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RoboStreet – April 16, 2020
Market Moves Forward in Thick Fog
News of more extensions of COVID-19 shutdowns in London, New York and a spike in new cases in Italy has the market back on the defensive at mid-week. Investors were fully expecting dismal weekly jobless claims and industrial production data, but the opaqueness of the coronavirus situation is like driving 60 mph down a freeway in thick fog where the risk of being rear-ended or slamming into a car in front is high.
Money has gravitated aggressively in the mega-techs Apple Inc. (AAPL), Amazon.com (AMZN), Microsoft Inc. (MSFT), Adobe Systems (ADBE), Alphabet Inc. (GOOGL) and a host of semiconductor stocks following strong earnings out of Taiwan Semiconductor (TSM). Coronavirus stocks like Clorox Co. (CLX), Walmart Inc. (WMT), Costco Wholesale (COST), Zoom Video Communications (ZM) and Teladoc Health Inc. (TDOC) as well as a litany of health care stocks have led the rally.
“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.
Markets are overbought and can potentially sell off 10-15% in the next 2-10 days. I would not chase the markets at these levels. A 50% retracement using SPY is between $220 and $280. A $250 price level would be a better entry price. SPY shows the average price for May $264 and July $287. My model confirms “U” shape recovery.
I expect the market volatility and the three percent daily market moves to persist. At this point, I do believe we have set the bottom (market can overshoot support and resistance levels especially when VIX is high). I believe the worst part of the sell-off is behind us. Please monitor VIX level as current levels are above the historical average. As long as VIX at $40-70 level market can approach the recent lows. My strategy is to aggressively buy any market sell-offs (10-15%).
The market (SPY) will trade in the range between $240 and $285 levels for the next 4 weeks. I believe the market will recover back to $290 level sometime during summer as the spread of the virus will slow down in Europe and the rest of the world. Please follow key support levels on TLT ($142), GLD ($145). As long as these support levels are intact, the market is prone to pullbacks.
The current market landscape is volatile and investors will have many opportunities to make money on extreme price swings. This past week, for the RoboInvestor Portfolio, we booked nice profits in Home Depot (HD), Coca Cola (KO) and the QQQs. We are also getting strong upside movement in our longs in BlackRock Inc. (BLK) and Johnson & Johnson (JNJ) after both companies beat earnings forecasts. And our recent addition of Clorox Co. (CLX) is powering higher as a pure-play on COVID-19.
A lot of investor focus is being placed on the healthcare sector and for good reason. As the jury is out as to whether the domestic economy is going to endure a protracted recession that extends beyond two quarters, there is little debate about the ability to lead healthcare stocks to weather an extended economic downturn. It’s become more of a safe haven trade – more so than utilities and consumer staples.
When I’m looking for a new position in and around earnings season, I like to do so after a company has reported its quarterly results. Stocks can react wildly to their posted numbers and guidance, so I tend to wait, check how the stock trades against the news and then buy or sit tight.
This week, our long in Johnson & Johnson JNJ) was well rewarded after the company posted a stellar quarter and raised its dividend. The stock made a strong move up on the headline and now trades within 5% of its all-time high. More compelling is how my AI platform is registering a high level of confidence for the stock to add to its gains.
My Stock Forecast Toolbox shows the stock has a clear path to $165 even in a herky-jerky market landscape as the present. Its current Model Grade “B” rating leaves room for a further upgrade and is one of only two healthcare stocks in the Dow, UnitedHealth Group (UNH) being the other – which also posted strong Q1 numbers.
It’s exactly this kind of relative strength investors should seek out for two reasons. First, if the market does get sideswiped by a black swan event like coronavirus, stocks with powerful internals that have a high reading from my AI platform will rally back to their highs the quickest. Secondly, if the market rights itself and the bull trend resumes in good order, stocks like JNJ will lead and trade sharply higher in fresh breakouts.
To put the power of my custom-tailored algorithms to work in your portfolio, just take a minute and become a member of RoboInvestor today. Our subscribers are on the receiving end of an 87.3% Winning Trade Percentage roll that goes back to April 2018 that includes two severe market corrections of 20% and 35%. The RoboInvestor investing platform has been stress-tested and proven to be highly successful for capital preservation while delivering strong performance for the past two years.
Take us up on our offer and put the Tradespoon team to work at building your new worth from the most cutting-edge technology available to investors today. I look forward to welcoming you aboard at a time when RoboInvestor provides a great deal of certainty and confidence against a market landscape full of unknowns.
“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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