In the last five trading days (Jan. 13 – Jan. 19) the broad stock market has traded sideways. The S&P 500 index reached new record high of 3,826.69 on Jan. 8 following new stimulus package hopes. Since then, it has been fluctuating. Last Friday the index got back to short-term support level of 3,750 before bouncing back higher again.
The S&P 500 has lost 0.09% between Jan. 13 open and Jan. 19 close. In the same period of time our five long and five short stock picks have lost 0.32%. Stock picks were relatively slightly weaker than the broad stock market’s performance last week. Our long stock picks have lost 0.62% and short stock picks have resulted in a loss of 0.02%.
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.
Our last week’s portfolio result:
Long Picks (Jan. 13 open – Jan. 19 close % change): AXP (+4.24%), SPGI (-0.46%), SHW (-2.11%), ECL (-2.95%), HD (-1.84%)
Short Picks (Jan. 13 open – Jan. 19 close % change): PLD (+3.19%), WY (+0.12%), DIS (-1.23%), TTWO (+0.14%), EL (-2.11%)
Average long result: -0.62%, average short result: -0.02%
Total profit (average): -0.32%
Stock Pick Update performance chart since Nov 18, 2020:
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, Jan. 20 – Tuesday, Jan. 26 period.
We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (Jan. 20) and sold or bought back on the closing of the next Tuesday’s trading session (Jan. 26).
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.
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 Materials
- sells: 2 x Consumer Staples, 2 x Real Estate, 1 x Communication Services
Buy Candidates
ConocoPhillips (NYSE:COP) - Energy
- Stock remains above the previous local highs - uptrend continuation play
- The resistance level is at $48 and support level is at $45
Pioneer Natural Resources (NYSE:PXD) – Energy
- Possible uptrend continuation following short-term correction
- The resistance level is at $137.50 – short-term upside profit target level
Citigroup (NYSE:C) – Financials
- Stock trades within a short-term consolidation following the recent run-up – uptrend continuation play
- The support level is at $62 and resistance level is at $68
Disclaimer: All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits' 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, Paul Rejczak 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. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s 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. Paul Rejczak, 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.