Power Trading & Markets– January 26, 2020
Power Trading & Markets– January 26, 2020
A Week of Selling is Constructive for the Bull Trend
Welcome every one from myself and the Yellow Tunnel crew. Our goals are to hone and sharpen trading psychology, awareness, and skills that produce consistent profits resulting in a compounding of wealth in traders’ portfolios. We bring to the aggressive trader a set of tools and trade discipline that is second to none and we’re highly confident about our ability to deliver on these promises.
CURRENT TRADING LANDSCAPE
The market continued to make an all-time high into Friday’s down session despite ongoing fear of the spread of the virus in China. Semiconductors have led all sectors and sub-sectors. Shares of Intel pushed to a multi-year high following strong Q4 earnings accompanied by upbeat forward guidance.
The market outlook for the next four weeks is slightly different. I expect shallow corrections in the next two weeks and the bull trend to be intact. However, the market is approaching overbought levels we have not seen for a few months, and the market is due for a short pullback by the end of February. We are remaining buyers on the pullbacks as long as the market is above the 50 days MA on SPY.
Please watch 320 and 325 support levels using SPY. I updated the Aggressive Power Trader list. I added LRCX and few other stocks to the watch list. I predict the semiconductor sector will outperform the stock market in the next five days.
SECTOR SPOTLIGHT
This week, I want to pay some particular attention to 5G and the promise of what 2020 will mean to investors that dedicate a portion of their investment capital to this massive buildout that will make possible Internet of Things (IOT), Artificial Intelligence (AI), Autonomous Driving, and the transfer of data to the cloud at 100 times faster than 4G technology is able. And these are just the most obvious applications among vastly more that address industrial, transportation, medical, utilities, and finance.
Fortunately for certain investors that only like to invest in ETFs, there is a handful of dedicated 5G ETFs to work with – my favorite being the Defiance Next Gen Connectivity ETF (FIVG). The largest holding in FIVG is one of our top-performing stocks within the– NXPI Semiconductors (NXPI) which has returned +17% to our members in less than two months.
Some of the more high-profile holdings include Qualcomm Inc. (QCOM), Analog Devices Inc. (ADI) and Skyworks Solutions (SWKS). However, seeing some of the mid-cap and smaller outlier 5G stocks race higher is giving the sector even that much more credence. Shares of Teradyne Inc. (TER) and Qorvo Inc. (QRVO) traded to 52-week highs following strong earnings beats. So, there is widespread prosperity in the 5G sector this is seeing strong fund flows.