Buy Alert! Big Bank Stock Poised To Spike

by Vlad Karpel

RoboStreet – November 12, 2020

See-Saw Battle Between Growth and Value Rages 

There is an old saying of “dance with the one that brought you” that bears out when looking at how the 2020 stock market is performing. There have been a few attempts to steer the market’s leadership from the big cap growth stocks, and each time those rotational rallies are short-lived before the mighty tech sector reasserts itself.

Transportation and industrial sectors the harbingers of future

There are new proxies for global growth in the global economy that have replaced those of yesterday. It was highly understood that the transportation and industrial sectors were the harbingers of future growth, and to some extent, they still hold an important role in how market sentiment is shaped.

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Semiconductor sector is the de-facto sector that defines confirmation of future growth

However, today the semiconductor sector is the de-facto sector that defines confirmation of future growth. Semiconductors touch literally every segment of business and consumer businesses and services. Without semiconductors, most businesses would cease to function, and it’s the pulse of demand when measured that provides the most concise forward guidance as to the health of the domestic and global economies.

FAANG and MAGA stocks make up more than 25% of S&P total asset

By now, most investors are keenly aware that the S&P 500 can’t advance in a meaningful way without the participation of the FAANG and MAGA stocks. They make up more than 25% of the total asset weighting of the S&P. Below are the top 10 holdings in the SPY of which 7 are big-cap tech.

Missing from this list are juggernauts like Adobe Inc. (ADBE), Netflix Inc. (NFLX), Salesforce.com Inc. (CRM), ServiceNow Inc. (NOW), PayPal Inc. (PYPL), just to name a few. Put simply, as big-cap tech goes, so goes the market.

The value, cyclical, and epicenter stock rally of the past week suddenly gave way Thursday to the resumption of the tech sector’s leadership role. And though, seeing the market broaden out to include most other sectors in the post-election relief trade, it doesn’t even begin to replace what makes the market hum long-term.

Value stocks continued to outperform the growth stocks up until Wednesday

As far as the current investing landscape is concerned, the SPY continued the rally as the uncertainty about the election subsided, and the successful test results from phase 3 trials of the vaccine. The SPY has broken through the main overhead resistance at $351, and value stocks continued to outperform the growth stocks up until Wednesday.

The $350 level is key support for the bulls. The SPY is overbought and prone to correction this week. I expect these corrections to be shallow and the bull market to continue to retest 52 weeks high.

As long as the SPY is trading above the $350 level, the SPY will break out from the current range to the upside and potentially can reach the $370-$385 level by end of November/early December.

Bull market to retest recent highs in November

The U.S. Dollar ($DXY) is trading below the $94 level and U.S. Treasuries (TLT) continued the sell-off. My opinion has not changed. The bull market has resumed its rally and will retest recent highs in November. I would be a buyer using any short-term corrections and use a dollar-cost averaging strategy to accumulate positions at this level.

Let’s look at another force at work that could have a material impact on investor sentiment in the months ahead. Bond yields are ticking higher to where the benchmark 10-year Treasury Note has punched up through the primary downtrend line that has the yield testing 1.0% with the next stop at 1.3% and then major technical resistance at 1.5% It’s a force to be reckoned with because it portends of a weaker dollar, rising inflation or both. Technicians would argue a “golden cross” is in the making – bullish for higher yields and rate-sensitive sectors.

Banks make the lion’s share of their profits on Net Interest Margin (NIM)

Bear in mind, rising yields are typically a sign of improving economic conditions, but it also means there will be some fresh rotation out of sectors like home builders and into sectors like banks as a byproduct of this trend. Banks make the lion’s share of their profits on Net Interest Margin (NIM) – the spread between borrowing short-term funds and lending out on long-dated terms.

The de facto bank of institutional choice in such a scenario is JPMorgan Chase & Co. (JPM) that boasts a $313 billion market cap. In our RoboInvestor advisory service, this is the name we work with. My AI platform responds very accurately to the stock and it’s where institutional fund flows power into when they want to own the bank sector.

When we apply our AI tools to JPM, our Stock Forecast Toolbox gives the stock an “A” Model Grade with a near-term predicted resistance target of $128.67. Considering the stock is trading at $115, that’s a nice upside move of about 12%. Pretty nice for an ultimate blue-chip stock that traded as high as $141 pre-pandemic.

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When we apply another of our AI tools, the Seasonal Chart, we get three of four probability readings for bullish price action over the next 20, 30, and 50-day periods.

When investors can input stocks and ETFs of all asset classes into our proprietary AI tools, much of the guesswork about whether to buy or not is eliminated. Better yet, most investors struggle mightily with when to sell a position from their portfolios. Our AI platform delivers sell signals just as precisely as it does buy signals.

17 straight profits from just October

It’s how we’ve been able to deliver 17 straight profits from just October through the first ten days of November.

RoboInvestor members benefit from is our Winning Trades Percentage of 90.29%

In fact, from the table above, the most important statistic our RoboInvestor members benefit from is our Winning Trades Percentage of 90.29%. Our algorithms that comprise the AI platform are generating profits in 9 out of every 10 trades, which is unheard of as a set of affordable tools for the Main Street investor.

Our current winning streak goes back to March 9, the last time our system incurred a loss. That was 50 trades ago. That’s not a typo – 50 straight winning trades. That’s good news for current subscribers. What’s great news is that the market is about to embark on a smoother uptrend now that the elections are behind us, a vaccine that has been discovered and a stimulus package is forthcoming.

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During this period of heightened volatility where the SPY will likely gyrate heavily due to the uncertainty of surging COVID-19 data heading into winter without a vaccine and a Senate runoff in Georgia slated for January 5 that could easily reshape the balance of power in Congress, I highly recommend investors have an agnostic AI set of tools at their disposal to navigate and trade this market landscape successfully.

Don’t get caught out in the cold trying to figure out how best to put your investment capital to work. Instead, put RoboInvestor to work. Our always thinking, always learning, always data-crunching system never sleeps. The stock market may only be open for six and a half hours per day, but at RoboInvestor, our AI-powered platform is working 24/7 for you.

Join up today, become a member, and start booking RoboInvestor profits tomorrow! I personally look forward to welcoming you aboard our journey to mutual wealth, health, and happiness. I promise, in doing so, it will be the best trade you make in 2020.

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 “I’m investing my own money in each and every stock as my AI platform identifies.”

And remember we’re not talking about day-trading here.  I’m looking for 50-100% gains inside of the next 3 months, so my weekly updates are timely enough for you to act.

Click Here – To See Where I Put My RoboInvestor Money


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