May 10, 2021
Near-term Market Forecast: The market environment is neither favorable or unfavorable for appreciation of these stocks in the weeks ahead.
Money continues to rotate from tech high-flyers into large cap and cyclical stocks with a dividend especially. This is allowing the S&P 500 to hold its value near the highs while the Nasdaq pulls back again. In fact, the Nasdaq is near another bearish signal. The Nasdaq dropped about 4% since last Monday evening. The small cap Russell 2000 dropped about 2.5% and looks almost as weak as the Nasdaq. You often see a correction starting around mid-May although earnings estimates continue to rise. The current earnings run rate would equate to about a 20 P/E ratio on the S&P 500 currently and potentially around 17 by the end of the year at the rate things are going. Many commodities are breaking into all-time highs including steel and lumber. The NYSE advance/decline line continues to make higher highs and higher lows with the banking continuing to make new highs. The ten-year treasury yield just generated a strong bullish candlestick pattern so we could be seeing higher yields soon. Volatility spiked today but the VIX volatility index has been in a better range lately between 16 and 20.:
This Weeks Stocks:
This week we have 3 new stocks. So, to follow the system, you would sell CROX, HLIO and SLM and buy equal dollar amounts of CUBI, HVT and TX. 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 – CUBI
Optional Protective Stop-loss Point: $26.89 (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 – HVT
Optional Protective Stop-loss Point: $36.89
Stock #3 – TX
Optional Protective Stop-loss Point: $32.46
It was another good week with the 3 stocks up slightly while the S&P 500 was down since last Monday evening. We continue to include stocks with some very large estimate increases so we could see some nice gains later this month after perhaps a pullback. HLIO just crushed estimates and raised guidance so we could see a nice gap for the stock tomorrow.
Its always difficult to know when it will go on its next run but May and the summer are often good periods for this strategy as can be seen on the performance chart since inception.
Brian C Neall
Founder – Investtobefree.com
email: info@investtobefree.com