MARKET OUTLOOK, 25 MAY 2020

This week the stock market returned to positive territory with big technology companies leading the heard.
The stock market was up this week with the S&P 500 +3.2% to end the week at 2955.45.

Moderna (MRNA) was responsible for most of the earnings this week after announcing they have preliminary results for a coronavirus vaccine, this piece of news jump-started the week as the market made most of this week’s return on this day. The fed chair had its own contribution to the elevated markets reiterating the fed has not finished it’s support of the market and still has ammunition to fight this, this declaration kept the market hovering close to 3000 psychologically critical levels

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.

Will the consumer spend again?

Consumer spending contributes almost 70% of the total United States production. In 2019, that was $13.28 trillion.

In order to show growth, the consumer needs to start spending again, these are the categories of U.S. consumer spending, ranked from largest to smallest:

housing, transportation, food & beverages, and medical care.

For the US economy to show positive improvement the consumer has to:

  1. Buy a new house – unlikely any time soon, this is by far the largest expenditure of any US household and will probably be put on hold in the next quarters.
  2. Buy a new car, commute more often – unlikely to happens soon, unless car manufacturers find a way to reduce prices significantly
  3. Buy more food & beverages – there will always be a steady demand for that so no big change up or down in the future.
  4. Medical Care – now here is a category which I believe will see an increase, the coronavirus health shock will make the consumer take a second look at health issues and decide to increase spending on personal health.

So in total, there will be a significant drop in GDP in 2020, or, in the better case, the GDP will stay put.

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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