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RoboStreet – December 23, 201
Markets Looking Past Omicron
The investing landscape has vastly improved this week as news of the Omicron variant burning out in South Africa within 25 days has raised optimism that the pandemic is finally weakening. Some health experts are liking this third wave of Covid-19 as to the end of the Spanish flu when at the end of that pandemic it was highly contagious but not deadly. Let’s hope this is also the case as 2022 comes into view.
Investors also got some bullish headlines in the form of stellar earnings from Micron Technology Inc. (MU) and Nike Inc. (NKE) right when the market was trying to pivot away from worrying about the Fed, inflation, and Omicron. Strong earnings are like the old saying of “sales fixes everything.” For stocks, bullish earnings almost always put the fix a beleaguered market.
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.
TRADING LANDSCAPE
The $SPY continued to trade higher and closed up 1.0% at $468, within 1% of the all-time high. The value/reflationary stocks traded higher and closed up 0.6% within 1% of the all-time high. The technology-led rally, up 1.2%, and right above the 5- day moving average.
The $DXY traded lower and closed at $96 above the key breakout level of $94.5. The $TLT closed higher, at $150 and above the 50-day moving average. The $VIX traded lower, back to the 18 level.
The $SPY short-term support level is at $461 followed by $455. The SPY overhead resistance is at $472. The short-term market is overbought but the market breakout, through the overhead resistance of $472, is just a matter of time.
I would consider starting accumulating reflationary/values stocks ($XME, $XLI, $XLF, $XLB, and $XLE). I expect the market to have shallow pullbacks but most likely the $SPY will not break through the $455 level.
I would consider rebalancing my portfolio at this time and have an overall bullish portfolio. I believe it is only a matter of time for the market to break through overhead resistance.
If you are trading options consider selling premium with February and March expiration dates. Based on our models, the market (SPY) will trade in the range between $450 and $490 for the next 2-4 weeks.
As the market starts to broaden out into January, both the Small Caps and Consumer Discretionary sectors are showing up in my AI models as to where capital will be flowing into. The pandemic has fostered a higher savings rate by consumers and hampered small businesses with shortages of all manner of key inputs, parts, laborers while prices for shipping goods have dramatically increased.
When we plug in the iShares Russell 2000 ETF (IWM) into our AI-driven Seasonal Chart, we get a bullish 20 and 30-day forecast for upward price movement. And a month from now, the 40 and 50-day forecasts could turn “Higher” as well depending on how our algorithms measure the movement of IWM.
For our RoboInvestor advisory service, I will recommend blue-chip stocks and ETFs that represent indexes like the Russell 2000, sectors such as the Consumer Discretionary space and the other 10 market sectors as well as commodities, precious metals, interest rates, currencies, volatility, and shorting opportunities through the purchase of inverse ETFs.
When considering pent-up consumer spending that will strengthen as the pandemic weakens, the Consumer Discretionary Select Sector SPDR ETF (XLY) is a great way to play the space. The top 10 holdings make up almost 70% of total assets with Amazon.com Inc. (AMZN), Tesla Inc. (TSLA), Home Depot Inc. (HD), and Nike Inc. (NKE) as the biggest positions.
Being that consumer spending accounts for about 70% of U.S. GDP, as the consumer goes, so goes the economy. When we apply our AI models, the Forecast Toolbox, to XLY, we get a Model Grade “B” rating with an intermediate-term Predicted Resistance price target of around $240, representing a potential gain of 18% from its current level of $203.
With the major advantage of having AI tools at our fingertips, which is always learning and crunching data 24/7, we have a system that is churning out a steady streak of winners going back to April 2018. In fact, RoboInvestor has delivered to its members a Winning Trades Percentage of 91.89%. It’s a track record that would be hard-pressed to find anywhere else in the investment advisory universe.
With the market facing some rising challenges in 2022, having a cutting-edge AI platform to take to task the business of stock and ETF selection is a sound strategy for beating the odds on a daily basis. Putting RoboInvestor to work in one’s portfolio is a wise choice, and buying the service for someone else makes for a wonderful Christmas and holiday present. Call it the gift that keeps on giving!
Merry Christmas and Happy Holidays!
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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