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RoboStreet – August 2, 2018
Tech Wreck Short Lived as Apple Reaches $1 Trillion Valuation
It was only a week ago that the Nasdaq set a new all-time high of 7,933 fueled by high earnings expectations for FAANG stocks and other leading high-profile tech companies. As it would be, a few big disappointments from the likes of Facebook, Twitter, Intel, PayPal Holdings and others, the Nasdaq shed over 300 points in the span of just three days. The bleeding stopped after strong earnings from Apple put a floor under the market that is seeing renewed optimism after Apple traded to a $1 trillion-dollar market capitalization today.
The strength in Apple has spilled over into other big-cap tech stocks that were summarily hit with last week’s tech sector sell-off. Our recent purchase of Salesforce.com (CRM) for the RoboInvestor Portfolio saw its shares dip briefly, thereby providing investors an excellent opportunity to add this blue-chip software leader that sports annual top line growth of 20% and annual earnings per share growth of 30%. Our Stock Forecast Toolbox shows a strong upward trajectory for shares of CRM with $170 as a high-end price target.
While trade war rhetoric heating up as President Trump has threatened to raise the tariffs on $200 billion of Chinese imports to 25% from 10%, the market is doing a good job of digesting the dialogue. In fact, the U.S. stock market trades with an undertone of confidence that a full-blown trade war will not break out as threatened. Conversely, China’s Shanghai Composite Index tanked by 2.0% last night, taking its key market average back down to test its 52-week low.
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.
Clearly, investor sentiment in China is considerably more worried about the implications of tariffs on their export-driven economy at a time when leaders in Beijing are challenged to keep GDP on its current 6.5% growth rate. From the way that market is trading, it would not surprise most global market analysts that China was cuffing their data to where the actual number is well below that government’s official GDP data.
China’s total debt, now exceeding 250% of GDP, dwarfs the U.S. debt at about 100% of our GDP. Any downturn in growth could precipitate a debt crisis. So, the country has every incentive to lie. According to U.S. Census estimates, China’s population is set to begin shrinking as soon as 2026, dragging economic growth rates down. So maybe the 21st century won’t be dubbed the “China Century” after all. In any event, ‘fake news’ is nothing new to the Chinese government and it will be interesting to see how long China will keep its poker face on over trade at the expense of ‘saving face’ publicly and tanking their economy.
Being in the front end of August, volatility has already spiked as headlines have more impact on stock prices due to fewer market participants available to absorb heavy bouts of selling in stocks failing to meet earnings expectations. Shares of market darling Wynn Resorts were slammed after a big earnings miss, as were all the casino stocks that have exposure to Asian gaming mecca Macau. On the flip side, the short sellers were crushed when Tesla reported better-than-forecast results as the stock spiked over 40 points on the news.
So, it goes without saying that if the first few days of August are any indication of what lies ahead for the month, investors should put the power of AI to work with each and every trade they intend to dedicate capital to. It’s a minefield for a wide array of once coveted stocks that seemed bear-proof, only to see the bottom fall out without any notice. The fundamentals of any market sector can change on a dime and the analyst community loathes to admit when they are wrong, but the charts don’t lie and this is why having an algorithmic platform based on AI can guide us through the noise, fake news and technical pitfalls that can beset any stock position.
Remember Thor Industries (THO), the leading manufacturer of motorhomes and owner of Airstream trailers? The CEO gave a glowing outlook on CNBC about the bullish macro trend for the domestic RV business. The baby boomer buying binge to purchase an RV and see the country had stock analysts targeting the stock to trade over $200 when it was trading at $160 back in January. Today, it trades at $90. That’s a -44% hit in what was considered a can’t miss investment theme.
What is interesting is that our Tradespoon Seasonal Chart has been telegraphing investors to avoid the stock all the way down, but if it gets down to the $83 level, might provide for a good entry point. So, for those that didn’t get caught up in the emotional hype of the RV craze, they avoided losing half their money and will be able to buy the stock at a reasonable value where real money can be made. Now that’s how managing risk should be practiced and without the right tools, it’s just guesswork that rules the day.
There is no guesswork in how I’ve built the RoboInvestor Portfolio. With current holdings of JPMorgan, Visa, and Salesforce.com among others, the chance of seeing a stock fall out of bed is slim thanks to the 24/7 always learning AI platform I designed that makes the right call over 85% of the time. My AI platform not only serves as a gold metal detector that locates the best stocks to get long, it also serves as a minesweeper that keeps investors from buying into potential bombshells. Put RoboInvestor to work for your portfolio today and remove the volatility coefficient while adding the power of AI to elevate and enhance your investment experience.
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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