June 5, 2020

No-one is Talking about this on Wall Street

Midas Letter
Midas Letter
No-one is Talking about this on Wall Street

The S&P 500 Index (INDEXSP:.INX) has broken above its 200-day moving average. This would normally indicate a bullish sentiment and price action, right?

When digging a little deeper and taking an internal look inside the index, we notice a couple key trends:

1… 97% of stocks within the S&P 500 are trading above their 50-day moving averages;

2… but only 47% of stocks within the S&P 500 are trading above their 200-day moving averages.

There lies the discrepancy. The shorter moving average indicates a monstrous short-term trend to the up side. A huge momentum that can’t sustain itself on its own. Couple that fact with half of those stocks not trading above their 200-day MA, and we see a vulnerability in markets where there lies a high  probability we of dipping back down…

This means: the V-bounce recovery we’ve seen since February could be nothing more than a very large dead-cat bounce (a temporary recovery of prices from a decline that is then followed by the continuation of the downtrend) and markets will revert back down. Perhaps the only reason markets recovered as well as they did is because of the speed in which we dropped in the first place.

With that major theme to keep in mind when entering the market today and in the coming weeks, these are opportunities to make profits. Here is what Wealthpress Head Trader Roger Scott is still looking at:

Weapons & Defence Stocks…

Although, the riots stemming from the murder of George Floyd  hasn’t been reflected in the overall price action in markets, there have been stocks that are on the rise. Gun stocks have jumped after police-brutality protests and looting  plagued the US. Firearm manufacturer Sturm Ruger & Company Inc (NYSE:RGR) is up 65% since March. As governments and police forces are accumulating tasers, developers of such weapon products for law enforcement like Axon Enterprise Inc (NASDAQ:AAXN) are up 80% since March.

Shorting stocks which have seen little-to-no upside amid the last months market rise…

Watch the full interview to learn more about Roger’s shorting strategy and the stocks he is looking at to capitalize on market growth while limiting any downside risk.

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