September 28, 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 a confirmed downtrend resistance over the past couple days. The Nasdaq has closed back above the 50 day moving average but has generated a hangman candle as well. We could be headed into a choppy October where a market bottom may remain elusive. Last week the S&P 500 entered into correction territory before rebounding over the past few days on renewed hope for a 2nd pandemic relief bill. So far, the volume has been weak on this rebound. The NYSE advance/decline continues to make lower highs and lows. However, transports continue to look strong here as the transport index is in a narrow range just below the highs. The ten-year treasury yield continues to move sideways and closed today near .66% and the yield curve continues to be positive at just over .5. 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 LRCX, CTLT and BJ and use the proceeds to buy equal dollar amounts of AMZN, PFSI and EBS. 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 – AMZN
Optional Protective Stop-loss Point: $2469.89 (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 – PFSI
Optional Protective Stop-loss Point: $46.89
Stock #3 – EBS
Optional Protective Stop-loss Point: $82.40
A TSLA tweet after hours last Monday triggered a gap lower but the other 2 stocks gapped a bit higher to help offset some of that. Last week LRCX led the way with a near 7.5% gain while the other 2 stocks were down 1% to 2%. Overall, it was another up week where the strategy about matched the overall market. Early October is often volatile and election polls will surely be affecting the market in the weeks ahead. Sometimes you see a rally later in October into an election but the track record is really mixed with plenty of potential volatility in the weeks ahead.
Brian C Neall
Founder – Investtobefree.com