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RoboStreet – March 25, 2021
Market Searching For Next Catalyst
The checks are in the mail. The Fed and Treasury have spoken. The President gave his first press conference. Big tech has been grilled on Capitol Hill and the bond market is holding steady following three Treasury auctions amounting to $183 billion. As these events transpired, growth stocks led by technology swooned to retest the lows of a couple of weeks ago, even as bond prices rallied.
There is more focus on investors trying to buy value and cyclical stocks on pullbacks as evidenced by good relative strength in the industrials, materials, and financial sectors. A selloff in crude prices has not really adversely affected the energy stocks, signaling that investors are also using dips to up their energy exposure.
The week ahead will likely be choppy and defined by end-of-the-quarter portfolio window dressing where a continuation of rotation into value will likely occur. With that said, there are many leading big cap tech stocks with reasonable P/E ratios that are trading at attractive discounts to their previous highs.
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.
From a purely technical viewpoint, The SPY sold off and retested last week’s lows at the $387 level. Reflationary stocks able to close in the green and the growth stocks retested March lows. Short-term, the SPY range remains between $387 and $400. The SPY is close to the end of the sell-off and can incrementally trade below the $387 level this week. The growth stocks close to the bottom and should rebound in the next few sessions.
DXY is losing its momentum. The TLT continues to rebound. The bottoming process is almost done and the worse part of the sell-off is now behind us. The market will finish the bottoming process in the next two weeks and will resume bullish momentum by the end of March-early April.
I would be a buyer using any short-term corrections and use a dollar-cost averaging strategy to accumulate positions. If you are trading options consider selling premium with May and June expiration dates. Based on our models, the market (SPY) will trade in the range between $380 and $400 for the next 2 weeks.
As noted, the energy sector is demonstrating good relative strength, and a recent report put out by Goldman Sachs making a base case for $80/bbl oil has stirred the conversation about the prospects of such a move. Even at $50-$60/bbl for WTI, most energy stocks will continue to power higher.
Shares of the Energy Select Sector ETF (XLE) rallied to a post-pandemic high of $54.90 before some well-deserved back-and-filling brought the shares down to their current price of $49. XLE holds a classic basket of blue-chip stocks where the top ten holdings make up just over 78% of total assets.
When applying our artificial intelligence platform to XLE, we get a very bullish readout of “Higher” probability ratings for the next 20, 30, 40 and 50-day periods from the Seasonal Chart. This set of indicators is a real bell ringer of us where we will recommend buying this asset for members of our RoboInvestor advisory service.
We might also be just as inclined to recommend buying the SPDR S&P Oil & Gas Exploration and Production ETF (XOP), which carries another set of blue-chip leading stocks that are widely held. The top ten holdings in XOP are the most notable stocks in this sub-sector and account for over 42% of total assets.
Our Seasonal Chart once again shows a broadly bullish “Higher” probability rating for XOP where we could buy this ETF for the RoboInvestor Portfolio in lieu of XLE. It just depends on the day our indicators give us the green light to take action at a given price.
On a single stock recommendation that has been hitting up on our AI screens, shares of Haliburton Co. (HAL) have been a trading vehicle for us within our action services, with the latest pullback setting up the stock nicely for a good fit for our directional trades in RoboInvestor where we look to own each position from two weeks and beyond.
Once again, applying an AI overlay, we get across-the-board ratings for HAL and look to invest when our indicators trigger us to do so. Having an agnostic AI platform takes out the emotions and much of the guesswork that investors struggle with and gives our RoboInvestor members and serious edge in generating wealth.
When I speak of generating wealth, I couldn’t be more serious. Our Winning Trades Percentage is a stunning 91.39% going back three years. To my knowledge, there isn’t a competing advisory service in the market with a track record that is even close.
I invest my personal capital into every trade. I walk the walk on this mutual journey to growing our portfolios and net worth with a multi-year mission to maximize all that this bull market can produce. If the market struggles, we just use inverse ETFs to capture downside gains.
Our RoboInvestor strategy is unrestricted, meaning we can deploy stocks and ETFs in market sectors, indexes, currencies, interest rates, commodities, precious metals, and volatility. We’re making money for our subscribers in all markets and this is what truly differentiates RoboInvestor from our competition. Put the power of AI to work for your portfolio today and let me be the first to welcome you to our RoboInvestor community!
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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