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RoboStreet – February 18, 2021
The Pause That Refreshes
Higher than forecasted inflation data and solidly higher-than-expected January retail sales lifted Treasury yields on the long end of the curve to multi-month highs, raising concerns of an increasing rate of inflation that could risk the Fed having to taper QE.
This week’s FOMC policy statement by Fed Chairman Jerome Powell reassured that they are highly cognizant of inflation risks, but see the greater need to maintain the $120 billion monthly bond and mortgage purchases in order to restore economic growth and bolster labor markets.
Earnings season is winding down and has proven to be very upbeat and broadly better than Wall Street had forecast. Companies have become much more efficient during the pandemic and profits are soaring on lower revenue growth. This is historically the case with any period where there is major economic disruption.
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.
The SPY continues to trade in the narrow range. Banks (XLF), and Energy (XLE) continue to lead the market. Growth stocks sold off this week. AAPL crossed below its 50-day moving average. Short-term, the SPY range remains between $370 and $395. The DXY rebounded today and a stronger dollar will pose a challenge for value stocks short term. TLT remains in the downward momentum as the yield curve steepens.
The question on everyone’s mind is still: Is this the beginning of the next leg up in the market or is this a short-term bounce followed by another retest of the recent lows (ABC pattern). At this point, I would not chase the market due to the risk vs the reward.
The key support is now at $370-$375 and I expect the SPY to retest these levels in the next 1-2 weeks. The $388 level is key support for the SPY short-term.
The bottoming process has started and the worse part of the sell-off is now behind us. Market will finish the bottoming process by end of February and will resume bullish momentum in early March. I would be a buyer using any short-term corrections and use a dollar-cost averaging strategy to accumulate positions.
Assuming the reflation trade picks up speed, investors will continue to pursue buying and accumulating the Materials Select Sector SPDR ETF (XLB) that is not only seeing its component companies seeing strong pricing power of their products but will be a huge beneficiary of any future infrastructure deal that might be forthcoming.
Below is a table of the top ten holdings for XLB that include producers of copper, steel, industrial gases, chemicals, paint, coatings, and agricultural seed. This grouping accounts for just over 66% of total assets and is a good way to play the sector as a broad proxy for the sector as a whole.
From the 2-year chart below, shares of XLB powered to new highs back in January before retreating on some well-deserved profit taking. After briefly trading below the 50-day average, XLB has retaken this trendline and looks poised to reassert its upside bias in the weeks ahead. I’m looking at XLB as a viable candidate to be added to our RoboInvestor portfolio as my AI indicators determine.
Within the materials sector, three stocks jump out that on an individual basis have excellent upside potential. Namely LyondellBasell Industries N.V. (LYB), Vulcan Materials Company (VMC), and Nucor Corp. (NUE). Here, we have leading companies within chemicals, aggregates, and steel.
Let’s isolate one of the three that shows up strongly on my AI platform. Shares of Vulcan Materials Company (VMC) are currently trading around $160 and carry a Model Grade “A” rating that implies a move higher over the near and intermediate-term.
With a 10-day price resistance target of $181.44, that implies a potential gain of 13.4%, which is huge in market where a great many stocks are over-extended. This is when the power of AI is so valuable, spotting great trades where investors aren’t waiting around for the stock to eventually move. Our tools provide short-term forecasting as well as intermediate-term forecasting.
In fact, our AI models are so good at predicting future price action that our customized RoboInvestor advisory service has a Winning Trades Percentage of 91%. That’s not a typo – 91% of the time we recommend a trade – it produces a profit. To my knowledge, there is no other service available to retail investors that can put up performance numbers that come close. What’s important to note is that we launched RoboInvestor back in early 2018, so we’ve been investing for three years exactly as of this week. We’re not on someone- or two-month hot streak, we’re on a 3-year hot streak and building on the fourth year of consistent gains and wealth creation for our members.
As my proprietary algorithms crunch the numbers for each and every recommendation, we’re looking for stocks and ETFs that will provide for a sustained move higher in the weeks and months ahead. My AI system filters out only blue-chip stocks and the most liquid and institutionally favored ETFs that represent indexes, market sectors, interest rates, currencies, commodities, precious metals, and volatility.
We also have the option of using inverse ETFs for bearish strategies that we find compelling per our data that is being crunched 24/7/365. Our AI platform is always thinking and always learning as our Winning Trades Percentage continues to improve on a gradual basis. How much more can it improve? Time will tell.
Getting it right 91% of the time capital is put to risk is already phenomenal, but I’m excited to see how close to 100% we can get! My personal money is participating in every trade recommended and if this kind of consistent wealth creation is as exciting to you as it is to me, then come aboard as a new member of RoboInvestor and let me be the first to send you an email welcoming you to our community. We email out a newsletter every other week with two new recommendations. At any given time, we will email out alerts as to when to sell half of a position or sell the entire position. We’ve had tremendous success with this buy/sell discipline. Make a bullish decision today to have RoboInvestor and the power of AI help pave the way to a rewarding 2021 and beyond. We do ALL the work and you simply need to follow my lead and count the profits week after week.
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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