April 13, 2020
Near-term Market Forecast: The market environment is neither favorable or unfavorable for appreciation of these stocks in the weeks ahead.
The Nasdaq and S&P 500 have now retraced half the losses from the February highs. Meanwhile, the small cap Russell 2000 continues to lag but broke the prior swing high to confirm a trend change back to the upside. This week kicks off earnings season which could be very interesting with the huge spike in unemployment and the worldwide economic contraction. The banks will start the parade later this week. The market rallied into the peak of the new cases and deaths per day in the US. From here it will real interesting. We want to see the Nasdaq get back above 8800 to retrace more than 2/3 of the correction. This will be a good sign for the longer-term. Volatility continues to be more than twice the norm and we can expect more bouts of volatility in the weeks ahead as earnings and outlooks are reported to investors. The strategy is calling for holding positions in the 3 stocks below until the next update:
This Weeks Stocks:
This week we have 1 new stock. So, to follow the system, you would sell REGN and use the proceeds to buy DXCM. 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 – DXCM
Optional Protective Stop-loss Point: $212.90 (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 – NFLX
Optional Protective Stop-loss Point: $288.90
Stock #3 – AMZN
Optional Protective Stop-loss Point: $1559
An underwhelming gap for our stocks last Tuesday was followed up with a big move higher today from NFLX and AMZN. REGN had a good week and about matched the overall market. AMZN led the way with about an 8% gain while NFLX was up about 6% and REGN up about 3% since last Monday evening. Meanwhile, the Nasdaq is up about 4% since the close last Monday and less than 2% from the open on Tuesday.
As discussed before, a bullish market signal this soon after the start of a correction is precarious so we would not be surprised if we get another sharp pullback and even a test of the lows as we head through earnings season. Although, the chances of the March lows being a generational bottom have increased somewhat.
Brian C Neall
Founder – Investtobefree.com