MARKET OUTLOOK, 11 MAY 2020

This week the stock market returned to positive territory with big technology companies leading the heard.
The Nasdaq was the major leader with a +6.0% gains for the week thus marking the index as positive for the year, followed by the S&P500 +3.5%.

Did new information move the market up this week?

The main topic this week was also the reopening narrative, some optimism with positive vaccine developments, and the common belief that the month of May is a transition month to total reopen of the economy, a rally in oil prices, a high buying volume in the mega-cap stocks, and a fear of missing out by professional money managers who sat on the sidelines.

AlphaOverBeta Next Week Forecast

As the market had a tremendous run since the 2182 lows with no looking back, we expect it to take a breather as there are many .. many traders who believe the worst is yet to come and the market cant have such a strong break from the real economy, we are on the opposite side estimating another leg up and not down, although we listen to traders who make complete sense with the disconnect argument, this is why we will remain bullish as long as the market remains above 2800, below 2750 will force us to rethink our current bullish stand.

What’s the emotional price of trading current markets?

Trading is no easy process, for many reasons – psychology being one of the major causes of the challenge.

In normal days, if ever there were any normal days in the market.., the psychological aspect is there for one reason – uncertainty.

The human brain is not functioning at its peak when there is uncertainty, and the market provides much of that lately.

The current state is uncertain and the road ahead is also unclear, which makes trading these markets a very challenging process.

Experience to the rescue – to combat uncertainty, personal and collective experience can help a lot.

Experienced traders have been in many similar situations – if it wasn’t the Coronavirus it was M&A, mortgage or any other financial crisis.

The cause is not the major parameter here, its the market reaction that is the same in all of these crises.

It seems different every time but experience shows that there is nothing new – it’s just another financial crisis.

If you are young to trading, use the more experienced traders to show the way and developing your own sense of direction using personal and other trading insights.

AlphaOverBeta uptrending watchlist

Using AOB Dashboard to spot trending opportunities in the market.

Investment Hidden Gem

Out top-ranking stock for the week is Delphi Technologies PLC (DLPH)

Delphi Technologies PLC engages in the design, development, and manufacture of integrated powertrain technologies worldwide. The company operates through four segments: Fuel Injection Systems, Powertrain Products, Electrification & Electronics, and Aftermarket.

Specific stocks in these sectors may be found on our Dashboard

 

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

AlphaOverBeta sectors ranking

Below you may find our leading and lagging sectors.

For the first time in many weeks, we see the Oil and gas sector on the recommended list, this definitely calls for a bottom in the Oil-related companies( note this is not the Oil ETF, these are actual companies that are Oil related), the valuations for such companies has reached very favorable levels and buyers are paying the current low prices, we are long on the sector in our portfolio.

As a norm for the past few weeks the Bio and Healthcare sectors are moving forward and are bullish sectors, this makes sense in the current environment, as they race to find a cure for the coronavirus , the first one to get to the finish line will have most of the gains in this race.

Recoomended 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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