August Trading Range Continues: Economic Data Improves

August 16, 2019 KDelta Stocks No Comments

{Follow model portfolio table & favored stocks below}

08-16-19   SP reached our 2850 pullback target for this week& added an additional 1% intraday before returning back to the overall sideways pattern we expect with an end of week rally. Sept’ SP 2890’s is the 1st short term rally target & resistance, above which the upper part of our 2 to 3 month trading range in the mid to upper 2900’s would be resistance to raise cash once again. Economic and consumer data is actually improving recently making a 50 basis point cut in Sept’ unlikely so far.

08-14-19  The elevated China Trade hopes were dashed today by new Yield Curve inversions elevating Recession risk. SP heading back to our 2850’s support & now a greater risk of testing upper 2700’s in August before finding new support (possibly over the next week). 

08-08-19  SP 2850’s is this weeks downside risk. Assume a trading range has begun between recent lows under 2800 and the mid 2900’s basis SP 500 Index. Over 2970 may indicate the entire decline was a false alarm. Economy will continue to slow to < 2% GDP growth & flight to safety & lower yields should continue.

08-05-19  Our 8% correction zone minimum has already been hit after after just over 3 down days with the overnight SP hitting 2776. Our August – October bottoming zone currently looks like an 8 to 14% correction. A one day rally may have begun, but we don’t expect the uptrend to last more than a day or 2. A closing SP under 2800 for a day or 2 will begin to hit oversold sentiment levels.

08-03-19   July proved to be the Buy the Rumor, Sell the News action for stocks as the Sept’ SP 500 Index sold off to 2900 area.  When a rally starts, resistance should stop the rally in the 2960’s to 2970’s. After a rally we would allow for further new lows in August until sentiment reaches oversold. Remove half of VXX profit hedges when SP tests 2880.: Any SP move back over 3000 could mean this correction was merely an emotional reaction to the rate cut & Trump tariff news, otherwise we expect this corrective action to linger into September or early October with a maximum risk currently of 8 to 13% from the highs = SP 2,636 – 2,788. ::: While the industrial economy is edging into contraction & should stay down most of this year, no overall recession is expected. Economic cycle low mid-2019 to early 2020 & next cycle top in GDP in late 2021 before trouble starts brewing once again as in 2018’s GDP top, but with a deeper US downturn potentially in 2022.

07-27-19    It’s late July with SP at 3024 in the lower end of our end of July target zone. Post rate cut may send prices lower for a few days …Higher prices into our zone this week would allow for a corrective phase the most of August. : Add short hedge VXX up to 5% portfolio if Sep’ SP >3020;.

07-12-19    Uptrend into late July into SP 3020 to 3050 zone still ideal for potential top.

07-02-19  Stocks are moving to new records each day. SP 3000 – 3020’s next upside target zone. While all of July looks supportive for stocks and sentiment gauges are not even close to overbought, we would be surprised to see gains above the 3020’s SP given the weak economic and earnings data we expect.

07-01-19  Stock indices: more record highs are likely with Fed cuts expected end of July, Bonds and stocks should have a floor preventing major declines for now.

06-30-19  Exuberant expectations of China and US trade talks reconvening along with expected end of July Fed rate cut are sending stocks surging to record highs in early July. SP 500 Index heading above 3,000 & Dow over 27,000. 

(more past track record forecast commentary below our Favorite stock list)

Order GTCStock Price

——————————————————————————————————————————————————————————————————————-

Model Portfolio Tracker:

