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Stock Opinions by Javed Mirza

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COMMENT
Changing patterns leading to a possible correction.

His team has been highlighting 4 developing technical negatives that suggest equity markets are a bit stretched. 

At the start of the year they were very cautious, looking for the bigger correction that happens every 3-5 years. Thinks we got that from Feb-April. They recognized that it was a tradeable low, but didn't realize it was going to be "the" low. The recovery was really quick. At the end of May/early June, they were telling clients there was a medium-term rally with upside into August and also that a new 3-5 year cyclical bull market was underway.

What they've been noticing over the last couple of weeks is that investor sentiment is starting to get a bit too bullish. We've had a 35% move off the lows. The other thing is that seasonality is telling them that August and September are typically the weakest months of the year. So that's looming.

Short-term price momentum has been stalling on a variety of indices. Underneath the surface, a lot of the leadership names that were leading this rally are showing signs of giving up the ghost.

All these things together tell him there's going to be an air pocket of 5-8%. But he'd be using that air pocket to add exposure, because his team thinks we're in a new bull cycle that has upside into the second half of 2027 and first half of 2028. This will be a common theme of today's show -- most names mentioned could benefit from investors waiting to add exposure during the potential upcoming correction.

Because the tech sector has been so bloated, that space could see a correction beyond the typical 5-8% that you'd see in other sectors. Based on the beta of a stock.

COMMENT
Leadership names that are shifting.

There have been a variety of names in the US specifically. Names like AAXN, HWM, and RCL. They'd broken out to new highs, which is very bullish. That was telling him they were the leaders of this new bull cycle. However, over the last couple of weeks they've started to break down. Not just in relative terms, but also in absolute breakdowns. 

The leaders breaking down typically suggests that a bigger correction is likely to follow soon. 

COMMENT
Geographic reach of recent negative trends.

His team looks globally. They do look at a variety of stocks in Europe and Asia, but their focus is NA and where 90% of their research is targeted. So it's in the NA market where they're seeing a lot of the early signs of market breakdown.

There are stocks that continue to power higher, and the market's very attractive at the start of a new bull trend. But in the intermediate term, things are priced to perfection. Expects some kind of weakness, and he'd be looking to add exposure then.

COMMENT
How long might weakness last?

A short-term pullback typically lasts 1-3 weeks. That's what we've seen over the last couple of weeks. Looks as though markets are starting to grind higher, and that advance phase is typically 2-4 weeks. If he's correct on the bigger call of an intermediate-term correction, it will usually last 1-3 months. 

There are 2 ways you can correct. One way is in price, which is how most people think of it. The other way is in time, and a glance at the chart for gold demonstrates this. After gold moved up, it's been consolidating in a sideways trend for the last couple of months.

BUY ON WEAKNESS

A lot of names in the space have had monster moves but now correcting. Coming right back to important support around $24.50. Next big support ~$22. Probably get a bit of a dead cat bounce, and then chop around for a bit more if his broader correction call is right.

Today is timely to nibble a bit, but give it some more time over the next month or so. That's when he'd really be adding exposure.

BUY ON WEAKNESS

Really big move, a leader to the upside. Now showing signs of stalling and breaking down. Reaffirms his view that we're in a corrective phase. Moved below the 200-day MA, not a great sign. Doesn't mind nibbling here, but expects a better opportunity in the next 1-2 months as we get through September and even into October.

He'd definitely be looking to add around $4250, the support level of the tariff tantrum back in April. 

BUY ON WEAKNESS

Really likes it, and so do his firm's fundamental analysts. Strong fundamental story. Technicals are awesome. Good run. Add on weakness. Expect a consolidation or correction in next month or two, and that's when he'd be looking to add.

BUY ON WEAKNESS

Really likes it, and so do his firm's fundamental analysts. Strong fundamental story. Technicals are awesome. Good run. Add on weakness. Expect a consolidation or correction in next month or two, and that's when he'd be looking to add.

BUY ON WEAKNESS

The 3-year chart shows the longer-term downtrend and how it's now beginning to come out. Pulling back recently. Around $75 will be pretty important support. Technicals show it's turned a corner. Doesn't mind nibbling here.

BUY

Turning up after a downward trend. Likes the setup. Lots of the value guys he knows really like this name. Technicals are highlighting important inflection point. 

Combining fundamentals and technicals is really powerful in your investment decision-making process. Helps to avoid value traps.

PARTIAL BUY

Let's look at the 3-year chart. Definitely turning the corner after a 3-year downtrend. Dividend cut helped. Telcos are boring and defensive, lower beta. So they'll weather the upcoming corrective storm of 1-3 months. Doesn't mind nibbling here, but during weakness he'd be putting $$ to work in the more cyclical areas of the market.

PARTIAL BUY

Go-to name in the space. The leader. Telcos are boring and defensive, lower beta. So they'll weather the upcoming corrective storm of 1-3 months. Doesn't mind nibbling here, but during weakness he'd be putting $$ to work in the more cyclical areas of the market.

HOLD

Has had a strong move after languishing along with other telcos. Telcos are boring and defensive, lower beta. So they'll weather the upcoming corrective storm of 1-3 months. 

BUY ON WEAKNESS

Bigger longer-term uptrend. Lots of insurance names have had really strong moves in line with interest rates moving higher. So the move to lower interest rates affects them all across the board. Likes the stories longer term. Should ultimately come back to $250-260, so look to add there.

His work's telling him that interest rates are in a new secular uptrend, and this would benefit all the insurance names eventually.

PAST TOP PICK
(A Top Pick Oct 17/24, Up 12%)

(All the past picks today were from October, when he thought we were late cycle. His view is that we've started a new cycle, so tech and consumer discretionary risk-on names should do better.)

Still likes it, but probably more of a market perform for the next year. Then should really come into the spotlight in 2027. Hang on, pick up the dividend, don't add more.

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