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How to Find Winners in a Humdrum Market
From Baltimore – A single word sums up what’s driving financial markets right now…
Uncertainty.
Over the past two months, the markets have moved sideways. The S&P 500 Index has advanced only about 1.8% since May 7, and it’s trending down again as I write this.
You could attribute this lack of conviction among investors – to buy or to sell, to go risk-on or risk-off, to be or not to be – to summer doldrums, as War Room co-founder and Monument Traders Alliance Head Trade Tactician Bryan Bottarelli discusses in today’s Market Wake-Up Call video.
“The summer is usually a time [when] traders push back from the desk a little bit,” Bryan tells host and Senior Editor Rachel Gearhart, “and trading volumes reduce.”
Bryan’s certainly right about that. But I would add that a major contributor to the sideways trading we’re seeing is the fact that investors don’t know what to think about the future…
Has growth peaked? Or, instead, is the economy at risk of overheating, resulting in inflation? And, if businesses can’t draw workers back to meet demand, perhaps even stagflation?
Major indicators of market sentiment say uncertainty and anxiety rule the market at the moment. The economy is booming, yet the CNN Fear & Greed Index – which measures overall market sentiment – has suddenly dipped slightly into “fear” territory. The CBOE Volatility Index, which I think of as the best measure of market anxiety, is suddenly spiking. And it’s well documented that human uncertainty about the future often results in anxiety.
In fact, the only thing that is certain about markets right now is that investors don’t know whether they should be buying or selling, so they’re not doing much of anything.
Fortunately, that doesn’t mean you can’t find winning stocks.
“Even with a summer slowdown, there are still profitable opportunities to take every single day,” Bryan tells Rachel.
In today’s video, Bryan talks about one company that he really likes right now. He initially recommended it to subscribers in his Trade of the Day Plus service back on March 17, 2021. Since then, the stock has risen 22.7%. Compare that with the broader market as measured by the S&P 500, which is up 8.4% since mid-March…
As you can see in the chart above, Bryan’s March 17 pick has outperformed the market handsomely since he recommended it. And he still likes it.
“This is going to be a great stock for the next six months,” Bryan says. (If you want to find out more, you’ll want to watch the video.)
Bryan mentions another “reopening” trade – Avis Budget Group (Nasdaq: CAR) – that Trade of the Day Plus readers were able to close for partial gains of 24.71% and 7.65% over 32 days and 42 days, respectively, earlier this year.
Winner After Winner
Through all the uncertainty of these markets, Bryan says, “We’ve been able to continue hitting winner after winner.”
That’s an understatement (and trust me, it’s very unlike Bryan to be understated). The War Room recently celebrated its second anniversary and just hit 1,000 winners. That’s an average of about three winners per trading day since its launch!
(This past week, I wrote about how I was there when Bryan and Oxford Club CEO and Executive Publisher Julia Guth came up with the idea for The War Room and put it on the surprisingly quick path to becoming the monumental success it is today.)
Counting on the entire market to rise and lift all the boats with it is currently not an option, unfortunately, as the uncertainty that the markets are feeling will likely continue for the foreseeable future. And that will be the case until we get a better read on inflation, the economy and the U.S. labor market. Visibility on all of these at the moment is very poor.
That said, you can still identify good companies and winning stocks, even in this market. Bryan’s picks in Trade of the Day Plus and The War Room are perfect proof of this.
If you want to know more about The War Room and the incredible – almost unbelievable – guarantee Bryan is making to new members, definitely take a look at this.
Enjoy your Sunday,
Matt