June 8, 2020
Near-term Market Forecast: The market environment is modestly favorable for appreciation of these stocks in the weeks ahead.
Much stronger-than-expected jobs numbers on the ADP report and non-farm payrolls drove a strong move in small caps and the most beaten up areas of the market. Unfortunately, it also drove a pullback in the stay-at-home stocks. The Nasdaq made new highs which is a good sign for the months ahead. Also, the S&P 500 is now flat for the year and is less than 5% below the highs. The small cap Russell 2000 is catching up but is still about 10% below the highs. Its a market and economy that went from a likely 20% unemployment rate to about 13% and falling perhaps still quickly as many businesses begin to re-open in large metropolitan areas around the US. This caused a jump in the ten-year yield and steepened the yield curve which generated a bank rally as well. All good for the market. The stay-at-home stocks still have the best fundamental factors but may consolidate more as the most beaten stocks catch up a bit more. The price of oil is getting back to near $40 as demand grows. The VIX volatility index started to drop into more normal ranges before starting to rebound today as the market indices are well into overbought territory. The NYSE advance/decline line soared into new highs over the past week. Another bullish sign. We saw unusually strong volume coming in on the strong up days last week the likes we have not seen in decades. We are due for a pullback but the market uptrend is showing signs of strengthening and 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 IPHI, DBX and VRTX and use the proceeds to purchase an equal dollar amount of TSLA, ZM and 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 – TSLA
Optional Protective Stop-loss Point: $748.90 (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 – ZM
Optional Protective Stop-loss Point: $158.90
Stock #3 – DXCM
Optional Protective Stop-loss Point: $289.40
A nice gap from MTCH to sell into was followed by a disappointing week as the stay-at-home stocks were hit later in the week as re-opening of businesses continues successfully and really gets started in large markets around the US.
Its hard to anticipate when the next strong run or pullback will start for this strategy. So being consistent over the years is key as can been on the performance chart over the years.
Brian C Neall
Founder – Investtobefree.com