March 16, 2020
Near-term Market Forecast: The market environment is unfavorable for appreciation of these stocks in the weeks ahead.
After a crushing blow to the price of oil, the coronavirus outbreak in multiple countries began to grow out of control in Italy and elsewhere. This prompted multiple developed countries in Europe and the US to shut down many activities which will likely impact economic growth for several weeks to months or more. All the major indices cratered as the Fed did what they could to drop rates and basically initiate another round of QE. However, the measures needed to slow down the virus spread will likely lead to a economic contraction in the months ahead. The S&P 500 has come down to test the 2018 lows. Large caps are doing better than small caps as the S&P 500 is down nearly 30% from the highs made earlier this year. Meanwhile, the Russell 2000 is down nearly 40% off the highs with the banking index down more than that. Even gold sold off over the past week. The NYSE advance/decline line continues to trend lower as transports pulled back over 30% as well. The Fed already took drastic measures to help sure up the financial system as we wait for a series of bailout bills from congress. Its still a good time to be cautious as we expect more volatility in the days ahead although we are due for a bounce. 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 EHTH and use the proceeds to buy KR. 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 – REGN
Optional Protective Stop-loss Point: $337.90 (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 – MSFT
Optional Protective Stop-loss Point: $117.60
Stock #3 – KR
Optional Protective Stop-loss Point: $24.45
After hours, the 3 stocks about matched the overall market for the week which was pretty miserable – one of the worst five day periods for the market in history. It was going alright until today when EHTH fell out of bed as the market dropped about 11%. REGN is gapping significantly higher after hours and may win the race to have a vaccine for the coronavirus. As we have been saying, we certainly do not expect to consistently beat the market during corrections as can be seen on the long-term performance chart where the strategy tends to underperform during market drawdowns. When the market has a more sustained rebound, the strategy has tended to beat by a wide margin over its first 7+ years.
Brian C Neall
Founder – Investtobefree.com
email: info@investtobefree.com