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RoboStreet – November 26, 2020
Energy Sector Gets A Wake-Up Call
Bullish sentiment is sweeping Wall Street and the investment landscape as what is known as the “January Effect” is coming early this year. All 11 sectors of the market have participated in the rally to some extent, but clearly, the surprise leader has been the energy sector.
Almost out of nowhere, like a phoenix from the ashes, crude prices and energy stocks have soared on average by 30%-40% and are showing no signs of abating any time soon. It is truly one of the great comeback trades of all time and a welcome one at that as the primary bull trend looks for all sectors to be involved so the rally can broaden out.
Before we get more into energy, let’s get a take on the market in general.
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 was able to stage a broad–based rally and testing the $365 level. Value stocks continue to outperform growth stocks. Both Technology (QQQ) and Value (VTV) stocks are facing major overhead resistance levels. The best part of this year’s rally is behind us and the market is due for a shallow pullback back to the $350 level in the next 2-3 weeks ($345 worst-case scenario).
The $350 level is a key support for the bulls. I expect short term corrections to be shallow and the bull rally to continue.
As long as the SPY is trading above the $350 level, the SPY will break out from the current range to the upside and potentially can reach the $370-$385 level by end of the year.
The U.S. Dollar ($DXY) is trading below the $94 level and U.S. Treasuries (TLT) continued to trade in the downward channel. Value stocks continue to outperform and the breadth of the recent rally is impressive.
My opinion has not changed. The bull market has resumed its rally and will retest recent highs in November. I would be a buyer using any short-term corrections and use a dollar-cost averaging strategy to accumulate positions at this level. 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 $318 and $370 for the next 4 weeks. Based on the aggressive trader monthly predictions, the market will break through the $360 level in December of 2020/first quarter of 2021.
Back to the energy sector. West Texas Intermediate (WTII) has rallied to $45 per barrel, where it will likely consolidate for a while. Shares of the Energy Select Sector SPDR Fund (XLE) are the best way to trade the sector given its make up of the top ten holdings that account for 79.36% of total assets.
A quick view of the one-year chart for XLE shows a clean, high-volume upside breakout of its 200-day moving average this past week, setting up this ETF for a move higher.
My favorite stock in the energy sector just happens to also be the top holding in the XLE fund: Chevron Corp. (CVX) stands front and center as America’s premier energy company. It is also the only energy stock within the Dow Jones index.
Our Tradespoon AI-driven platform is very bullish on Chevron. The Seasonal Chart shows a “Higher” probability reading for the 20, 30, 40, and 50-day periods. Nice!
Our Stock Forecast Toolbox is also high on Chevron, with a Predicted Resistance target of $109.65 over the near term. That’s an upside move of 19.2% from its Friday close.
This kind of confirmation of future gains is only made possible through our RoboInvestor advisory service, where we utilized our AI models to act on buys and sells of blue-chip stocks and ETFs of all asset classes.
Our track record is phenomenal with a Winning Trade Percentage of 90.22%. Simply put, our RoboInvestor members book profits on over 9 out of every 10 trades.
Just in November alone, we’ve rung the register 15 times with only one losing trade for a nominal loss.
If this kind of performance is missing from your portfolio, then take advantage of this opportunity to make this Black Friday one to remember. The smartest purchase of 2020 should be one that greatly enhances your net worth day-after-day, week-after-week, month-after-month, year-after-year.
That’s what RoboInvestor does for people. It changes their lives and how they grow their nest eggs permanently. Put the perpetual profit-making tools of our AI platform to work for your portfolio today and start next week with the smartest and most successful investing system available anywhere in the marketplace – RoboInvestor.
“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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