Saturday, August 8, 2020
Last week in the weekly Broader Market Review I wrote:
“The Nasdaq is maintaining it’s higher trajectory from late June and has room to run up to 12,000 if it can stay above the ascending yellow line.
In fact all three proxies (driven by Nasdaq) might fill the higher gap before rolling over later in summer and into the election. The Dow and S&P 500 just might try to challenge the pre Corona Crash highs if the Nasdaq continues to push higher as tech is still running led by the software and semi bulls.
So, if we get the secondary collapse, the good news is as time passes the ascending support levels rise which creates a higher cushion to support any collapse we might see prior to the election.”
Current..
Software stocks are beginning to roll over. Technology stocks are vulnerable. We have come a long way fast from the Corona virus disruption/delay in the expansion we were experiencing that began last November. As I have been commenting on for a few weeks, the market is at a vulnerable level. I continue to trim, reduce risk, take profits and raise cash for lower entries.
The Nasdaq could easily fill the gap up to 12,000 and draw the Dow and S&P 500 with it over the next few weeks but I would still remain cautious up here. I certainly wouldn’t be adding or putting on new positions except for very short term trades.
We have been expecting a pretty healthy correction in August but the broader market just may chop sideways before a larger dip nearer the election. Either way, the risk is currently too high to be all in at this point. I maintain my core positions which currently represents about 65% of my portfolio with the balance in cash ready to scale in at the lower entry levels highlighted on the charts below.
Current Broader Market Forecasts below with short and long term projections.
Dow.. longer term forecast
S&P 500.. longer term forecast
Nasdaq.. longer term forecast
Dow.. short term forecast
S&P 500.. short term forecast
Nasdaq.. short term forecast
Individual Stocks
In anticipation of lower entries into the election this is week five of highlighting those individual stocks and ETF’s that I expect to perform the best during the next important leg up. I continue to love technology, especially software. While software companies are extremely vulnerable now, like they were last fall, I expect they will continue to outperform once we get the secondary dip.
DDOG
ROKU
SHAK
SPCE
SQ
SWKS
TLND
TTD
V
WDAY
We are looking for a broader market cycle low to occur during the next two to three months. Our expectation is the Dow, S&P 500 and Nasdaq will all be aligned at a cycle low inflection support level to reverse and propel the market into resuming the expansion that will drive prices higher well into 2021.
The list of individual stocks I have highlighted over the past month are the ones I expect to perform the best during the resumption of the expansion that began last November. We are trying to make the most amount of money in the shortest period of time. This is not to say other stocks won’t go up as most will. We just want to identify the fastest horses.You can choose to buy AT&T and watch it slog along or you can buy Amazon and watch it rip.
We will have a pretty good idea when the cycle low is put in just as we identified the Corona Crash low before it happened, just as we identified last year’s expansion m months before it happened and just like we consistently identify the reversal zones in individual stocks before they happen that result in gains that the best hedge funds on Wall Street would be proud of (we pretty much kick their ass).
And once again, because I love all things Elon, let’s look at Tesla. Price action is following the forecast perfectly, so far. Watch support levels below. Once a support level is broken price will seek the next one down until it reaches the historical pattern reversal zone. See the Entry Zones below represented by the green circles. Current best likely entry is towards October along the ascending green support line.
TSLA
And a final note about energy. Our forecast for crude oil remains sideways to lower over the next few years. If price crosses over descending blue line resistance with momentum before 2027 we would be surprised and would reconsider our outlook. Our outlook for the energy sector is mostly underperformance.
Light Sweet Crude
If you have any questions, I would be happy to answer. We use a layer of equity and debt analysis that is mostly not even known to exist yet we have proven it to be the most accurate of the layers most commonly utilized by professional analysts. If you care to review previous forecasts, trade alerts, highlighted stocks and resulting performance and accuracy the data is all transparent, searchable and linked in this website.
Have a wonderful week,
Don