March 23, 2020
Near-term Market Forecast: The market environment is unfavorable for appreciation of these stocks in the weeks ahead.
Governments worldwide continue to shut down significant portions of local economies to battle the coronavirus and save lives. Last week was one of the worst in market history with the S&P 500 dropping about 15%. Since the close last Monday, the S&P is down nearly 7%. Small caps are starting to “outperform” as the Russell 2000 was down a bit less – around 3%. The S&P 500 broke below the 2018 lows and tested the top of the consolidation that occurred after Brexit in 2016. Key indicators are buried into oversold levels. At the same time, how long many businesses will be forced to be closed remains unclear. This is the fastest that major indices have reached 35%+ corrections in market history. The Fed continues to step up its response by even buying some bond ETFs. The next support level for the S&P 500 is around 2100. Its still a good time to be cautious as we expect more volatility in the days ahead although we are still due for a bounce. Perhaps a large one starting after a recovery bill passing Congress and we begin to see daily covid new cases and casualties in Italy start to fall which will likely give large investors a sense for how soon the cases in the US will peak. 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 MSFT and use the proceeds to buy NFLX. 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 – NFLX
Optional Protective Stop-loss Point: $288.90
Stock #3 – KR
Optional Protective Stop-loss Point: $24.45
The 3 Stocks to Wealth easily beat the S&P 500 from the close last Monday and was up slightly. 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. However, its done quite well again during this correction versus corrections over the first 6 years where it generally corrected more than twice the drawdown on the S&P 500. 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