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RoboStreet – July 30, 2020
Fighting the Hack Attacks With Cyber Security Stocks
Equity markets rallied strongly into second-quarter earnings season, so it should be of no surprise by investors that there’s some selling on the news as earnings are crossing the tape. While some air is coming out of the big-cap tech bubble, it’s good to see some healthy rotation into other sectors as opposed to money leaving the market altogether.
Earnings, for the most part, are coming in above estimates. So, either the Street was too bearish or the economy is doing better-than-expected. Either way, it sends a bullish message that any corrections will be minimal in size and duration, with the primary bull trend staying well in place.
Treasury prices continue to go higher (negative for equities) and gold rallied to all-time highs. The next two weeks will be critical for the equity market. From a technical point of view DXY can rebound, TLT can sell off, Gold can sell off and banks can rally by end of this week or the next.
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.
If the SPY can trade above $323 level this week, then market will continue its march toward the 52-week high. If the SPY continues to trade below $319 level, the SPY will trade in the range between $300 and $323 for the next few month.
My opinion has not changed. The short-term bottom is at $300 for SPY and potentially can be retested most likely in August (put/call ratio is at the lowest point this year). SPY longer-term overhead resistance is at $340 and can be retested in the next 2-4 weeks. At this point, I do not think the market will break $300 level. My strategy is to buy 5-10% market corrections. My AI-driven Seasonal Chart remains largely bullish on the market:
One sector that is breakout out and getting a lot of attention is in the area of cybersecurity. Widespread hacking, ransomware, IP theft, identity theft, fraudulent marketing scams, unauthorized bitcoin transactions, dark web extortion, and widespread theft of monies from financial institutions is growing. The criminals are winning in many areas.
Spending by corporations and households on network security is rising – and fast. The global cybersecurity market was worth $3.5 billion in 2004 and over $100 billion in 2017. The cybersecurity market grew by roughly 30X over 13 years entering our most recent prediction cycle.
Cybersecurity Ventures predicts global spending on cybersecurity products and services will exceed $1 trillion cumulatively over the five-year period from 2017 to 2021, paving a road of huge profits for those companies best positioned in the industry to see their stocks thrive over the next three-to-five years.
Investors can either cherry-pick their favorite stocks of which CrowdStrike Holdings Inc. (CRWD), Okta Inc. (OKTA), Palo Alto Networks (PALO), Zscaler Inc. (ZS), Fortinet Inc. (FTNT) and Check Point Software Technologies (CHKP) are the most prominent stocks in the broader cybersecurity sector.
The other approach is to buy a cybersecurity ETF that actively manages a portfolio of the leading stocks and includes other smaller growth companies, leaving the research and due diligence to the fund managers. In a deeply complex business like cybersecurity or biotechnology, buying ETFs can be the smart path to profits.
There are two ETFs that fit the bill. The ETFMG Prime Cyber Security ETF (HACK) and the Global X Cybersecurity ETF (BUG). Shares of both ETFs are trading at new all-time highs as many of the components are trading strongly. Both funds own stocks like CrowdStrike Holdings Inc. (CRWD) that show up with strong AI ratings in our Stock Forecast Toolbox and bullish price targets that validate the momentum of these ETFs.
The one-year chart of ETFMG Prime Cyber Security ETF (HACK) is a very nice pattern that portends of higher-highs in the future. And for those that want to get in on this and other cybersecurity trades in our RoboInvestor advisory, then take advantage of our special offer and join today so as to not miss out when I put HACK or BUG to work in our RoboInvestor Portfolio.
Within our RoboInvestor Portfolio, we’ve logged 26 straight profitable trades going back to March 20 bolstering our Winning Trades percentage to 88.82%. Here is our latest run of trades showing that we only trade blue-chip stocks and ETFs with highly liquid options chains.
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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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