Stock pick update: EQIX possible uptrend continuation

Header: Which stocks could magnify S&P 500’s gains in case it rallies? Take a look at a part of our Stock Pick Update. We have included Utilities, Industrials and Real Estate stocks this time.

In the last five trading days (September 30 – October 6) the broad stock market has been fluctuating within a short-term consolidation. The S&P 500 index set new record high of 3,588.11 on September 2. But then the market fell below February 19 high of 3,393.52. Recently it set a local low of 3,209.45 before bouncing back above 3,300 mark. So far, the decline looks like a downward correction of a 63.7% rally from March 23 corona virus low at 2,191.86.

The S&P 500 index has gained 0.59% between September 30 and October 6. In the same period of time our five long and five short stock picks have gained 0.88%. So stock picks were relatively stronger than the broad stock market. Our long stock picks have gained 2.45%, but short stock picks have resulted in a loss of 0.69%.

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.

This means that our overall stock-picking performance can be summarized on the chart below. The assumptions are: starting with $100k, no leverage used. The data before Dec 24, 2019 comes from our internal tests and data after that can be verified by individual Stock Pick Updates posted on our website.

Below we include statistics and the details of our three recent updates:

  • October 6, 2020
    Long Picks (September 30 open – October 6 close % change): SO (+7.13%), SEE (+9.80%), MAS (-2.17%), EOG (-1.23%), FB (-1.27%)
    Short Picks (September 30 open – October 6 close % change): CVX (+0.07%), VZ (0.00%), MS (+0.15%), PPL (+5.90%), NEM (-2.67%)

Average long result: +2.45%, average short result: -0.69% Total profit (average): +0.88%

  • September 29, 2020
    Long Picks (September 23 open – September 29 close % change): MLM (+4.25%), MAS (-0.88%), ROST (+0.03%), OXY (-10.24%), JNJ (-0.28%)
    Short Picks (September 23 open – September 29 close % change): KMI (-3.26%), MCK (-1.92%), VZ (-0.99%), AMCR (-1.27%), IR (+1.82%)

Average long result: -1.43%, average short result: +1.12% Total profit (average): -0.15%

  • September 22, 2020
    Long Picks (September 16 open – September 22 close % change): CF (-5.53%), ROST (- 4.54%), SPG (-8.33%), XOM (-2.55%), CME (-1.50%)
    Short Picks (September 16 open – September 22 close % change): MPC (-0.86%), JPM (-5.19%), ETR (+1.03%), SHW (-3.12%), MCD (-2.59%)

Average long result: -4.49%, average short result: +2.15% Total profit (average): -1.17%

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, October 7 – Tuesday, October 13 period.

We will assume the following: the stocks will be bought or sold short on the opening of today’s trading session (October 7) and sold or bought back on the closing of the next Tuesday’s trading session (October 13).

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.

The stock market sector analysis is available to our subscribers only.

Based on the above, we decided to choose our stock picks for the next week. We will choose our top 3 long and top 3 short candidates using trend-following approach, and top 2 long and top 2 short candidates using contrarian approach:

Trend-following approach:

  • buys: 1 x Utilities, 1 x Industrials, 1 x Real Estate

  • sells: 1 x Energy, 1 x Communication Services, 1 x Technology

Contrarian approach (betting against the recent trend):

  • buys: 1 x Energy, 1 x Communication Services

  • sells: 1 x Utilities, 1 x Industrials

Trend-following approach

Top 3 Buy Candidates

CMS CMS Energy Corp. – Utilities

  • Stock broke above its previous local highs and downward trend line – possible uptrend continuation play

  • The resistance level is at $64

  • The support level is at $60

RTX Raytheon Technologies Corp. – Industrials

  • Stock broke above its short-term downward trend line – possible advance within a medium-term consolidation

  • The resistance level of $64-65

  • The support level is at $56

EQIX Equinix, Inc. – Real Estate

  • Stock remains above upward trend line – possible uptrend continuation

  • The resistance level of $800

  • The support level is at $740

Summing up, the above trend-following long stock picks are just a part of our whole Stock Pick Update. The Utilities, Industrials and Real Estate 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.


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