August 10, 2020
Near-term Market Forecast: The market environment is modestly favorable for appreciation of these stocks in the weeks ahead.
The Nasdaq rallied a bit early last week before pulling back over the past couple days. Many of the hot growth stocks pulled back sharply while the tech heavyweights like Apple, Facebook and Amazon held up much better. We continue to see the S&P 500 and Russell 2000 playing some catch up as the S&P 500 is now just about 1% below the pre-pandemic high as it gradually moves higher. The small cap Russell 2000 may be starting to lead as its the best performer so far this month by far. Meanwhile the banking index just confirmed a new uptrend support and is breaking a resistance and looks ready to move higher. Transports are up over 8% this month which is another good sign. The NYSE advance/decline line continues to make new highs. We continue to see reluctant moves from stocks after big earnings beats as is typical in early August. The market could rally into a 2nd relief bill before a pullback. In either case, the strategy is calling for holding positions in the 3 stocks below until the next update:
This Weeks Stocks:
This week we have 3 new stocks. So, to follow the system, you would sell QDEL, MTH, TER and use the proceeds to buy equal dollar amounts of MHO, AAPL and MEDP. 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 – MHO
Optional Protective Stop-loss Point: $33.85 (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 – AAPL
Optional Protective Stop-loss Point: $353.90
Stock #3 – MEDP
Optional Protective Stop-loss Point: $97.40
After a nice gap on ENPH to start the week, it was downhill from there. After a strong run, we finally had a bad week with QDEL getting clocked today. Overall, the strategy was down about 8.5% for the week as we can occasionally expect weeks like this. Like we have been saying, the end of July and early August are often bad for swing trading. Fortunately, the back half of the month is often very good as low volume weakness in certain stocks often sets up good opportunities heading into Labor Day.
Brian C Neall
Founder – Investtobefree.com