October 28, 2019
Near-term Market Forecast: The market environment is neither favorable or unfavorable for appreciation of these stocks in the weeks ahead.
The first busy week of earnings is now behind us and results were good enough to allow large cap indices to reach new highs. The large cap S&P 500 closed above the prior high while the small cap Russell 2000 continues to be in the correction its been in for over a year as small cap earnings are expected to be down a lot this quarter. Volatility continues to be subdued although that could change at any time as we head through earnings and get the Fed rate decision on Wednesday. Earnings have been mixed again so far where large cap earnings are flattish while smaller cap earnings are in the tank with near 20% declines on average. The ten-year yield continues to gain a little traction but below the September high of 1.9% as both the 3 month and 2 year/10 year yield curves are positive. The strategy is calling for holding positions in the 3 stocks below until the next update:
This Weeks Stocks:
This week we have 3 new stocks. So, to follow the system, you would sell PFSI, KBH and LULU and use the proceeds to purchase ROKU, VRTX and BLDR. If you are just starting, you would buy an equal dollar amount 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 – ROKU
Optional Protective Stop-loss Point: $114.78 (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 – VRTX
Optional Protective Stop-loss Point: $163.70
Stock #3 – BLDR
Optional Protective Stop-loss Point: $18.30
After several good weeks, the strategy under-performed last week as housing-related stocks pulled back after some underwhelming mortgage data last week was released. Its still been a good October so far overall, however.
Generally, between now and May is a very good stretch for the market and this strategy versus other times of the year. Although some years we see a good amount of volatility such as last year.
Brian C Neall
Founder – Investtobefree.com