August 17, 2020
Near-term Market Forecast: The market environment is modestly favorable for appreciation of these stocks in the weeks ahead.
Just when you think the small caps and S&P 500 are ready to lead the Nasdaq rebounds into new highs. The Nasdaq outperformed the S&P 500 which was up about 1.5% last week. The small cap Russell 2000 was about flat. The S&P 500 is consolidating in a very narrow range just below the pre-pandemic highs which is bullish. Many of the retailers reporting this week, including Home Depot and Walmart, should have good quarters which could help support the market. Although the Nasdaq made new highs again today, volume continues to shrink on the leading index. Meanwhile, volume on the S&P 500 increased today. Generally, you see a reduction in trading volume around this time in August. Its a good sign the indices are holding up well in a narrow consolidation near the highs. Its a also a good sign that the VIX volatility index continues to be below a declining 20 EMA and near the high end of a more normal range. That being said, its normally better if it were lower. With presidential conventions starting this week, we can expect some more volatility in the weeks ahead although pandemic numbers in the US are starting to look better in key areas around the country. The NYSE advance/decline line continues to be near highs which is a good sign and the yield curve steepened last week due to a bump in the ten-year yield. However, the long-term trend for bond yields is still lower. We continue to expect bouts of volatility but the strategy is calling for holding positions in the 3 stocks below until the next update:
This Weeks Stocks:
This week we there are no new stocks. So, to follow the system, you would do nothing. 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 the prior rough week for the strategy, the 3 stocks have already recouped most of those losses. As always, its difficult to know when the strategy will continue trending higher or go into the next pullback or consolidation. Consistency is key to have a shot at the big gains over the long-term.
Brian C Neall
Founder – Investtobefree.com