2019 Open positions: new portfolio each calendar year

$100,000 Starting value 01-02-2019

$3,000 initial investment/stock

48% invested as of 08-16-19@12:00AM EST: Profit=$15,144 =+15.1% : vs SP=+15.42%

Symbol Name Action Qty Entry Date Entry Price Exit Date Last Total Chg Total %Chg Total Profit
WM Waste Management Buy 40 8/15/2019 118 119.27 1.27 1.08% 50.8
XLK S&P 500 Info Tech Sector SPDR Buy 50 8/15/2019 76.5 78.16 1.66 2.17% 83
TEAM Atlassian Cls A Ord Buy 30 8/7/2019 135.1 142.97 7.87 5.83% 236.1
LPSN Liveperson Inc Buy 120 8/7/2019 33.34 38.46 5.12 15.36% 614.4
FDC First Data Corp Buy 130 7/1/2019 27.37 31.69 4.32 15.78% 561.6
RH Restoration Hardware Holdings Buy 30 6/28/2019 113.5 140.28 26.78 23.59% 803.4
CHWY Chewy Inc Buy 85 6/20/2019 33.75 31.13 -2.62 -7.76% -222.7
SPLK Splunk Inc Buy 30 6/19/2019 122 126.65 4.65 3.81% 139.5
PLAN Anaplan Inc Buy 100 6/6/2019 43.3 57.8 14.5 33.49% 1450
CRM Salesforce.com Inc Buy 27 6/4/2019 146.05 144.57 -1.48 -1.01% -39.96
PYPL Paypal Holdings Buy 30 5/16/2019 111.2 106.07 -5.13 -4.61% -153.9
PANW Palo Alto Networks Inc Buy 15 5/16/2019 220.56 218.57 -1.99 -0.90% -29.85
CSCO Cisco Systems Inc Buy 60 5/16/2019 59.27 47.08 -12.19 -20.57% -731.4
DIS Walt Disney Company Buy 30 5/16/2019 135.25 135.12 -0.13 -0.10% -3.9
AMZN Amazon.com Inc Buy 2 4/22/2019 1855.4 1797.02 -58.38 -3.15% -116.76
SQ Square Buy 40 2/28/2019 75.91 62.95 -12.96 -17.07% -518.4

Favored stocks Buy list (*=currently in strong momentum mode near highs): Most on our favs list today are in strong up-trends near record highs: Buy on 5%+ dips in SP 500 Index:

 Momentum/Tech stocks: *ACN Accenture :  *AEM Agnico-Eagle Mines : *AMT American Tower(5G) : AMZN  Amazon : *AYX Alteryx : *BABA Alibaba  CBS : CDW Corp  : CHWY Chewy : COUP  Coupa Software : CRL Charles River : CRM Salesforece :   CSCO Cisco :  CYBR Cyberark : DBX Drop Box : DXCM Dexcom :  DHR Danaher : DIS Disney  : *FDC First Dtat Sys : IBM :  GS Goldman Sachs  : *GPN Global Payments : HUBS Hubspot IRDM Iridium :  *INTU Intuit  : *LHX L3Harris Tech’ : *LPSN LivePerson : *MA Mastercard  : MELI Mercadolibre : *MLM Martin Marrietta : MSFT Microsoft : *MSI Motorola Solutions : NOW Service Now :  *NSRGY Nestle : OKTA   :PANW Palo Alto :  PEGA Pega Systems : *PLAN Anaplan*PLD Prologis : PYPL PayPal  : *RH Restoration Hardware : *ROKU  : *SAH Sonic Automotive : *SBAC SBA Communications :  *SBUX Starbucks : *SHOP Shopify: SPOT Spotify : SPLK Splunk : STNE StoneCo  : *TEAM Atlassian :  *TREX :  TWLO Twilio   : V  Visa  : VMW   VMWare  : VEEV Veeva : WDAY WorkDay : *WMWaste Mgmt’  : WIX Wix.com : *YUM   : ZM Zoom : ZS Zscaler 

Undervalued bullpen shift from Momentum after a China deal:  ALGN Align Tech’ : AMCX AMC :  BIIB Biogen : BA Boeing, BOX : CAT Catepillar  :  DELL   : FIVE Five Below : FLIR Systems :  HUN Huntsman : JNJ Johnson&Johnson :  MMM 3M  OLLI  Ollies : SAN Banco Santander : SLB Schlumberger  : SQ Square : TME TenCent : TRMB Trimble : WSM Williams Sonoma :            ETF’s–>  IYE Oil & Gas stocks : XLB SPDR Materials :  IGE Natural Resources : CARZ Auto sector :  SOYB Soybean ETF :  EEM Emerging Markets ETF : COPX Copper ETF : SLV Silver : XME Metals&Mining : GDX Gold Miners

