April 11, 2022
Near-term Market Forecast: The market environment is neither favorable or unfavorable for appreciation of these stocks in the weeks ahead.
The Fed hit the market again with an aggressive plan to contract the Fed balance sheet by over a trillion dollars over the next year starting in May. A Fed governor brought up the plan and the market started to tank soon after. The Nasdaq is now about 8.5% below the March highs and closing in on the lows of the year. The VIX surged over 20 again on the further hawkish Fed pivot and extended lockdowns in China. However, its well below the highs we saw earlier this year. At least so far. The Russell 2000 is back down to near bear market territory which is 20% off the highs. The price of oil continues to consolidate and is finding support a little below $95 a barrel on the continuous contract. The ten-year yield is surging higher after the balance sheet news and is near 2.8% and closing in on key resistance levels. The 3 month to 10 year yield curve continues to expand over 2 while the 2 to 10 year curve is now expanding again after briefly inverting last week. A key CPI number comes out before the bell tomorrow morning and earnings season starts on Wednesday morning when the big banks start to report Q1 earnings and conduct the all-important conference calls afterwards to give their view of the economy. The strategy is calling for holding the following 3 stocks until the next update:
This Weeks Stocks:
This week we have 1 new stock. So, to follow the system, you would sell BLDR and use the proceeds to purchase OXY. If you are just starting, you would buy equal dollar amounts of all 3 stocks when the market re-opens in your risk-capital account dedicated to this system. Be sure to view the complete introductory video before getting started.
Stock #1 – GOOGL
Optional Protective Stop-loss Point: $2,298 (Be aware that a tighter stop-loss will likely severely reduce performance over the long-term based on back-testing for this strategy. See upgrade and performance video for further information and insight on optional stop-loss orders.)
Stock #2 – OXY
Optional Protective Stop-loss Point: $46.93
Stock #3 – COST
Optional Protective Stop-loss Point: $464.49
The market sold off hard after the FOMC minutes and balance sheet contraction plan was revealed. The S&P 500 dropped about 3.5% while the Nasdaq fell 6.5%. COST made some gains while GOOGL and BLDR fell with the strategy down about 5.5% overall over the past 2 weeks. Its still the worst start of a new year since launching the service nearly 10 years ago with one of the worst starts for the overall market averages in the modern era.
Brian C Neall
Founder – Investtobefree.com