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RoboStreet – September 10, 2020
Market Enters The Wash Cycle
It’s September and historically a tough month to make money in the market consistently as volatility rises amidst seasonality and a void before third-quarter earnings season tends to keep the market adrift without a rudder. This year seems no different even though the elections are less than two months away, tensions with China are high, Congress is stalemated on further pandemic stimulus and a vaccine is still not here.
However, the most powerful market force, a dovish Fed, still has the back of the bulls and has issued its directive to keep up QE efforts to further boost employment, push inflation higher and provide a perma-bid to the corporate bond market. As long as the Fed is “all in” with their powers to provide unlimited liquidity, the primary uptrend will remain in place through year-end, albeit not without more fits of selling pressure.
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.
And selling pressure comes fast and furious. The Nasdaq witnessed its fastest 11% correction on record, lasting all of three days. The market (QQQ, SPY) was able to rebound from the 50-day moving average. The market was oversold and was due for a quick rebound.
The TLT (bonds) and the DXY (dollar) continue to trade in a range and do not show any signs of the market reversal. The market dynamics support the reflationary trade where the value stocks will outperform the growth stocks. The value stocks will continue to outperform technology stocks and should provide SPY with short term support at $330-$340. Short–term, the SPY overhead resistance is at $342 and will retest the $330 level probably next week if bulls are unable to push the SPY above $342 level.
The SPY new top is now set at $360 and potentially can be retested again only at the end of September or early October. I would be a buyer using any short–term corrections and use a dollar-cost average to accumulate positions at this level. Based on our models, the market (SPY) will trade in the range between $330 and $360 for the next 4 weeks.
When looking at where the market is finding its internal strength, there are several areas where strong fund flows rotation is feeding sector upside – specifically the homebuilding sector where most of the leading stocks are charging higher on very robust new home sales, existing home sales, remodeling sales and refinancing activity.
The SPDR Homebuilders ETF (XLB) is the most widely-traded ETF in the space and traded to a new all-time high just prior to the recent 7% sell-off for the S&P. What’s interesting is that it has composite deck supplier TrexCo Inc. (TREX) and building products supplier Masco Corp. (MAS) as the top two holdings, along with other suppliers showing strong relative strength.
As to the pure homebuilder plays, my AI platform is bullish on D.R. Horton Inc. (DHI) as the go-to name. The Seasonal Chart is giving us three out of four “Higher” probability readings for the next 20, 30, and 40-day periods. This kind of positive outlook makes for a great addition to our RoboInvetor Portfolio when my indicators signal to pull buy.
Our RoboInvestor advisory service is an unrestricted investing model that can buy everything from equities, ETFs, commodities, currencies, volatility, interest rates, whatever our AI-driven algorithms direct our attention to. There’s always a high-probability investment somewhere in the market and having powerful AI tools to filter out the best risk/reward trades is what RoboInvestor is all about – hence the name.
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In recent weeks, we’ve booked some fantastic profits in several well-known stocks and ETFs, the most profitable trade being in Workday, Inc. (WDAY) where we booked a +29.16% gain in about nine weeks!
With market volatility picking and sector rotation rapidly changing week-to-week, being out in front of these sudden changes in how best to trade and invest in the current market landscape. Make RoboInvestor you guide to delivering a smooth ride and consistent profits. Join today and put my market-tested tools to the task of generating a stream of profits that pads your portfolio for the balance of 2020 and beyond!
“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.
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