US Indexes – ETF’s:  SPY :  QQQ  :  XLK  :  HACK= Cyber security : XHE=Healthcare : FINX=Fintech : IHF : IHI : XLV :  MOAT

::: When using Stock Index Short hedges:=SH for SPY inverse : DOG for DJIA inverse : PSQ for QQQ inverse; VXX Vix volatility

 


(continued highlights/track record from above of past forecast updates correctly foretelling market action)

06-14-19   With assumption that Trump & Xi will talk Trade at G20 June 28th & Fed will cut rates, stocks remain in uptrend : 10 Yr’ still heading toward 2% yield or 128+ basis Sept’ 10 Yr Note, where Bonds & Stocks may reach a temp’ peak.

06-09-19   current trend in 10 Yr yields is toward 2%. 

06-03-19   Last week our target was June 3rd low at 2733.   2730 on June 3rd was the low before a monster short covering rally today on the news the Fed was open to a rate cut. This has placed a nice floor under the market preventing Trade War worries from tanking the market near term. We have talked of this corrective period as part of a trading range being carved out from 2700’s to 2900’s area. 

05-28-19     low due near June 3rd for a 7% correction.

05-21-19     Without a China Trade Agreement a broader trading range (2700’s – 2900’s) remains the best odds.

05-09-19   New Trump Tariffs without a hint of a deal being close will send stocks down sharply. : The high flyers we exited are amazingly still sitting at record highs after incredible gains this year –> WIX, SHOP, VEEV, DIS, GPN, OKTA,  TWLO… 

05-07-19   We have raised more cash. Our charts have been showing this decline with potential for 7 to 10% this month

04-30-19   Upper end of our short term target window is now being tested in the lower June S&P 2960’s .  

04-23-19   There is a feeling of climax in the air as many worry we are at an inflection area.  SP 2940’s to 2960’s remain our ideal topping zone to watch for.  : Exit DIS 140.

04-12-19  Fortunately we added Disney to the portfolio earlier this week. … : The S&P basis cash index targets 2950 area in coming weeks. 

04-10-19  … there is enough buying power to prevent any meaningful corrections near term.

04-05-19  Look for our forecast of record highs this summer to arrive in April. 

02-28-19   Still expecting record highs in all major indices by summer. Long term picture remains positive.   Stay with trend & use 3% corrections for more additions. 

02-25-19  SP reached our 2800 – 2832 intermediate topping zone today after Trump announced Sunday he would suspend the new China tariff deadline. Stocks then pulled back from the SP 2814 highs on Trumps tweets drove Oil prices down. As mentioned in our latest “In The News” section interview the other week, a new Trade Deal framework might be the classic Buy the Rumor Sell the News of an agreement. If Oil moves to new 2019 highs then stocks may start move to new 2019 highs again.  

02-15-19  Our bias has remained to the upside with stock indices just 5% from all time highs.  Max potential in Feb’ in 2830’s. Next time indices fall more than 2% will quickly increase odds of our first meaningful correction of the year.: Oil is tethered to stocks & we remain long looking for $56.50 area next week before a pullback and >$60 eventually.

02-12-19  Well our suspicion of minimal downside risk before March 1st was realized today as the ideal 3+% correction was only 2% and the SP did rise above the reversal level of 2730 hinting that this market has a floor of optimism over a trade deal and is unlikely to plunge. 

02-07-19 … should the SP regain the 2730’s and Oil move back over $54, we would assume the correction phase is not ready to begin … significant downside risk before the March 1st trade deal deadline seems very unlikely

02-01-19  Stocks …longer term 2019 target zone remains Bullish in the 2900 to 3100 SP 500 Index, assuming no tariff war escalation. 

01-30-19   Impressive news response syndrome continues. Market confidence of a China Trade deal grows each week & is a major tailwind that will continue into February until China or the US publicize roadblocks. March SP 2730’s to 2740’s is the next target zone. The Feb’ pullback we expected may be elusive or a much higher low than many had hoped for.  

