By William Watts
Nvidia Corp. tops a list of technology stocks that would be expected to bounce back strongly over the next month based on the reaction to past plunges by the Nasdaq Composite, according to an artificial-intelligence-driven screening platform.
|Stock||1-month median return||1-month 80th percentile||1-month 20th percentile||#times in past|
|Nvidia /zigman2/quotes/200467500/composite NVDA||15.3%||32.2%||-6.0%||30|
|Citrix /zigman2/quotes/206700852/composite CTXS||12.3%||33.7%||-5.2%||35|
|Salesforce /zigman2/quotes/200515854/composite CRM||9.9%||22.8%||-12.3%||15|
|Monolithic Power Systems /zigman2/quotes/204177258/composite MPWR||9.3%||22.7%||-5.5%||15|
|Xilinx /zigman2/quotes/209389378/composite XLNX||8.8%||22.1%||-8.4%||36|
|Microchip Technology /zigman2/quotes/208326291/composite MCHP||8.1%||24%||-7.9%||35|
|Synopsis /zigman2/quotes/208349984/composite SNPS||7.7%||19.9%||-4.8%||35|
|Jack Henry & Associates /zigman2/quotes/201857446/composite JKHY||7.4%||18.7%||0%||39|
The list above was put together by Toggle, a research platform launched in 2019 that serves individual investors and institutional clients. The platform each day crunches its way through an array of data. explained Jan Szilagyi, the research company’s co-founder and chief executive, in a Tuesday phone interview.
These include macro items, including U.S. and global macroeconomic indicators; micro data, including company-specific fundamentals; technical factors, including market microstructure data points; and a steady flow of news articles.
The process that produced the list is “at the heart” of how the platform works, said Szilagyi, who previously worked as a quant analyst at hedge-fund legend Stanley Druckenmiller’s Duquesne Capital and, before setting up Toggle, was co-chief investment officer for global macro at Lombard Odier.
“The system is always looking for excessive moves in individual stocks as well as indices,” he said. Toggle isn’t intended to be used as a generator of buy or sell signals, but is aimed to help investors with their research by narrowing down selections that, “at least statistically speaking, look the most promising.”
When the Nasdaq selloff began, Toggle each day looked at the degree of selloff and compiled how each stock in the Nasdaq, as well as the broader U.S. market, had responded after similar episodes in the past. In this case, Szilagyi said the aim was to find the stocks that bounced the most robustly in the weeks and months after a Nasdaq selloff of 7% or more in a week.
The table, in the first column, breaks down the median return for each stock over past similar episodes. The next two columns give investors a sense of the risk-reward outlook by breaking down the range to show performance in 80th percentile versus the 20th percentile, while the final column shows how many past episodes there were to be analyzed.
A rise in Treasury yields driven by expectations for a more aggressive Federal Reserve has contributed to a sharp stock-market selloff to begin 2022, particularly for the rate-sensitive growth stocks that feature heavily in the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -3.21% .
The index has slid more than 10% from its November record finish, meeting the definition of a correction. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.91% finished 6.8% off its Jan. 4 record close on Tuesday, while the S&P 500 ended 9.2% below its Jan. 3 record.