The
corona virus and economic slowdown fears continued dominating headlines in the recent days. Our
last week’s Stock Pick Update has been released at the local high of stock market’s dead-cat-bounce upward correction. Then the broad stock market resumed its downtrend, and on Monday it basically crashed following Friday’s OPEC meeting negative oil news. Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, March 11 – Tuesday, March 17 period.
The
S&P 500 index has lost 5.37% since last Wednesday’s open. But our five long and five short stock picks were flat, as they lost 0.19% in the same period! So our stock picks have been relatively much stronger than the broad stock market for the third time in a row. Our short stock picks gained 11.96% and they
outperformed the index on the short side again. Long stock picks lost 12.34%, but the whole ten-stock-picks
portfolio performed incredibly well in time of a stock market’s big sell-off.
If stocks were in a more prolonged downward correction, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.
This means that our overall stock-picking performance can be summarized on the chart below. The assumptions are: starting with $100k, no leverage used. The data before Dec 24, 2019 comes from our internal tests and data after that can be verified by individual Stock Pick Updates posted on our website.
Below we include statistics and the details of our three recent updates:
- Mar 10, 2020
Long Picks (Mar 4 open – Mar 10 close % change): VNO (-8.94%), WBA (+4.26%), PFE (-1.45%), NBL (-40.68%), JPM (-14.92%)
Short Picks (Mar 4 open – Mar 10 close % change): APA (-57.45%), PGR (-0.09%), ROK (-9.59%), EQIX (-2.51%), KR (+9.84%)
Average long result: -12.34%, average short result: 11.96%
Total profit (average): -0.19%
- Mar 3, 2020
Long Picks (Feb 26 open – Mar 3 close % change): BKR (-11.98%), MMM (-2.89%), PFE (+0.18%), EXR (-0.96%), WEC (-2.91%)
Short Picks (Feb 26 open – Mar 3 close % change): MAA (-4.20%), EIX (-9.01%), CLX (-0.02%), OKE (-7.87%), CMI (-6.54%)
Average long result: -3.72%, average short result: +5.53%
Total profit (average): +0.91%
- Feb 25, 2020
Long Picks (Feb 19 open – Feb 25 close % change): XEC (-7.66%), BSX (-5.67%), NUE (-5.31%), PEG (-2.69%), SPG (-2.59%)
Short Picks (Feb 19 open – Feb 25 close % change): AEE (-3.55%), CBRE (-8.58%), INTC (-10.03%), SLB (-13.40%), A (-7.97%)
Average long result: -4.78%, average short result: +8.71%
Total profit (average): +1.97%
The broad stock market has reached historically high levels recently. The breathtaking correction in December of 2018 was followed by the record-breaking comeback rally. The late October – early November breakout led to another leg higher, as the S&P 500 index broke above 3,300 mark. But
the recent sell-off suggests that investors should prepare for volatility. If the market reverses higher, which stocks are going to beat the index? And if it continues lower from here, which stocks are about to outperform on the short side?
We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since
the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.
We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (March 11) and sold or bought back on the closing of the next Tuesday’s trading session (March 17).
First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.
There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.
We will analyze them and their relative performance by looking at the
Select Sector SPDR ETF’s.
The stock market sector analysis is available to our subscribers only.
Based on that, we chose our top 3 long and top 3 short candidates using trend-following approach, and top 2 long and top 2 short candidates using contrarian approach:
Trend-following approach:
- buys: 1 x Consumer Staples, 1 x Utilities, 1 x Real Estate
- sells: 1 x Energy, 1 x Financials, 1 x Industrials
Contrarian approach (betting against the recent trend):
- buys: 1 x Energy, 1 x Financials
- sells: 1 x Consumer Staples, 1 x Utilities
Trend-following approach
Top 3 Buy Candidates
(charts courtesy of
www.stockcharts.com)
ADM Archer Daniels Midland Co. - Consumer Staples
- Potential rising wedge bottoming pattern
- Technically oversold – short-term upward correction play
- Positive divergence between the price and RSI indicator
- Resistance level of $39-40 (upside profit target level)
AES AES Corp. - Utilities
- Technically oversold – short-term upward correction play
- Positive divergence between the price and RSI indicator
- Potential resistance level at $16
SPG Simon Property Group, Inc. - Real Estate
- Potential upward reversal pattern – upward correction play
- The resistance levels of $120 and $130
Summing up, the above trend-following long stock picks are
just a part of our whole Stock Pick Update. The Consumer Staples, Utilities and Real Estate sectors were the strongest since February 11. And they have lost less than the S&P 500 index in the same period. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.
We hope you enjoyed reading the above free analysis, and we encourage you to read today's Stock Pick Update - this analysis' full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There's no risk in subscribing right away, because there's a 30-day money back guarantee for all our products, so we encourage you to
subscribe today.
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Thank you.
Paul Rejczak
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care
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Disclaimer
All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.