May 16, 2022

 

Near-term Market Forecast: The market environment is neither favorable or unfavorable for appreciation of these stocks in the weeks ahead.

Inflation not seen in decades continues to drive down valuations in the market.  The Nasdaq started to find its footing last Tuesday before falling out of bed on Wednesday and Thursday on more hot inflation numbers that were worse than expected.  The market started to rebound late Thursday into Friday before losing some of that traction today.  The strong bounce on Thursday produced about a flat week for the S&P 500 and Nasdaq since the last update.  The good news is that the ten year treasury yield is starting to come off the 3% area and has closed below the 20 EMA for a second time.  This is an indication the uptrend in interest rates is weakening.   That being said we could still see another new high in the weeks ahead.  The VIX has eased a bit with it moving to 27.47 at the close today but still very elevated.  Both the small cap Russell 2000 and Nasdaq are in their worst drawdowns since 2009 other than the initial pandemic panic in March 2020.  According to Zacks, Q1 earnings are now expected to be up over 9% for the S&P 500 with estimates still gradually moving higher.  Lets see if that continues in the months ahead.  Perhaps we will soon see tests of key trend-line support areas going back to 2009 in the weeks ahead followed by a relief rally.  The strategy is calling for holding the following 3 stocks until the next update:

 

This Weeks Stocks:

This week we have no new stocks.  So, to follow the system, you would do nothing.  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 – DOW

Optional Protective Stop-loss Point: $53.49 (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 – CVX

Optional Protective Stop-loss Point: $46.93

Stock #3 – COST

Optional Protective Stop-loss Point: $464.49

It was a nice week with CVX carrying the load and rising about 8% and the overall strategy rising nearly 3% with the gap higher on the OXY exit last Tuesday.  The S&P 500 was about flat since the close last Monday.  The P/E ratio for the S&P 500 has gotten to a more attractive valuation based on this years projected earnings with earnings estimates still holding up well at this point as the S&P 500 is now expected to have nearly 10% earnings growth in Q1.  Overall, future estimates are still steady to rising.

 

 

 

Brian C Neall
Founder – Investtobefree.com
email: info@investtobefree.com