May 17, 2021

Near-term Market Forecast: The market environment is unfavorable for appreciation of these stocks in the weeks ahead.

The move away from pricey tech stocks to cyclical and re-opening trades continues.  While the Nasdaq has dropped over 8% from high to low over the past few weeks, the S&P 500 has dropped about 4% from high to low.  After pulling back sharply early last week, the small cap Russell 2000 is trying to regain traction and avoid dropping below the support in its 3 month base pattern.  The market generated a bearish market signal last week and we are seeing the typical first rebound attempt.  It will be interesting to see how the market reacts to the FOMC minutes on Wednesday as fear of strong inflation and an early Fed response to it grows.  Typically the market will trend lower into a Fed hawkish pivot.  This may occur this year or next and the market is priced for later next year.  So this will be interesting.  If the rebound strengthens later this week we will be back to being modestly bullish but we could see further downside in the days ahead although the cyclical, banking and outdoor recreation trade is rebounding strongly so far while tech lags.  The NYSE advance/decline line came down over the past week or so but it appears it may be just making another higher low at this point.  The ten-year treasury yield moved higher early last week but then pulled back over the past couple days on weaker economic data than expected as the market rebounded.  Volatility soared early last week as it surged over 27 before falling back again to below 20 again over the past couple days.  Outside of tech, the market is holding up well but is susceptible to more volatility in the weeks ahead.  The strategy is calling for holding the following 3 stocks until the next update:

This Weeks Stocks:

This week we have 3 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 – 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

After a gap lower last Tuesday, the 3 stocks recovered about all of the losses as HVT led with a nearly 4% gain from the entry point taught in the getting started video.  TX and CUBI were about flat as the S&P 500 was down about 1% from the close last Monday.

Its always difficult to know when it will go on its next run as seen on the performance chart but lets hope it starts in the weeks ahead.

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