November 16, 2020
Near-term Market Forecast: The market environment is modestly favorable for appreciation of these stocks in the weeks ahead.
More positive vaccine news, this time from Moderna, drove the major market indices higher again today. The news from Pfizer and Moderna were game changers for the future outlook as the efficacy is above 90% for both vaccines. The S&P 500 has now closed at new highs and the small cap Russell 2000 is now well into new highs as optimism over the pandemic ending next year and record stimulus taking full affect in the months ahead pushes the market higher. Earnings estimates for next year have moved significantly higher as well. 2021 S&P 500 earnings are now expected to be above 2019 levels according to Zacks. The transport index is breaking out with the S&P 500. Small caps continue to take the lead as the small cap Russell 2000 has moved over 6% above the prior all-time high. The ten-year yield moderated a bit last week and closed today at .906%. However, the trend on the yield curve is still towards steepening for now. The VIX volatility index is finally starting to move below 25 which is a good sign. However, the 20 level has been a firm support this year. We continue to expect some bouts of higher 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 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 – TSLA
Optional Protective Stop-loss Point: $328.69 (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 – OMF
Optional Protective Stop-loss Point: $29.96
Stock #3 – AIMC
Optional Protective Stop-loss Point: $39.49
It was a so-so week for the strategy until we received the Tesla news after hours where they are now going to be included in the S&P 500 index. The stock is up nearly 13% after hours and trending north. This delivered a nice week for the strategy with some of the best weeks of the year historically for the market just ahead of us to cap off a great year for the strategy thusfar.
Brian C Neall
Founder – Investtobefree.com