In the last five trading days (November 11 – November 17) the broad stock market has fluctuated following November 9 run-up to new record high of 3,645.99 after news about Pfizer’s coronavirus vaccine and the U.S. Presidential Election outcome. The S&P 500 index got closer to the high on Monday and it currently trades along 3,600 mark.
The S&P 500 index has gained 1.30% between November 11 and November 17. In the same period of time our five long and five short stock picks have gained 0.51%. Stock picks were relatively weaker than the broad stock market. However, our long stock picks have gained 3.55% as they’ve outpaced the S&P 500 index on the long side. Short stock picks have resulted in a loss of 2.52%.
There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.
If stocks were in a prolonged downtrend, 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.
Starting this week, we will modify our stock-picking strategy. Its year-long performance record shows that non-contrarian (pro-market) stock picks were outperforming contrarian (against-market) stock picks by a large margin. Non-contrarian stock picks gained 8.8% since Nov 19, 2019, and contrarian stock picks lost 10.6% in the same period of time. Therefore we will stop picking stocks on a contrarian basis. Our 5 long and 5 short stocks portfolio will be based solely on the trend-following approach.
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, November 18 – Tuesday, November 24 period.
We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (November 18) and sold or bought back on the closing of the next Tuesday’s trading session (November 24).
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.
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 the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:
- buys: 2 x Energy, 2 x Financials, 1 x Industrials
- sells: 2 x Technology, 2 x Consumer Discretionary, 1 x Consumer Staples
WMB Williams Cos., Inc. - Energy
- Stock broke above medium-term downward trend line - uptrend continuation play
- The resistance level of $21.50 and support level of $20.00
PXD Pioneer Natural Resources Co. – Energy
- Short-term uptrend continuation play
- The resistance level of $98-108
- The support level is at $84-90
WFC Wells Fargo & Co. – Financials
- Stock broke above downward trend line, uptrend continuation play
- The resistance level is at $25.50
- The support level is at $23.50
Summing up, the above trend-following long stock picks are just a part of our whole Stock Pick Update. The Energy and Financials sectors were relatively the strongest in the last 30 days. 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.
Stock Trading Strategist
Sunshine Profits - Effective Investments through Diligence and Care