Let’s check which stock 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, January 15 – Tuesday, January 21 period.
The Stock Pick Update for the Thursday, January 8 – Tuesday, January 14, 2020 period resulted in a gain of 1.10%. The S&P 500 index has gained 1.38% in the same period. However, our long stock picks have gained 1.42%. The short stock picks have also been profitable despite the broad stock market’s record breaking advances!
Below we include statistics and the details of the previous updates. Only the updates for week-long periods ending on December 24 and January 14 are verified by the alert’s release on our website, but before we decided to make it available to you, we tested our approach and our stock picks performed very well:
Jan 14, 2020
Long Picks: VTR, COST, ECL, COG, CSCO
Short Picks: PXD, AMD, VFC, AVB, PEP
Average long result: +1.42%, average short result: +0.79%
Total profit (average): +1.10%
Jan 7, 2020
Long Picks: GD, CHRW, CTL, CLX, CSCO
Short Picks: PM, ANSS, HST, JCI, EA
Average long result: -1.15%, average short result: +0.97%
Total profit (average): -0.09%
Dec 24, 2019
Long Picks: VTR, CHRW, CF, IDXX, CINF
Short Picks: LLY, MS, AES, DRE, AME
Average long result: +1.12%, average short result: -1.31%
Total profit (average): -0.10%
Dec 17, 2019
Long Picks: WMT, FAST, SEE, ZTS, SLB
Short Picks: BMY, PSX, SST, LW, EMR
Average long result: +2.45%, average short result: -1.69%
Total profit (average): +0.38%
Dec 10, 2019
Long Picks: PSA, OXY, DE, ILMN, TTWO
Short Picks: ZTS, DIS, LW, WELL, PSX
Average long result: +0.87%, average short result: +1.30%
Total profit (average): +1.08%
Dec 03, 2019
Long Picks: PSA, EXC, FANG, ILMN, FLT
Short Picks: ABBV, NVDA, CHTR, WELL, AEP
Average long result: -0.03%, average short result: +1.55%
Total profit (average): +0.76%
Nov 26, 2019
Long Picks: VTR, YUM, HAL, ADI, CME
Short Picks: MSFT, JPM, ABT, WELL, LOW
Average long result: +1.89%, average short result: -0.50%
Total profit (average): +0.69%
Nov 19, 2019
Long Picks: PSA, DUK, EBAY, MMC, MMM
Short Picks: C, CAT, TXN, PLD, SO
Average long result: 1.08%, average short result: -1.50%
Total profit (average): -0.21%
The broad stock market has reached historically high levels recently. Last year’s breathtaking December correction 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 got close to the 3,300 mark. But will the rally continue? If the market goes higher, which stocks are going to beat the index? And if it reverses down 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 (January 2) and sold or bought back on the closing of the next Tuesday’s trading session (January 7).
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.
Let’s start with our first charts (charts courtesy of www.stockcharts.com).
There’s a S&P 500’s 30-minute chart along with market sector indicators for the past month. The S&P 500 index has gained 3.63% since December 13. The strongest sector was the Technology XLK, as it gained 7.29%. The Communication Services XLC gained 5.70%, and the Real Estate XLRE gained 4.83%.
On the other hand, the weakest sector was the Materials XLB, as it lost 0.8%. The Financials XLF gained just 0.58%, and the Consumer Staples XLP gained 1.69%.
Based on the above, we decided to choose our stock picks for the next week. We will choose our top 3 long and top 3 short candidates using a contrarian approach, and top 2 long and top 2 short candidates using the trend-following approach:
Contrarian approach (betting against the recent trend):
buys: 1 x Materials, 1 x Financials, 1 x Consumer Staples
sells: 1 x Technology, 1 x Communication Services, 1 x Real Estate
buys: 1 x Technology, 1 x Communication Services
sells: 1 x Materials, 1 x Financials
Top 3 Buy Candidates
DD DuPont de Nemours, Inc. - Materials
The DD stock has been relatively weak in the recent weeks following breaking below the early December local low. However, its short-term trading action is quite bullish and we expect some upward correction. Potential resistance level is at $62-63.
CINF Cincinnati Financial Corp. – Financials
The Cincinnati Financial Corp. stock keeps trading sideways following breaking above two-month-long downward trend line. We could see a breakout higher at some point. The support level is at around $103, and the resistance level is at $106-107.
CHD Church & Dwight Co, Inc. - Consumer Staples
The CHD stock has been relatively strong in the recent days. We could see an attempt at breaking above the resistance level of around $70-71.
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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' employees and 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, Przemyslaw Radomski, CFA 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. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA 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. Przemyslaw Radomski, CFA, 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.