Flash Alert! Vlad’s Buy Point For The S&P

by Vlad Karpel

RoboStreet – March 4, 2021

Inflation Fears Roil Markets 

Sellers remained in control of the stock market this week as the Nasdaq entered correction territory, down a full 10% as of mid-day yesterday. The heavily-weighted technology index continues to weaken amid continued upwards momentum in long-term interest rates.

10-yr Treasury note quoted around 1.54%

The yield on the 10-yr Treasury Note quoted around 1.54% after Fed Chair Powell said the Fed’s current policy stance is appropriate. That means that the central bank isn’t interested right now in using its tools to control yields. The move higher in yields is a direct reaction of expectations for economic growth and inflation with the bond market testing the Fed’s resolve.

Powell concerned only if disorderly market conditions threaten the achievement of the Fed’s goals

Mr. Powell acknowledged that the recent upward adjustment in real rates was notable and caught his attention, further stating that he would be concerned if disorderly market conditions threaten the achievement of the Fed’s goals. The market found this dovish language to be one of just watching and seeing, but unwilling to be responsive.


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Technology stocks continue the selloff

If seeing the market correct by 10% in a week isn’t the definition of disorderly market conditions, then I’m not sure what is. Investors are going to see the market The SPY pulled back hard as technology stocks continued the selloff. Value stocks have outperformed with metals and miners one notable leader (XLF, XLE, XME).

SPY range remains between $368 and $395

Short-term, the SPY range remains between $368 and $395. The DXY pulled back (reason values stocks outperformed). The TLT is in the process of building a bottom.

Key support is now at $368-$375

The short-term correction has started and probably has one to two weeks of retesting recent lows. The key support is now at $368-$375 and I expect the SPY to retest these levels in the next two weeks.

Worse part of the selloff is now behind us

The bottoming process has started and the worse part of the selloff is now behind us.  Market will finish the bottoming process in the next two/three weeks and will resume bullish momentum by the end of March.  

I would be a buyer using any short-term corrections and use a dollar-cost averaging strategy to accumulate positions. Based on our models, the market (SPY) will trade in the range between $368 and $395 for the next 3 weeks.

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Algorithm-based buy and sell programs pushes the market to its support and resistance levels quickly

One thing that we can expect is for the corrective process to run its course in short order. The evolution of high-frequency trading and algorithm-based buy and sell programs pushes the market to its support and resistance levels quickly, wherein the case of a market sell-off, the negative mood doesn’t have a chance to fester.

TLT test a key support level

Shares of iShares 20+ Treasury ETF (TLT) layout the technical picture for the long-end of the bond market, where TLT is testing a key support level. Certainly, the Fed is paying close attention to this level as well, not wanting to see yields push higher.

 

If the Fed felt there was a serious threat of long-dated maturities rising significantly higher, they could conduct what is called “operation twist” where they sell short-term bonds and buy long-term bonds to flatten the yield curve. It’s another monetary tool that typically used to stimulate the economy, but in this case, its objective would stabilize long-term bond yields.

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DB Commodity Index Tracking Fund “A” Model Grade rating in Tradespoon Forecast Toolbox

Driving inflation concerns has been the across-the-board increases in commodity prices both in soft and hard goods. Shares of Invesco DB Commodity Index Tracking Fund (DBC) carry an “A” Model Grade rating in our proprietary AI-driven Tradespoon Forecast Toolbox, trading up against near-term resistance at $17.52 that could set in motion another leg higher if and when breached.

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When investing in a volatile market, nothing makes for a better analytical read on a situation than the power of AI at one’s disposal. The ground has shifted under the bond market, inciting fierce sector rotation that needs to be respected and managed properly so as to reduce risk and position properly in the best sectors and stocks.

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As the market transitions from a deflationary landscape to an inflationary landscape, it stands to reason that having a real-time, market-tested AI system working for your portfolio makes all the sense in the world, especially at our very affordable rate.

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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, and my weekly updates are timely enough for you to act.

‘If you’re looking for free trading resources… click here’

Click Here – To See Where I Put My RoboInvestor Money


*Please note: RoboStreet is part of your free subscription service. Not included in any paid Tradespoon subscription service. Vlad Karpel only trades his own personal money in paid subscription services.  If you are a paid subscriber, please review your Premium Member Picks, ActiveTrader, MonthlyTrader, or RoboInvestor recommendations. If you are interested in receiving Vlad’s personal picks, please click here.