ORTEX Monthly Recap for June

ORTEX Perspectives on the S&P 500 for June

At the halfway point in the year, stocks have had a remarkable 2023 so far. The Nasdaq Composite closed out its biggest first-half gain since 1983, surging 31.7%, while the S&P 500 jumped 15.9% for its best first-half since 2019. The Dow Jones Industrial Average lagged, climbing a modest 3.8% during the period. Those gains come as enthusiasm around artificial intelligence boosted tech stocks. Recent data showing a resilient U.S. economy despite higher rates also lifted investor sentiment, easing some fears on Wall Street of a long-awaited downturn. ORTEX Short Interest Data showed all sectors saw a rise in bearish bets last month. Short interest (SI) shares in the Energy sector rose the most, up 10.43%, while financial stocks saw the smallest rise as SI shares increased by 2.5%.

Short-sellers had a very difficult month in June as stocks soared. In the aggregate, the bears lost $37 billion in June.

The number of earnings reports slowed in June, meaning there have been fewer changes in forward-looking earnings estimates from Wall Street. Industrial stocks saw the largest increase in EPS estimates, up 1.69%, while profitability forecasts for the energy sector fared the worst for the third month running, down 1.17%.

Total Insider activity fell slightly in June compared to May, with Insider buying only reaching $159 million in June, according to ORTEX Insiders Data. However, 98% of the total buying activity was ranked as High trade significance, meaning this activity was based on conscious decisions, and not just the result of exercise of share options. Whilst significant, Insider buying activity was relatively insignificant compared to selling activity in June, which was $4.14 billion. That translates into an insider buying ratio of just 4% across all levels of Trade Significance.

On the options front, positive order value for SPY was $4.34 billion, while negative order value for the fund was $5.14 billion. That positive order value ratio of 45.8% represents a small decrease in sentiment among options traders, compared to May’s figure of 47.1%.

Market developments in June

In what’s been an incredibly successful first half of the year for stocks, the tech-heavy Nasdaq has shone, due in large part to the excitement around artificial intelligence. The brightest light in this area continues to be Nvidia (Nasdaq:NVDA), as the chipmaker’s shares are up nearly 200% in 2023. Apple also reached another milestone, crossing the $3 trillion valuation mark.

In May 2023 the inflation rate cooled to its lowest annual rate in more than 2 years, with prices increasing by 4% compared to May 2022 according to the 12-month percentage of change in the consumer price index. The Federal Reserve decided against what would have been an 11th consecutive interest rate increase in June as it measures what the impacts have been from the previous 10, which was widely anticipated by markets. However, the decision by the Federal Open Market Committee to hold off on a hike at this two-day meeting came with a projection that another two quarter percentage point moves are on the way before the end of the year. The decision left the Fed’s key borrowing rate in a target range of 5% – 5.25% with the next meeting on July 25 – 26th. This Hawkish pause also increases the importance of each incremental economic report.

June’s Top Performing Trading Signal

On June 16th, ORTEX generated a Event AGM On The Day Trading Signal for TRxADE HEALTH, Inc. (Nasdaq:MEDS) based on historical trading activity.

Shares of TRxADE HEALTH soared after the company said it had signed a binding letter of intent to acquire Superlatus, Inc, a US based holding company of food products and distribution capabilities. After the Merger, TRxADE will pivot its business focus and branding to become an industry-leading processing and forming technologies company that creates the latest generation of delicious, high nutrition, high taste and texture plant-based foods and snacks. The merger would be expected to close in late third quarter or early fourth quarter of 2023. The company also announced a 1-for-15 reverse stock split of its common stock on June 22nd. The signal returned 160.26% over the prior best holding period of 9 days, making this the best performing ORTEX Trading Signals in June.

Please note that ORTEX Trading Signals are based on historical performance and are not investment advice.

Highest Short Seller Gain and Loss for June

For the fourth time this year and the second month in a row, Tesla (Nasdaq:TSLA) was the biggest loser for short sellers. Bears lost over $5.6 billion in the stock throughout June. Since the beginning of the year, Tesla has risen 162.3%, with shares of the electric vehicle giant up by 30.4% in June. Whilst there have been fluctuations in Tesla’s short interest level throughout June, the net result shows bears are again mostly unchanged, as ORTEX data shows short interest marginally fell to 91.91 million shares, or 3.39% of free float.

The big winner for the bears last month was Dollar General Corporation (NYSE:DG). The US discount retailer’s shares gapped down 20% at the start of the month after the company’s gloomy sales forecast, predicting net sales growth in the range of 3.5-5 per cent in 2023, down from a previous estimate of between 5.5-6 per cent. The weaker outlook came as higher inflation and depleted coronavirus pandemic savings have hit lower-income consumers, the core customers of retailers such as Dollar General. Short-sellers reaped $185 million in gains from betting against Dollar General, the most profitable short trade in June.

Short Squeeze Candidates with the Highest ORTEX Short Scores

Cricut currently has the highest ORTEX short score on our platform (with at least 3 analysts covering the stock), coming in at 99.67 out of 100. Our ORTEX Short Score uses a multi-factor model that incorporates multiple short-related metrics, with a higher score indicating that the stock is heavily-shorted and has other characteristics that increase the possibility of a short squeeze occurring.