November was one of the best months for the market in decades.
The Dow saw its best month since 1987, gaining 10%, while the S&P 500 rose 9.4% and the Nasdaq added more than 11%.
Stocks like Align Technology (NASDAQ: ALGN), Deere (NYSE: DE), Etsy (NASDAQ: ETSY), Gap (NYSE: GPS), and L Brands (NYSE: LB) saw big double-digit gains last month, and all are among the names that have seen their 50-day moving averages climb past their 200-day averages.
Simpler Trading’s Danielle Shay says two of those names still have room to run higher.
“I love to follow the momentum to the upside,” Shay said. “I’m definitely a bullish momentum trader and especially Etsy and John Deere. They provide really good opportunities in the options market for selling put credit spreads, buying long calls, and just owning the stock as well.”
Etsy shares gained 35% last month as the e-commerce shift continued to accelerate, and this holiday season is likely to be a very strong one for the company as shoppers seek more meaningful, personalized gifts.
“I think there’s always a need for things that are going to be cheap and arrive fast, but more and more I think people want an alternative to that, when they want that product to mean something to them, when they want it to feel special, and those occasions happen all the time,” said Etsy CEO Josh Silverman. “These are things you’re going to need every year, in a pandemic, not in a pandemic, and I think what people are discovering is there’s just a better way to shop. Connecting with the actual person who made the product and having it sent to you is just a better way to shop.”
As for Deere, the stock rose 17% in November and analysts say the company’s strong earnings are a bullish sign. Deere posted better-than-expected fiscal fourth quarter results, reporting earnings per share of $2.39 on $8.7 billion in sales, compared to analysts’ estimates for earnings of $1.49 per share on $7.7 billion in sales.
Following the blowout report, RBC Capital analyst Seth Weber issued a Buy rating for the stock, and boosted his price target from $252 to $280 – nearly 11% higher than the price as of this writing.
Weber argues Deere’s push into precision farming, using software and new technology to enhance farm production, is yielding positive results for the company.
“Deere is well positioned for a farm rebound we believe is just getting started,” Weber wrote. “Runway ahead.”
But of last month’s big winners, one trader cautions against one of the names.
“Gap is facing two structural issues,” John Petrides, portfolio manager at Tocqueville Asset Management, said. “One, as we all know, COVID has been the great accelerator to e-commerce. And that leads to… less foot traffic in the store going forward. And also, they announced the turnaround plan back in October where they’re spending a lot of money or will be spending a lot of money on beefing up their marketing efforts to pick up market share so there’s still a turnaround story.”
Shay echoed that and agrees that Gap is in a precarious position.
“This is one of the weaker of the names in this group and currently the way that it’s sitting on the” 50-day moving average, Shay said. “If that level breaks, we could see a pretty decent decking there so out of these names, that’s really the only one that I would look for a potential breakdown.”