01-17-19   We have been expecting the obvious resistance in the low 2620’s SP to break .. No longer is this a market Selling Good News, but Buying Bad news.

01-14-19  Late January top short term should lead to a strong pullback into a Feb’ low where new buying is expected. Weak earnings & economy are “mostly” priced in. Short term trader Equity Call option buying indicates a ceiling on price with SP likely to stay under the low 2700’s in Jan’ & then fall into lower 2500’s in Feb’.

01-06-19    Further economic weakness is expected over the next few months when equity valuation risk should be mostly priced in. A test of record highs due this summer, assuming a positive trade deal in the 1st qtr’.

12-26-18  Strong short term bottom is likely in with the spike low early today (12-26-18). $VIX close over 36 Monday implies a low of some importance has arrived

12-18-18  With the sharp drop in China Trade proxies of Aussie$, Copper & Crude Oil today…a reversal lower in stocks before Christmas would not be a surprise.

12-17-18   New 2018 lows breaking multi-month support hints of capitulation. We remain with heavy cash levels

12-07-18   After 3 tests of the 10% correction lows since the Oct’ 3rd peak our old adage hints this 4th test has higher odds of busting to new lows – new 2018 lows, perhaps as much as the 17 to 20% correction levels from the peak basis Dow & SP.  Need a VIX>35-50 for a stronger low. Now 73% in cash.

12-04-18  Mini panic underway …We are raising more cash … Need to await new oversold signals before putting cash back into stocks.  

12-03-18  China sensitive Soybeans and Copper heading down all day is a sign the markets fear the China Trade truce will fail. If SP 500 Index 2760 & Dow 25,538 are tested or broken this week, then the Trade relief rally is on hold & stocks will continue to work even lower … 

11-20-18  The Dow psychology is setting up quickly for a stock market … tradable December low despite more downgrades in 2019.

11-19-18  We are a net 39% long stocks … hopes of a Trade deal seem ripe for disappointment yet again. 

10-18-18   Like the Jan’ – Feb’ correction, stocks…now heading back to the lows or new lows …

10-04-18   Our end of September newsletter warned of an October pullback as the mid-term election nears. 

09-27-18   Medium term traders should use the lows of 09-26-18 as short term support below which a new short term leg down may accelerate. 

08-04-18   Dow rally … to continue to new multi-month highs over the next 3 weeks … S&P 2900 to 2910 is the ideal target in August. 

06-25-18   Trump will risk furthering a trade war …he doesn’t want a deal; he wants a weaker China & stronger USA.

05-10-18    … we should expect rhetoric that keeps Oil prices edging higher (>$70). 

04-14-18   Oil has remained high as expected …We continue to like buying the dips into at least mid-May as Iranian talks heat up.  

03-27-18    … we continue to favor Trump … pivoting to an aggressive focus on Iran (Higher Oil)

03-18-18    Use any new testing of 11 to 15% intraday correction level as new buying entry.

02-05-18    Look for an initial low this week.

02-03-18    For a couple of months we have discussed our forecast for the first real correction since Trump was elected is due during the 1st qtr’ 2018 earnings reporting period from late January to late February.

01-23-18   A several month pause into the spring looks likely.  

11-14-17   Our current expectation remains that more serious corrections of 10% or more will hold off until the 1st quarter of 2018. 

________________________________________________________________________________________________________________________________

Disclaimer and Notice:  This report may contain information on investments that are high risk and have substantial risk of principal loss.  It is for informational purposes only. Statements in this communication are not statements of fact are merely opinions or forward looking statements from a potentially biased source(s) that involve known and unknown risks, uncertainties and other factors that could cause actual future results to differ materially from any prior or projected results. Statements in this communication may be inaccurate and/or unsuitable for you.  You must perform your own due diligence.  Your investment decisions should always be made based on your specific financial needs, suitability, objectives, goals, time horizon and risk tolerance.  Any decision is at your sole discretion and at your sole risk.  You are advised to consult with your individual investment and tax professionals before making any investment.  Past performance is no guarantee of future results.———————————————————————————————————————————————————————————————————————————

Leave a Reply

Ready to start creating financial success? START YOUR FREE TRIAL