March 30, 2020
Near-term Market Forecast: The market environment is unfavorable for appreciation of these stocks in the weeks ahead.
We saw a large bear market rally last week on the most beaten up, risky stocks in the market including the airlines, banks, energy and leisure stocks ahead of the recovery bill which passed Congress on Friday. This helped the market retrace about a third of its losses from the February highs. The S&P 500 rebounded strongly off the top of the 2015 – 2016 consolidation range. The Nasdaq has held the 2018 lows so far. Oil continues to fall as it is threatening to break below $20 per barrel with some spot prices much lower as oil storage has become full. Volatility continues to be very elevated as the the VIX closed today near 60. New cases of the coronavirus are falling in hard hit areas in Europe which is a good early sign. Still, no clear signaling as to when the restrictions on business and travel will be lifted which will weigh on the market as the global economy contracts. Its still a good time to be cautious as we are set up for another pullback starting later this week. However, if we get clear signs of when the pandemic and measures to protect people will end, the market may not revisit the lows. The strategy is calling for holding positions in the 3 stocks below and we are introducing the RWM inverse Russell 2000 ETF for those who want to use the optional inverse ETF strategy until the next update:
This Weeks Stocks:
This week we have 1 new stock. So, to follow the system, you would sell KR and use the proceeds to buy AMZN. If you want to use the optional inverse ETF strategy, you would put half the trading capital in the RWM and split the other half equally among the other 3 stocks. If you are just starting, you would put half into the RWM and the other half in 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 – AMZN
Optional Protective Stop-loss Point: $1559
After crushing the market last week and actually gaining, the strategy underperformed last week as the most beaten up stocks finally got a relief rally. However, it was still a positive week for the 3 Stocks to Wealth. 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.
Once the market confirms a new sustained uptrend, the strategy tends to outperform by a wide margin. That confirmation of a new sustained market uptrend may be just around the corner.
Brian C Neall
Founder – Investtobefree.com
email: info@investtobefree.com