AI Models Favor Big Tech Stocks 🖥 and Oil ETFs 🛢

After a tough week for markets, the major indices made a major comeback and rallied for four consecutive days. Going into Friday, the Dow and S&P 500 were each up 7%+ and the Nasdaq was up just under 9%. This comes at a time of expected volatility, and Friday was a demonstration of that. At the time of writing, a clear winner of the presidential race still remains undetermined as mail-in ballots continue to be counted across major battleground states.

For next week, our AI models highlight two major tech companies, both rated Top Buy. Apple Inc (AAPL) earned Q-Factor Scores of B in Technicals, B in Growth, A in Low Volatility Momentum and C in Quality Value. Paypal Holdings Inc (PYPL) is rated C in Technicals, A in Growth, A in Low Volatility Momentum and C in Quality Value. Broadcom (AVGO), a Top Buy for the next 30 days, is the only other stock pick rated Top Buy from the same sector and has been assigned Q-Factor scores of B in Technicals, B in Growth, C in Low Volatility Momentum and A in Quality Value. 

For the next month, Cinemark Holdings Inc (CNK) is a Top Short and has Q-Factor Scores of C in Technicals, F in Growth, F in Low Volatility Momentum and F in Quality Value. Cinemark has seen its revenue evaporate since the COVID pandemic hit, so it makes sense why this stock frequently makes the list of Top Shorts. 

The same goes for Royal Caribbean Group (RCL) and Southwest Airlines (LUV), both of which are from industries that are no stranger – or friend – to the travel restrictions and economic hardship caused by COVID. Royal Caribbean Group (RCL) holds Q-Factor Scores of F in Technicals, F in Growth, D in Low Volatility Momentum and F in Quality Value while Southwest Airlines (LUV) is rated C in Technicals, F in Growth, C in Low Volatility Momentum and F in Quality Value.

Looking at ETFs, there are a few Top Buys for the next week, including SPDR Bloomberg Barclays 1-3 Month T Bill ETF (BIL), Invesco S&P 500 Revenue ETF (RWL) and United States Brent Oil Fund (BNO). A broad mix of sectors in comparison to previous week. Precious metals are noticeably missing from both the Top Buys and Top Shorts lists during both timeframes. ProShares Ultra Bloomberg Crude Oil (UCO), the only other oil and gas ETF our AI has identified, has been rated Top Buy for the next month. Interestingly enough, iShares U.S Consumer Goods (IYK) has been rated Top Buy for the next month while iShares Global Consumer Staples (KXI) is rated Top Short for the next week.

Some of our favorite options trades this week: 

Short Call Spread Utilities Select Sector SPDR Fund (XLU) – Bearish trade on the US Utilities Sector.  This trade offers downside exposure to a rotation out of low beta and defensive stocks.  It can also be a hedge against and overly defensive stocks allocation in a long-only portfolio.  

Long Call Spread in Financial Select Sector SPDR Fund (XLF) – Bullish trade on the US Financials Sector.  Pro-cyclical trade which is a bullish play on the US economy.

Long Call Spread in Activision Blizzard (ATVI) – Bullish trade on one of our favorite names in Consumer Tech heading into the holiday season.  Offers an uncorrelated upside play on seasonal increase in sales for video games during the holiday months.

The Latest

The last few weeks has consisted of sell-offs, rallies and everything in between. Given the current climate, we had our AI and deep learning algorithms identify the top picks this month for U.S. Value stocks and U.S. Value ETFs.

Throughout the COVID pandemic, Growth stocks have proven to be a very successful type of investment for those who are looking to build a tech-heavy portfolio. For this month of November, these are the top growth stocks to buy.

Update: The beta version of the Forbes AI Investor investment discovery platform is now live! It’s a simple, easy to use, jargon free platform that helps users discover new investments using AI. Our goal is for investors to kickstart their research with Forbes AI Investor so that they spend less time finding ideas and more time on optimizing their decisions. The platform takes guesswork out of investing and provides AI driven high conviction stocks and ETFs ideas. We opened up the platform to the first 100 users. Investors who are part of our investing slack channel will get priority access.

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