Competition Analysis | Learn by leading mooers in ASX to win the 10 shares of NVDA

Moomoo AU wrote a column · Sep 24, 2024 10:42

Competition Analysis | Learn by leading mooers in ASX to win the 10 shares of NVDA

Hello, mooers!!

Congrats to these Top 10 mooers who gained most in the ASX stocks Papertrading Competition last week:

@满山猴我腚最红 @JMack89 @Surf at risk @151452511 @BigBosher1 @152319742 @151696138 @2DETN8 @151255162 @NoNo4Eva

Last week, the $S&P/ASX 200 (.XJO.AU)$ index rose 1.35%.

The benchmark Aussie index looks to be getting a boost after the United States Federal Reserve was surprised to the upside with a full 0.50% interest rate cut.

Judging from the trading records of the top three investors last week, trading is still concentrated on some high-beta stocks, such as $Zip Co Ltd (ZIP.AU)$ and $Appen Ltd (APX.AU)$ . Although there is no clear news about these companies, their stock prices can more or less benefit from the positive impact of the Fed's interest rate cut.

Strategy analysis

$Zip Co Ltd (ZIP.AU)$ : BNPL shares that benefit from lower borrowing costs from rate cuts

$Zip Co Ltd (ZIP.AU)$ is a leading digital financial services company that provides fair and seamless payment solutions, simplifying the way people pay. The company provides unsecured loans and credit lines to small and medium-sized enterprises, and also provides buy now, pay later (BNPL) services, providing credit lines and installment products to consumers online and in-store. Zip's main products include Zip Pay and Zip Money, which allow consumers to pay for their purchases in installments.

BNPL stocks like Zip are very sensitive to interest rate changes in the financial market because their business models usually involve lending and credit provision. On September 19, the Federal Reserve announced a 50bp interest rate cut. Although the Reserve Bank of Australia may keep interest rates unchanged until 2025, it is also likely that the Reserve Bank of Australia will start to relax its policy at some point in the next six months. Therefore, the positive effects of lower borrowing costs and improved consumer confidence brought about by the interest rate cut jointly pushed the stock price up 9.24% on September 19.

However, judging from the KDJ and RSI indicators, the company's stock is currently overbought and in a risky area. The support level of ZIP'stock is AUD 1.90 and the resistance level is AUD 2.70, while the current stock price is AUD 2.70 which had touched the resistance level. Caution is needed for the risks of chasing high prices.

$Seek Ltd (SEK.AU)$ : Interest rate cuts stimulate corporate investment and indirectly affect recruitment activities

$Seek Ltd (SEK.AU)$ is a multinational technology company headquartered in Melbourne, Australia. It mainly provides online job advertisements, vocational training and educational courses，helping job seekers and employers facilitate effective matching through its website and related platforms. SEK has a dominant position in the Australian and New Zealand job markets and also holds a stake in Zhaopin through its investment arm, a leading online recruitment website in China.

The market typically sees rate cuts as a driving factor behind higher job ads. The Federal Reserve's interest rate cut may stimulate economic activity and corporate investment, which could lead to an increase in corporate hiring activities.

$Appen Ltd (APX.AU)$ : High-Growth Defensive Stock

$Appen Ltd (APX.AU)$ is an Australian artificial intelligence company that provides data services for AI and machine learning. It has achieved a leading position globally in data collection, standardization, annotation, translation, and transcription services for voice semantics, text, images, and videos.

A decrease in interest rates typically improves liquidity preference, enhances the attractiveness of risk assets, and subsequently boosts the valuation of growth stocks. The stock price of APX has been continuously increasing last week, rising by 7.16% on September 19th, the day of the Federal Reserve's interest rate cut, and then surging by 19% on September 23rd.

Price range AUD 1.52 to AUD 2.2: The trading range indicates a heavy concentration of buy orders, accumulating a significant amount of profit-taking positions, which raises the risk of selling pressure. The stock price is in an upward trend with strong momentum. It repeatedly touched around AUD 2.20, creating a certain upward resistance. It is necessary to observe whether the stock price can effectively break through the AUD 2.20 level. In the event of a decline, attention should be paid to whether support near AUD 1.52 is effective.

Leader's insights

We particularly invited the mooers on the leaderboard last week, to share their insights about the papertrading strategy and the stock market.

@BigBosher1: "chuck it all in $Appen Ltd (APX.AU)$ and insh'allah"

@152319742: "I was lucky in this competition. I think the market is focusing the very first US rate cut and I just picked the best stocks what I think during rate cuts which are in fintech and financial categories."

@Surf at risk emphasizing the positive impact of the US Fed's rate cut on the US and ASX markets, highlighting the impressive performance of $Appen Ltd (APX.AU)$ and suggesting that $Zip Co Ltd (ZIP.AU)$ and $IperionX Ltd (IPX.AU)$ also show promise by his personal research.

"The US Fed kicked off the rate cut cycle last week and both the US and ASX markets had stellar performances. Keep an eye on $Appen Ltd (APX.AU)$ . It's soared over 100% this month and shows no signs of slowing down, which reminds me of $Droneshield Ltd (DRO.AU)$ earlier this year.

Also, $Zip Co Ltd (ZIP.AU)$ and $IperionX Ltd (IPX.AU)$ are looking strong with solid fundamentals and nice patterns. Always remember to Do Your Own Research (DYOR). Cheers."

@JMack89 is the star in Aus papertrading competition, isn't he?

JMack declares the varied reactions of different sectors in the ASX to the U.S. interest rate-cut, noting specific stock performances and considering potential future volatility in their investment strategy.

"It was a rollercoaster week for the ASX, with sectors responding differently to the U.S. interest rate cut. Although the actual impact won’t be realised until 6-24 months down the track, investors have seemed to price in continued cuts throughout 2025. This has not changed my competition strategy significantly however could provide further volatility which may prompt me to rebalance in light of the competition end date coming to a close.

Some stocks I am following post interest rate cut $Zip Co Ltd (ZIP.AU)$ climbed 5%, as lower rates eased pressure on BNPL business models reliant on credit with their US presence. In tech, $Appen Ltd (APX.AU)$ surged nearly 16% and reached a recent high, benefiting from cheaper capital, which helps fund further AI advancements in chatbot and LLM projects.

Despite some initial jitters, AI seems to have had a resurgence in the US market with chipmakers starting to see renewed gains. Last week, $Wesfarmers Ltd (WES.AU)$ and $JB Hi Fi Ltd (JBH.AU)$ saw gains, though consumer sectors were less directly impacted. For mining, lower rates didn't significantly help giants like $Rio Tinto Ltd (RIO.AU)$ and $Fortescue Ltd (FMG.AU)$ , while energy stocks like $Woodside Energy Group Ltd (WDS.AU)$ remained flat amid stable oil prices. "

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