March 8, 2021
Near-term Market Forecast: The market environment is modestly unfavorable for appreciation of these stocks in the weeks ahead.
After the strong rebound last Monday, the Nasdaq faded and then confirmed a bearish head-and-shoulders pattern late in the week. After a more than 2% down week last week, the Nasdaq dropped nearly 2.5% again today. Both the Nasdaq and S&P 500 had bearish confirmation signals last week. These often are overcome by the next market rebound if its strong enough, but its now a more volatile market and less attractive for swing trading. It often takes 5 weeks or so from the recent 52-week high for the market to start bottoming out and to trend higher again during a correction. The spike on the ten-year treasury yield caused the repricing of tech growth stocks and the market as a whole. The S&P 500 and small cap Russell 2000 are holding up better so far as value is doing better so far this year. The yield curve continues to expand as the ten-year yield hovers around 1.6%. The NYSE advance/decline line continues to consolidate just below the highs. We could continue to see bouts of higher yields and volatility but 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 CMBM, CROX and OVV and use the proceeds to purchase RCII, KFY and COWN. 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 – RCII
Optional Protective Stop-loss Point: $46.34 (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 – KFY
Optional Protective Stop-loss Point: $48.94
Stock #3 – COWN
Optional Protective Stop-loss Point: $27.94
After a gap lower on HAFC, OVV continued to launch over 20% last week and is up about 9% since last Monday evening which helps. Meanwhile, CMBM was down about 15% and crox was down as well as the strategy underperformed the S&P 500 which is the norm during corrections over the first 9 years of the strategy.
You never know for sure when these corrections will end and the market will trend higher again. The trend change occurs when it occurs and this strategy tends to start doing well just before then.
On average corrections seem to last about 5 to 10 weeks from the 52-week high that occurred before the correction which would be later this month to sometime in April in this case. However, it could be sooner as well.
Brian C Neall
Founder – Investtobefree.com