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RoboStreet – July 8, 2021
Stock Rally Takes A Breather
News out of Washington that the Biden administration wants to increase regulation in the transportation industry as well as further laying out the tax proposals that will materially increase corporate taxes has the market retreating from record highs for a second straight day. The Delta variant threat is also weighing heavily on the travel and cyclical sectors, implying a slower than forecast global growth recovery.
The market was looking for one or more reasons to book profits and it is playing out that way this week. Bond yields have plunged on these new-found fears with the 10-year Treasury yield down to 1.28%, which in my view is completely overblown relative to the revised GDP estimates for the U.S., but it just illustrates how quickly the market is to judge the strength of the reflation trade.
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 $SPY continued to trade between $430 and $435 levels. The Mega Cap Technology stocks continue to harbor a lot of interest. The Small-Cap, the High Beta, and the Biotechnology stocks sold off the most this week. The reflationary stocks (energy, banks, materials, commodities, industrials) began to show signs of rebounding.
The $DXY has broken above $90.60 resistance and has confirmed its break out. The next level of resistance at $93. The $TLT continued to trade higher and the next level of overhead resistance is at $148.
Based on the steep correction in the reflationary stocks, strong dollar, and overbought technology stocks, the market is due for a correction in July. The $SPY short-term support level is at $430, followed by $425. The SPY overhead resistance is at $435.
The earnings season continues with (JPM) scheduled to announce their earnings in the next two weeks. I would consider rebalancing the portfolio at this point to be more market-neutral.
The second wave of the sell will continue for the next 2-4 weeks. Market corrections are never a one–way trade. Based on our models, the $SPY can pull back 5-10% from the all–time highs in the next 2-4 weeks.
Based on our models, the market (SPY) will trade in the range between $405 and $435 for the next 2-4 weeks.
Within this market landscape, both the financial and energy sectors have endured a healthy and constructive pull back to where I’m looking at adding a couple of positions to our RoboInvestor advisory service. Our AI-driven models discern the best entry and exit points for our recommendations.
When looking at the money center and investment banks, Morgan Stanley (MS) shows up very well on our AI platform. When we apply our Forecast Toolbox to the stock, we get an “A” Model Grade rating with a 6-month price target of $120, implying a gain of better than 37%.
When we examine the energy sector and how well it has performed year-to-date, the name that is most attractive to us is ExxonMobil Corp. (XOM). As one of the two biggest integrated energy companies in the U.S. with high exposure to the production of natural gas, refined fuels, and a dividend yield of 5.8%, the stock is getting our full attention. Shares of XOM hit a recent high of $64.92 and pulled back to $60 this week.
Applying another of our AI tools, the Seasonal Chart, we get a very bullish reading “Higher” probability upside momentum for the next 20, 30, and 50-day periods. Again, we depend heavily on these AI tools in our decision-making process to add new positions to the RoboInvestor model portfolio.
Within RoboInvestor, our AI platform will identify trades in blue-chip stocks and ETFs that represent all 11 major S&P sectors, and a vast number of market sub-sectors like semiconductors, bond yields, commodities, precious metals, currencies, indexes, and inverse ETFs to take advantage of downside opportunities. AI affords us a wide-open screening process that determines where the best risk/reward opportunities lie that warrant action.
We take great pride in how our AI modeling has performed for RoboInvestor members for the past three and a half years. Our Winning Trades Percentage is 91.53%, which stands out, creating wealth on a highly consistent basis year after year.
Case in point, our AI indicators flashed a sell signal to book profits in Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN) right into the teeth of the Nasdaq rally before Thursday’s sell-off. We’ll be back in these two stalwart names for sure in the future, but the mega-cap tech sector was extended and we rode two of the best names higher for excellent gains to pad our total return and our nest eggs.
We publish an email newsletter every other week that is delivered over the weekend with two new recommendations so investors can take action on Monday morning. We typically maintain a portfolio of 15-25 stocks and ETFs in a dynamic strategy that is predicated on our AI models.
Take full control of your portfolio as the market landscape is now getting more challenging with the many different forces at work. Putting the power of AI to work to manage the stock market is a big step in the right direction when it comes to reducing risk and uncertainty. Our AI platform is always thinking, always learning, and always crunching data so we can make smart and decisive investing decisions. Make RoboInvsestor your smartest trade of 2021 and join today!
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.
*Please note: RoboStreet is part of your free subscription service. It is not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services. If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.
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