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RoboStreet – September 23, 2021
Swift Correction May Be Over
It’s still early, but the rolling correction of the past three weeks may have culminated with this Monday’s steep selloff that saw the SPY trade down to $428. The subsequent rally into the FOMC meeting reassured investors that the bull market is resilient, even when faced with multiple headwinds.
Fed Chairman Jay Powell did not give much mention to the Evergrande debacle in China, preferring to couch his tapering and dot plot language carefully so as to not undermine the newfound bullish tone. The policy statement was clearly dovish in light of the recent data showing very mixed economic growth as well as some signs of slowing in key areas.
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.
The Fed took the proper “wait and see” approach about whether momentum in the job market will be sustained and get a better idea of how Congressional stimulus and tax policy will take shape in the weeks ahead. This is the kind of posture the market can embrace until the third-quarter earnings season enters the fray in mid-October.
The technical picture needs more confirmation for the bulls to fully claim victory over the recent consolidation. The $SPY closed right below the 50-day moving average, $438, and near August’s low. The value/reflationary stocks rallied after the FOMC decision, up 1%, and settled at the lower Bollinger band. Technology stocks closed higher, 1% right at the 50-day moving average.
The $DXY is short-term overbought and testing multi-month resistance at $93.5. The $TLT is short-term overbought and also testing multi-month resistance at $152.
Volatility pulled back to 21 (VIX was at 29) and SPY short-term overbought after today’s bounce. The $SPY short-term support level is at $428, followed by $420. The SPY overhead resistance is at $438 and then $442. I expect the bottoming process to continue in the next few sessions. The FOMC meeting this week and unemployment numbers next week will dictate the magnitude of the correction. I would be a buyer of value stocks on pullbacks and sell technology stocks on rallies.
The earnings season continues with (ACN, SFIX, MU) scheduled to announce their earnings next week. I would consider rebalancing portfolios at this time and have a more bullish portfolio. Based on our models, the market (SPY) will trade in the range between $420 and $455 for the next 2-4 weeks.
My models are predicting a pullback in the dollar, which in turn is bullish for energy and materials. As the Fed is playing the waiting game, the dollar had rallied into the FOMC meeting with the expectation that the policy statement would be more forthcoming about a hard taper for QE. When it didn’t materialize, it signaled a short-term top for the greenback and a green light to get long energy and materials.
Both sectors XLE (energy) and XLB (materials) have pulled back to their respective 200-day moving averages and are oversold, prompting very attractive long-side setup trades that we’ll be considering for our RoboInvestor advisory service. It just depends when our AI platform signals us to buy at just the right time when our model gives us confirmation.
But we are close to adding one or both trades and would encourage readers of this blog to join as RoboInvestor members because there is a lot of money to be made following the September correction and having the power of AI at work provides a tremendous investment advantage to harness for one’s portfolio performance.
The Energy Select Sector SPDR ETF (XLE) is an excellent way to play the relative strength in the energy sector. The top 10 holdings makeup just over 76% of total assets and provide and diversified way to reduce single stock risk while not compromising in performance.
Having my proprietary AI tools to define our entry and exit points is what is paramount to our phenomenal track record where our Winning Trades Percentage is a scintillating 91.87%. To my knowledge, I know of no other advisory service to the retail investor that can compete with this performance.
RoboInvestor members receive an email newsletter every two weeks, over the weekend with two new recommendations they can act on come Monday morning when the markets open. Our AI models are fairly unrestricted, meaning that we will advise buying blue-chip stocks and ETFs of market indexes, market sectors, sub-sectors, commodities, interest rates, currencies, precious metals, foreign markets, volatility, and shorting strategies via inverse ETFs. Wherever our AI models spot opportunities, we’re open to putting them to work.
We aim to maintain a blended portfolio of diversified assets that number 15 to 25 holdings at any given time. It’s been a winning formula for over three and a half years with our AI platform always learning more, thinking more, and delivering more for our subscribers. Become a RoboInvestor today and put the power of AI to work in your portfolio to create consistent and wealth-building returns.
And remember we’re not talking about day-trading here. I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.
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