November 9, 2020
Near-term Market Forecast: The market environment is neither favorable or unfavorable for appreciation of these stocks in the weeks ahead.
Concerns of a blue wave turned into a red trickle with a likely split government and perhaps no tax increases or major regulation increases over the next couple years. Much of the election uncertainty was lifted as the Nasdaq and S&P 500 quickly tested and moved briefly above the highs today on news of a much more effective vaccine than what was anticipated. This delivered a sudden swing from the stay-at-home trade to the opening trade and banks at the open today. A big event and point of inflection. Meanwhile, the jobs report and unemployment rate in October was much better than expected as well. The news today drove the ten-year treasury yield above the range its been in since April. Its likely now that the pandemic will be over significantly sooner than what was thought. Although the major indices moved into new highs today, they closed well below them so we could be looking at a pullback from here. The NYSE advance/decline line is challenging the highs again. The transport index moved higher before rejecting the highs as well later today. We continue to expect 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 2 new stocks. So, to follow the system, you would sell OMI and CROX and use the proceeds to buy equal dollar amounts of OMF and AIMC. 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
A much better-than-expected vaccine announcement tanked the pandemic-related medical supply stocks including OMI. CROX got off to a good start but, again, a better-than-expected vaccine hit the stock today after a strong start last week. TSLA was up over 5% and held up well today as most Nasdaq stocks sold off. A disappointing few weeks of underperformance which often occurs ahead of a market pullback. Still, its been another great year for the strategy overall.
Brian C Neall
Founder – Investtobefree.com