September 21, 2020
Near-term Market Forecast: The market environment is modestly unfavorable for appreciation of these stocks in the weeks ahead.
Both the Nasdaq and S&P 500 broke the prior swing low with strong volume on Friday. However the Nasdaq closed above that prior low Friday and today on news that the UK is considering a new shutdown due to a spike in cases. The S&P 500 came within a whisker of a 10% decline from the recent all-time high this morning. The small cap Russell 2000 broke a prior swing low as well and is holding up about as well as the S&P 500. The VIX volatility index increased over the past week but not as much as we would think given the sharp pullback in the market. The ten-year treasury yield is moving mostly sideways for now and closed today near .67%. The yield curve continues to be positive at just over .5. The NYSE advance/decline just generated a lower swing high and then lower low which confirms a trend lower while the transport index is still well above a sharply rising 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 3 new stocks. So, to follow the system, you would sell TSLA, COOP and PFSI and use the proceeds to buy equal dollar amounts of LRCX, CTLT and BJ. 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 – LRCX
Optional Protective Stop-loss Point: $249.74 (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 – CTLT
Optional Protective Stop-loss Point: $67.87
Stock #3 – BJ
Optional Protective Stop-loss Point: $39.34
At the close of trading today, TSLA was about flat for the week while COOP and PFSI were both down about 1%. The strategy easily beat the market again as the Nasdaq and S&P 500 lost about 2% to 3%. As can be seen on the long-term performance chart, the strategy usually pulls back about twice the overall market on average so its a good sign the strategy is beating by a wide margin overall and still near the highs. Another amazing year continues although we can expect plenty of pre-election volatility in the weeks ahead with possible shutdowns again in areas around the world. As we were saying last week, the market often rallies later in October into a Presidential election. However, you never know for sure when the strategy will go on its next strong run or pullback. As always, its important to be consistent to have a shot at the biggest gains over the long-term.
Brian C Neall
Founder – Investtobefree.com