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RoboStreet – December 10, 2020
Year-End Push Higher For Stocks Looks Good
Following eleven straight up days for the Nasdaq and a massive IPO offering for DoorDash Inc. (DASH) capped the near-term move higher for the market and prompted some profit taking in the tech sector. JPMorgan also downgraded several “cloud kings” on valuation that also hit the sector.
But true to form, you can’t keep a good sector down and Thursday’s session saw bargain hunters busy in the tech sector snapping up shares of leading stocks on this brief but sharp pull back. It really does reflect how resilient this market is and how much cash at year end is being committed to stocks based on a rosy 2021 outlook.
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.
As to market technical, both Technology (QQQ) and Value (VTV) stocks are facing major overhead resistance levels. The market is due for a shallow pullback back to $355 level in the next 1-2 weeks.
The $350 level is a key support for the bulls. I expect short term corrections to be shallow and the bull’s rally to continue. The market gains have been selective and bullish momentum is deteriorating.
As long as the SPY is trading above $350 level, the SPY will break out from the current range to the upside and potentially can reach $370-$385 level by the end of this year. The U.S. Dollar ($DXY) is trading at two-year low and U.S. Treasuries (TLT) continued to trade in the downward channel. GLD and SLV have started its bottoming process.
My opinion has not changed. The bull market has resumed its rally and will retest recent highs in December. I would be a buyer using any short-term corrections, and use dollar cost averaging strategy to accumulate positions at this level.
The great rotation out of defensive sectors and into those that are most leveraged to an economic upturn continues. Steady fund flows into the industrial sector are most impressive and a weak dollar will only boost earnings from those doing a lot of business internationally.
Shares of the Industrial Select Sector SPDR ETF (XLI) hit a fresh new all-time higher earlier this month and have been consolidating the gains and setting up nicely for a year-end move higher.
The top holdings make up 41% of total assets and are the who’s who of the industrial sector that should all perform well going into 2021 – especially if an infrastructure bill gets introduced in Congress. These stocks will roar higher.
Within the top holdings of XLI my AI models are giving high ranking heavy equipment maker Caterpillar Inc. (CAT). CAT is a member of the Dow Jones average and a big beneficiary of the weaker dollar with more than 60% of sales being overseas.
The company is looking for revenue to rebound in 2021 by 9.7% to $45.5 billion and earnings to soar by 36% from $5.45 this year to $7.50 per share next year.
The stock has only given back about 5 points off its 52-week high as optimism for an infrastructure deal builds into year-end. Our AI-driven Stock Forecast Toolbox is also high on the stock, with an “A” Model Grade reading with first upside resistance at $189.
Working with blue-chip stocks and ETFs like CAT and XLI are how we manage our wildly successful RoboInvestor advisory service. Since inception back in April 2028, our Winning Traders Percentage is running at a torrid 90.32%. Risk capital put into our trades is making money 9 out of every 10 trades.
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Take us up on putting RoboInvestor to work for your portfolio today. I promise you’ll be impressed right from the get go. Our track record is stellar and we only trade in the highest quality and most liquid assets. Make the holiday season a truly profitable one and join our family of RoboInvestor investors that have been booking gains all throughout 2020 and look forward to an even more profitable 2021.
“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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