The Bull Market is back! At first, I brush this aside. However, I decided to check out the details myself and also did some trading on the SPY options on 13 Apr 2020 . I am happy to inform this is going up. I do expect some correction to come in before it goes up again. So I will be tracking this on daily basis for my own portfolio.
Disclaimer: But please note that this article is not an recommendation for you to buy or sell any stocks. You need to do your own analysis and take your own decision based on your current skills/experience level. I am just sharing this as more of an educational insights of what’s happening in the market amidst all this COVID-19 situation. I have been trading for more than 20 years myself.
Why Is Bull Market Back?
In the video above, Adam shared his views of why he feel the bear market is officially dead and the new Bull Market in Stocks Has Begun with the S&P 500 rallying 20% from its lows. I look at the figures and I tend to agree with him. Adam shares his insights on how to identify a bottom in a bear market and why it is important for investors to start buying stocks even before there is a recovery in the economy. As of 10 Apr 2020 (when I checked), the 4 signals that the bull market is back are:
1. Extreme Volatility and Extreme Oversold Conditions (market was in this condition in my check)
S&P500 William%R below 80% and ATR above 80%
2. Peak levels of unemployment (it was at 14.7% during check)
When unemployment claims > 450,000 or when unemployment rate > 6%, this indicates that market is near Bottom.
3. Market Rallying on Bad News (this was happening during my check)
Though there were more bad news on Coronavirus, the stock market still went up. This was because there were no further worst news that can make market goes down any further.
4. S&P 500 Dividend Yield Exceeds 30 Years Treasury Bond Yields (this was happening during my check)
The 30 Year Treasury Rate was 1.35% as at 9 Apr. However the S&P 500 dividend yield was 2.31%
Note that Stock Market is leading indicator of economy by 6 to 9 months. It is not the economy. Hence, economy can be in recession but stock market can be going up. This is the key lesson to be noted here. These are essential strategies for stock traders and investors who want to improve their investment and trading performance.
Here’s 20 Stocks You Can Consider During Crisis
In case you wanted to see which are the 20 stocks that you can buy during this crisis period, check out the video below. Note that I have already got into some of this stocks. Hence, I have some vested interested in some of them.
The 20 stocks are as follow. Go through the video to have an idea of when you can consider trading them. The 3 criterias that Sean used to come up with these 20 stocks are:
Criteria 1 – Business must be sustainable
Criteria 2 – It must be cash rich especially in current COVID-19 situation
Criteria 3 – It must have low or no debt
One quick check before doing further in-depth analysis of the stocks is to check if current PE ratio of that stock is lower than half of the past 5 years PE ratio. The only exceptions to the above guideline would be:
BRKB – as long as its PE is below 1, it can be considered
Tencent – as long as its PE is below 30, it can be considered
With this below said, below are the 20 stocks listed. The number in bracket is the past 5 years PE ratio for that stock as at 24 Mar 2020. Use this to compare against its current PE ratio when you do your analysis
China Sunsine (5.53)
Now is the time to start buying up those stocks that you have been eyeing for a long time. But I strongly suggest you do not put in all your money into 1 stock. Spread it out as we will not know when the correction will come in. Trade safely.
To your success,
P.S. If you are into other passive incomes streams, read our post on those areas as well.