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RoboStreet – September 17, 2020
Fintech Is Best Financial Sub-Sector To Buy On Dips
The current pullback in the market offers investors a buffet table of great stocks to initiate and add to positions, depending on how the investing landscape is taking shape as the third quarter comes to a close. There is a clear rotation out of growth sectors and into transportation, industrials, materials, and deep value stocks.
Regardless of the back-and-forth news surrounding the coronavirus, money flows are moving into more economically sensitive sectors on the notion of a vaccine making to the market in the next 3-6 months, further Fed accommodation, a $1.5 trillion stimulus bill getting passed in Congress, and a strong third-quarter earnings season on deck.
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 continued to retest the overhead resistance at the $342 level. Positive economic news from China supports the “V shape” economic recovery. The results of the FOMC meeting can create some volatility in the past couple of trading sessions. On the downside, I still expect a marginal breakthrough 50-day moving average sometime in the next two weeks, led by heavily weighted tech stocks like Apple Inc. (AAPL).
The TLT and the DXY continue to trade in the range and do not show any signs of the market reversal. The market dynamics support the reflationary trade where the value stocks will outperform the growth stocks. The value stocks will continue to outperform technology stocks and should provide SPY with short term support at $330-335. Short term, the SPY overhead resistance is at $342 and will retest the $330 level.
The SPY new top is now set at $360 and potentially can be retested again only at the end of September or early October. SPY short term resistance is at $342. I would be a buyer using any short-term corrections and use a dollar-cost average to accumulate positions at this level.
Our AI-driven Seasonal Chart remains bullish on the primary bull trend with “Higher” probability readings for the next 20, 30, 40, and 50-day periods.
The SPY potentially can overshoot 50 days moving average next week and stage rebound toward the end of September, the start of October. Based on our models, the market (SPY) will trade in the range between $328 and $360 for the next 4 weeks.
One of the major themes that drive the market higher this year has been the incredible growth of the digital economy led by eCommerce and mobile payments. The key players in the space are Visa Inc. (V), MasterCard Inc. (MA), PayPal Inc. (PYPL), and Square Inc. (SQ). There are others, but these four companies are what the market cares about most and is what fund managers care about most.
These are all great companies, but if I had to choose one to take a position in on this big market dip, I’d likely go with Square Inc. (SQ) as it has the highest growth rate among the four companies, exhibited the best momentum and is technically the most bullish.
Within our RoboInvestor advisory service, we employ my proprietary AI tools to help not only select the best stocks and ETFs to work with, but to also provide us specific entry and exit points for maximum performance.
One of our tools, the Stock Forecast Toolbox, has Square rated as a Model Grade “B” with predicted overhead resistance at $202.13 representing 40% upside potential for the stock.
Shares of Square topped out at $170.61 back on September 2 and currently trade around $145, a healthy 14.7% correction, and yet are doing a fine job of holding their 50-day moving average (orange) where a good entry point is shaping up.
The stock is a prime candidate for our RoboInvestor Portfolio in the near-term and for those that want in on this trade and other high-quality picks, please sign up today and become a member of the RoboInvestor community.
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“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.
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