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RoboStreet – August 6, 2020
Eternal Stimulus Versus Overbought Rally
Continued Fed intervention via QE forever and a massive pandemic stimulus package being worked out in Congress continue to provide the oxygen for a market this is showing signs of upside fatigue. Following a much better-than-expected second-quarter earnings season, the major averages have rallied strongly with the Nasdaq topping 11,000 for the first time and the S&P trading with just 2% of its all-time high of 3,393.
Market leadership has been rotating into value stocks including metals, mining, industrials, and energy this past week while technology and healthcare consolidate recent big gains. The SPY continued to make small incremental gains after Disney released its earnings. This week will be critical for the equity market as July unemployment numbers will be released.
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.
If the SPY can trade above $327 level next week, then the market will continue its march toward the 52-week high. If the SPY breaks below $319 level this week, the SPY will trade in the range between $300 and $323 for the next few months.
My opinion has not changed. The short-term bottom is at $300 and potentially can be retested most likely in August (put/call ratio is at the lowest point this year). SPY longer-term overhead resistance is at $340 and can be retested in the next 2-4 weeks.
At this point, I do not think the market will break $300 level. I would be a buyer in any short-term corrections but would not chase the stock market at these levels. My strategy is to buy 5-10% market corrections.
Earnings season has benefited a number of our holdings within the RoboInvestor Portfolio. Shares of Abbott Labs (ABT), CVS Health Corp. (CVS), Goldman Sachs Group (GS), and Rockwell Automation (ROK) all posted Q2 results that handily exceeded analyst estimates. And the stocks are responding accordingly.
The hunt for value in the current investing landscape has a number of stocks rearing up that are vying for investing capital. One such name is Deere & Co. (DE), a global leader in the manufacture of agriculture, construction, and forestry equipment. Momentum into what some call the “heavy metal” stocks is robust as forecasts for an earnings rebound into 2021 are on the rise.
The stock has broken out this past week to a new 52-week high, opening the way for an unrestricted move higher in the weeks ahead. After beating earnings estimates in the prior quarter, investors have been walking up shares of Deere in anticipation of another beat and raise when they report later this month.
Our Tradespoon Seasonal Chart, an AI-driven algorithm that I developed and continue to refine, displays a very bullish price forecast for the stock over the next 20, 30, and 40-day periods. This is a very strong read that puts the stock up for consideration for being added to our RoboInvestor Portfolio.
We only work with blue-chip stocks and the most favored ETFs traded by fund managers and institutions when crafting our model portfolio. When we take a full position in a stock or ETF, we typically sell half on the way up and keep half for more gains. I recommend two new trades every other week on Sunday night so members have some fresh strategies to work with for the week ahead.
And all asset classes are candidates for making money in RoboInvestor. I’ll work with commodity ETFs, currency ETFs, Volatility ETFs, precious metals ETFs among equity sector ETFs that mesh well with our individual stock picks. We’ll also consider inverse ETFs if and when my AI tools indicate that the primary uptrend shows signs of turning lower. At present, I’m a buyer of the dips. But there will come a time to sell rallies.
My point is that if you’re managing a portfolio with any level of seriousness, and don’t have an AI platform to filter out the noise, dissect the market’s internal plumbing on a daily basis and put forth a steady list of investible ideas, then join today and make RoboInvestor your go-to place for real-time analysis.
Our RoboInvestor AI tools are proven, scoring an 88.82% Winnings Trades Percentage that demonstrates consistent wealth creation. Take me up on my special offer to become a member of RoboInvestor and let’s make grow your net worth together.
“I’m investing my own money in each and every stock as my AI platform identifies.”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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