January 27, 2020
Near-term Market Forecast: The market environment is neither favorable or unfavorable for appreciation of these stocks in the weeks ahead.
An acceleration of the cases of the coronavirus triggered a pullback on the major averages as the Nasdaq dropped around 3.5% from the highs and the S&P 500 lost slightly less than that. Small caps continue to lag as the small cap Russell 2000 erased all the gains for the year and dropped about 4% from the highs. The VIX volatility index surged today to close a little above 18. The price of oil continues to fall but is nearing a horizontal support level. The ten-year treasury yield fell to near 1.6% as money moves over to bonds. The yield curve is now flatter with the 3mo/10 year near the zero line. The NYSE advance/decline line is pulling back towards its trend-line. Meanwhile, the transport index is pulling back sharply after reaching new highs earlier in the year. The banking index is pulling back as well as the yield curve flattens further. We are not seeing the classic signs of a large correction but we continue to monitor the market averages for these signs. 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 SSNC and use the proceeds to buy ESNT. If you are just starting, you would buy an equal dollar amount 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 – ESNT
Optional Protective Stop-loss Point: $41.40 (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 – LULU
Optional Protective Stop-loss Point: $198.90
Stock #3 – RH
Optional Protective Stop-loss Point: $178.79
The market indices pulled back sharply last week on the coronavirus news and so did the 3 stocks. Although the performance about matched the overall market. If we can withstand the down weeks like this, the up weeks have historically been impressive after a market pullback.
Brian C Neall
Founder – Investtobefree.com