April 25, 2022
Near-term Market Forecast: The market environment is neither favorable or unfavorable for appreciation of these stocks in the weeks ahead.
It continues to be one of the worst starts to a new year in modern market history for bonds and stocks. The market started to gain traction again last week before a Fed governor put a 75 basis point rate hike on the table. The market almost immediately began to sell off and the Nasdaq and S&P 500 dropped 7% within a couple trading days. Not the kind of action we want to see but is often the stuff we find during market corrections and bear markets. The VIX soared but so far has fallen well short of the March and January highs so lets see if the “fear index” starts to subside and negative inflation, interest rate and other bearish factors get fully priced in. Earnings growth is now expected to reach double digits this quarter but we still have most of the S&P 500 companies left to report so its still too early to know how well Q1 earnings will come in. We expect more volatility in the days ahead with big tech reporting and the PCE inflation number on Friday morning that the Fed watches closely. We are testing the lows of the year and perhaps will see some kind of bounce from here. 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 GOOGL and use the proceeds to purchase BANC. 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 – BANC
Optional Protective Stop-loss Point: $16.48 (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
Big losses in the indices took down even large oil companies with low valuations and strong longer-term trends. OXY dropped about 10% over the past week. COST was down about 2% and GOOGL down almost 3%. Overall, the strategy was down about 5% while the S&P 500 gave up 4% since the last update. 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. Perhaps this will be “one of those years” for stocks and bonds as inflation remains high and the Fed tries to bring it down with a more hawkish plan to fight inflation every couple weeks leaving investors wondering how far they plan to take rate hikes and balance sheet contraction this year. Inflation and a hawkish pivot like we have not seen in about 4 decades.
Brian C Neall
Founder – Investtobefree.com