Weekly Update: The Bear Market is Dead
Stocks continued to power higher this week, which so far confirms what my indicators are telling me…
The low is in, and we are at the start of a new bull market.
You should have received a text alert from me with a short YouTube video the other week highlighting the major signals that the market has turned.
If you need a refresher, click here to watch the video now.
Since the low made on June 17, we’ve seen four follow-through days on the S&P 500 as well as two 90% up-volume days.
This shows high-conviction buying, and the market is rallying because of it.
We have also seen 10 days in a row of net new highs on the Nasdaq.
In a bear market, we tend to see more stocks making new lows than stocks making new highs.
In a bull market, the opposite is true.
The 10-day new high streak is the longest we’ve seen since the market began selling off in January.
The percentage of stocks above their 50-day moving averages is now a bullish 65%.
And the percentage above their 200-day moving averages seems to have bottomed and is now surging higher.
With so many indicators confirming the bear market is dead, it is time to start looking for good investments.
That is why I issued a buy recommendation for McKesson Corporation (MCK) this week.
Our New Stealth Trade
Today, let’s break down that trade in a bit more detail…
When it comes to picking stocks, I take a top-down approach. It is a simple three-step process:
- Market Direction
- Market Sector
- Stock
First is market direction. For all the reasons we just discussed, I believe the market is now moving higher.
Next, I want to find the strongest groups or sectors in the market.
All things being equal, a bullish setup in a strong sector is going to outperform a bullish setup in a weak sector nine times out of 10.
It’s not rocket science. Stocks tend to move in herds.
Earlier this year, it was oil, chemical and shipping stocks leading the way. Pick any name in the group, and there’s a good chance you made money.
Right now, I’m seeing strength in solar, medical, consumer services and food/grocery stocks.
MarketSmith breaks the stock market down into 197 industry groups and ranks them based on their performance.
Here is the top 10%…
This is where I like to focus my scans, because I know the odds of finding a big winner are vastly improved by sticking to the top groups.
In the “wholesale drug supply” group, McKesson is the top stock in terms of both relative strength and earnings per share.
And a quick look at the chart shows a textbook breakout setup…
The stock formed a four-month base with resistance at $335 and a nice tight pivot point on the right side of the chart.
Relative strength was steadily rising, and all major moving averages were trending higher.
The up/down volume ratio was bullish, and there were several high-volume accumulation days within the base.
None of this is a guarantee the trade will make money. But the odds are definitely stacked in favor of a profitable outcome.
I’ll keep you in the loop as this trade progresses, and I’ll be sure to issue an alert as soon as it’s time to take profits.
Stay tuned!
Stealth Trades Watchlist
Going forward, your Weekly Updates will look a lot more like this one…
They’ll include more information on our current stock recommendations and put less of a focus on our weekly Watchlist.
Don’t worry – The full Watchlist is still available on our website right here!
But it’s important to remember that not all of the stocks on our Watchlist are actionable.
When it’s time to make an official recommendation for our Trade Tracker, I’ll let you know on our Alerts page right here!
Join the Insiders
Now, if you’ve ever wondered how I developed a proven track record of trading along the insiders like corporate CEOs, CFOs, executives and board members…
Do yourself a favor and check out my latest Insider Effect presentation!
Corporate insiders are always buying or selling shares in the companies they operate. These folks have a footing of knowledge that Main Street investors simply do not.
I covered my strategy for trading alongside corporate insiders and generating potentially massive gains as a result.
Live Coaching Session
Monday, at 3:00 p.m. EDT, we’ll be hosting our regular weekly coaching session for Stealth Trades.
We’ll send you a login reminder that morning, just so you don’t forget.
We’ll cover all of our new stocks on the Watchlist as well as the rest of the stocks inside Stealth Trades.
You need to attend this session to get the most from your subscription!
In the meantime, you can watch the replay of our latest Stealth Trades session right here.
Best wishes for your trading,
Ross Givens
Editor, Stealth Trades
P.S. Click here to learn more about my Insider Effect strategy and see what you could be missing out on.