Busting Bond And Stock Market Myths: Weekly Nifty 9

Welcome to another trading week!! In appreciation of all of our daily readers of finomgroup.com content, we offer the following excerpts from our Weekly Research Report. Our weekly report is extremely detailed and has proven to help guide investors and traders during all types of market conditions with thoughtful insights and analysis, graphs, studies, and historical data/analogues. 

Research Report Insight #1

We’ve identified individual stocks in previous Research Reports that we deemed reasonable opportunities, and we understand that many Finom Group members have benefited from such dissemination. Below are 2 such opportunities that were outlined in mid-October 2020, which have delivered strong profits since:

“With the Industrials sector having performed very well over the last couple of months, one stock in particular comes to mind; Caterpillar (CAT). This stock recently broke out and above a longer-term trend line.

Not only did the stock break above a longer-term trend line, it’s relative performance with the S&P 500 has also broken out to the upside (bottom panel chart). CAT is definitively signaling to investors that the uncertainties of the day hold limited potential to derail the global economy longer-term. Investors have received this message and are signaling a willingness to weather near-term storms in favor of the long-term destination.

I wouldn’t jump into CAT right away. Like the small-cap ETF, it may prove prudent to set a course of action that includes buying dips, rather than chasing rips to the upside. One of the reasons I offer such commentary is due to the fact that the recent move in shares of CAT is rather parabolic and finds the RSI (14-day relative strength index) has achieved 70, typically an overheated reading that may prove unsustainable near-term.

If small-caps and CAT don’t work for your portfolio, keep in mind that we’ve been highlighting Transports within the Industrial sector ETF (XLI). It may also prove noteworthy that Boeing (BA) is in the large-cap Industrial Sector ETF (XLI). Try as they may to push and keep BA below $160 a share, they have not been able to do so. While the stock has not broken out, does not express strong technicals and has been in a longer-term consolidation phase, it would appear the lows for the CYCLE are in for shares of BA.

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