October 26, 2020
Near-term Market Forecast: The market environment is neither favorable or unfavorable for appreciation of these stocks in the weeks ahead.
The market indices slipped another 1% to 2% led by the Nasdaq ahead of the election. Small caps continue to perform a little better as the Russell 2000 was only down slightly. The ten-year treasury yield moved higher early last week before weakening back to .801% today on news of no stimulus deal for now. The NYSE advance/decline line is holding up pretty well but the the VIX volatility index is in a large rounding bottom pattern with a sharp move higher today. The transport index has pulled back to the 50 day moving average as the S&P 500 and Nasdaq test the 50 day moving average. 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 MELI and SQ and use the proceeds to buy equal dollar amounts of TSLA and OMI. 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 – OMI
Optional Protective Stop-loss Point: $19.79
Stock #3 – RCII
Optional Protective Stop-loss Point: $27.69
Another disappointing week with all 3 stocks down a few percent or more led by SQ which was down about 9%. One of the worst 2 week periods in some time versus the overall market as we run into a demand air pocket ahead of the election and about a 5% drop in the Nasdaq. Often, the market will rally into an incumbent presidential election but not always. Either way, you never know when the strategy will go on its next run after a pullback as can be seen on the performance chart over the last 8+ years.
Brian C Neall
Founder – Investtobefree.com