In the last five trading days (November 18 – November 24) the broad stock market has been fluctuating along 3,600 level. Yesterday it broke above short-term consolidation, as it got close to November 9 record high of 3,645.99 again. Is this a medium-term topping pattern or just some month-long consolidation before breaking to new record highs? The market is very hot right now .
The S&P 500 index has gained 0.65% between November 18 and November 24. In the same period of time our five long and five short stock picks have gained 6.57%. Stock picks were relatively much stronger than the broad stock market . Our long stock picks have gained a stunning 10.97% as they’ve outpaced the S&P 500 index on the long side. And short stock picks have resulted in a gain of 2.17%.
There are risks that couldn’t be avoided in trading. Hence the need for proper money management and a relatively diversified stock portfolio. This is especially important if trading on a time basis – without using stop-loss/ profit target levels. We are just buying or selling stocks at open on Wednesday and selling or buying them back at close on the next Tuesday.
If stocks were in a prolonged downtrend, being able to profit anyway, would be extremely valuable. Of course, it’s not the point of our Stock Pick Updates to forecast where the general stock market is likely to move, but rather to provide you with stocks that are likely to generate profits regardless of what the S&P does.
Last week, we modified our stock-picking strategy . Its year-long performance record shows that non-contrarian stock picks were outperforming contrarian stock picks by a large margin. Non-contrarian stock picks have gained 8.8% since Nov 19, 2019, and contrarian stock picks have lost 10.6% in the same period of time. Take a look at our Stock Pick Update performance chart. We included non-contrarian along with contrarian stock picks and the S&P 500 index performance (Tuesday’s open – Wednesday’s close):
Therefore we stopped picking stocks on a contrarian basis. Our 5 long and 5 short stocks portfolio is based solely on the trend-following approach.
Our last week’s Stock Pick portfolio result:
November 24, 2020
Long Picks (November 18 open – November 24 close % change): WMB (+5.02%), PXD (+15.29%), WFC (+16.63%), C (+11.69%), ROK (+6.22%)
Short Picks (November 18 open – November 24 close % change): TXN (+2.32%), QCOM (-2.22%), DG (+1.94%), BBY (-4.67%), HRL (-8.24%)
Average long result: +10.97%, average short result: +2.17%
Total profit (average): +6.57%
The new Stock Pick Update performance chart:
Let’s check which stocks could magnify S&P’s gains in case it rallies, and which stocks would be likely to decline the most if S&P plunges. Here are our stock picks for the Wednesday, November 25 – Tuesday, December 1 period.
We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (November 25) and sold or bought back on the closing of the next Tuesday’s trading session (December 1).
We will provide stock trading ideas based on our in-depth technical and fundamental analysis, but since the main point of this publication is to provide the top 5 long and top 5 short candidates (our opinion, not an investment advice) for this week, we will focus solely on the technicals. The latter are simply more useful in case of short-term trades.
First, we will take a look at the recent performance by sector. It may show us which sector is likely to perform best in the near future and which sector is likely to lag. Then, we will select our buy and sell stock picks.
There are eleven stock market sectors: Energy, Materials, Industrials, Consumer Discretionary, Consumer Staples, Health Care, Financials, Technology, Communications Services, Utilities and Real Estate. They are further divided into industries, but we will just stick with these main sectors of the stock market.
We will analyze them and their relative performance by looking at the Select Sector SPDR ETF’s .
Based on the above, we decided to choose our stock picks for the next week. We will choose our 5 long and 5 short candidates using trend-following approach:
- buys: 2 x Energy, 2 x Financials, 1 x Industrials
- sells: 2 x Utilities, 2 x Health Care, 1 x Consumer Staples
PXD Pioneer Natural Resources Co. – Energy
- Stock accelerated its uptrend after breaking above the resistance level of $98
- Uptrend continuation play
- The next resistance level is at $116
- Risk of a downward reversal
WMB Williams Cos., Inc. – Energy
- Uptrend continuation play
- The support level is at $21.50
- Risk of a downward reversal
AXP American Express Co. – Financials
- Bullish flag pattern breakout play
- The support level is at $110
Summing up , the above trend-following long stock picks are just a part of our whole Stock Pick Update . The Energy and Financials sectors were relatively the strongest in the last 30 days. So that part of our ten long and short stock picks is meant to outperform in the coming days if the broad stock market acts similarly as it did before.
We hope you enjoyed reading the above free analysis, and we encourage you to read today’s Stock Pick Update – this analysis’ full version. There, we include the stock market sector analysis for the past month and remaining long and short stock picks for the next week. There’s no risk in subscribing right away, because there’s a 30-day money back guarantee for all our products, so we encourage you to subscribe today .
For a look at all of today’s economic events, check out our economic calendar.
Stock Trading Strategist
Sunshine Profits – Effective Investments through Diligence and Care
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All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.