MARKET OUTLOOK, 01 JUNE 2020

S&P 500 above its 200-day moving average following a broad sector recovery

The stock market extended its rally this week on continued optimism about an economic recovery and a fear of missing out on further gains. The S&P500  was up +3.0% for the week, base on a nice uptrend in All 11 S&P 500 sectors which had finished in the green and supported the S&P 500 to close above its 200 days moving average.

U.S.-China relations are front news again as there was uncertainty regarding China approving legislation to tighten its control over Hong Kong.

Trump said the U.S. will remove special treatment for Hong Kong, will review practices of companies from China on U.S. financial exchanges, and will terminate its relationship with the HWO (World Health Organization), as he is trying to maneuver domestic riots from home.

AlphaOverBeta Next Week Forecast

We have chartered a number of bands for the S&P500, these bands are used for risk control and decision making.

  • 295-310 – This is the best scenario we have for the rest of 2020. This bullish range holds as long as the price is above 295
  • 280-295 – is the current locked trading range, when prices went above 295, it triggered a bullish signal in our systems.
  • 265-280 is the bearish zone.

This Time It’s Different ?

During the market meltdown of March-April, I saw many posts trying to compare the current crisis with the crisis of 2008 and even 1929.

How can this crisis be compared to the previous ones when there is nothing that is similar between this and previous crisis other than the fact that this is a crisis!

Everything is different now – not the same economy, market valuations, reasons for the crisis, government, fed … And even if you could compare, every statistician will tell you that a sample of two is barely enough to get a reliable result, so the comparison is meaningless.

The desire to compare comes from the human inability to live in uncertainty for long, we just have to find the crumbs in the forest to lead us home even if they are simply not there.

AlphaOverBeta uptrending watchlist

Using AOB Dashboard to spot trending opportunities in the market.

 

Investment Hidden Gem

Out top-ranking stock for the week is Arconic Corporation (ARNC)

Arconic Corporation manufactures and sells aluminum sheets, plates, extrusions, and architectural products in the United States, Hungary, Russia, China, France, the United Kingdom, and internationally. It operates through three segments: Rolled Products, Extrusions, and Building and Construction Systems.

  • Sector: Industrials
  • Industry: Specialty Industrial Machinery
  • Market Cap(M$): 1,400
  • 52 Week High: 34.27$
  • 52 Week Low: 5.8$
  • Forward PE: 5.46
  • Trailing PE: 5.75
  • Q Earning Growth: 0.46%
  • pegRatio: 0.83


Analysts Recommendations

DateFirmTo GradeFrom GradeAction
16/03/2020Morgan StanleyEqual-Weightmain
30/03/2020Morgan StanleyEqual-Weightmain
24/04/2020BairdNeutralOutperformdown
07/05/2020BarclaysEqual-Weightmain

Specific stocks in these sectors may be found on our Dashboard

AlphaOverBeta sectors ranking

Below you may find our leading and lagging sectors.

For the first time in two months all sectors are green, this is a very bullish market lead by the home builders and oil, gas sectors that have been week in the early cycle.

Recommended Trading Strategy – “Intelligent Pairs Trading”

Performance Trading Strategy Report:

Intelligent Pairs Trading began trading on 2015-05-11 and is trading US equities and ETFs in the New York stock exchange.

Traders who understand ETFs trading benefit trading this strategy.

Here is a summary of Intelligent Pairs Trading performance:

+ 98% of trades in any 12-month window, were profitable.

+ 80% of trades in any year, were profitable.

+ The maximum drawdown since inception is -14.85%.

+ The largest profit was while trading IVV, Intelligent Pairs Trading gained 3,665$

+ The largest loss was while trading IVV, Intelligent Pairs Trading returned -1,681$

+ The gain in the last 3 months: 3.5%, which are 4,636$.

+ The gain in the last 6 months: 13.3%, which are 16,216$.

AlphaOverBeta Trades

We have a number of specific stock picks from the above sectors in our website,
You may find all of AlphaOverBeta trades in the Real Time Trading Updates of our website

Trade Safely,
Alon

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