Nasdaq was down 2.73% last week, which made my prediction for a green week wrong. Will I be able to get back on track, and will I be able to pick some strong gainers for the last two trading weeks of this year? I don't know. However, as usual, I will try my very best.
In this blog post:
- I will guide you through what I think will happen in the week ahead;
- Also, discuss a little bit about what I think you should look out for;
- And by the end, I will give you some trading tips and even tell you what I will put my money on.
Last week's wrap-up and more about 2023.
Last week's trading tip was a Chevron Corporation (NYSE: CVX).
Well, Chevron was up quite much, then started to fall. Probably, your question is, is it still in the portfolio? And how did it do?
There are only two short weeks left of 2022, and then we will be in a new year. Let's try our best to correct the last two weeks because I was very wrong on week 50.
I thought it could end green, but Nasdaq ended down 2.73%, and Dow Jones was down by 1.66%. Nasdaq is now at 10 705, and I told you the support at 10 600 is very important. Since we only have a little time till the end of 2022, I will start with 2023 because I hope you will pay attention to what I say now.
I often said on my YouTube podcast that high inflation and a recession are coming, and that's precisely what happened. Over time, many well-known experts have joined me, who also believe that it will be challenging to succeed in the stock market during the recession of 2023. To do this, you need to be a very experienced player and correctly calculate where exactly you should place your bets.
A few weeks ago, I told my podcast listeners that Nasdaq will have to take the fall down to 8000 points, have these three major falls, and then we will be done with it. I don't think it will happen now, but who knows? It could be that it starts this week, or it will likely just start as we enter the new year.
Hopefully, I am wrong. We turn up because Nasdaq has been moving sideways for some time now. Still, a fair chance that the markets can just go up, and this is the bottom. But deep down, I believe we will see more Red days.
As I said in the beginning, there are opportunities, and you can certainly reduce your losses if you do a few things:
The U.S. had stronger labor markets during 2022, and money spending was somewhat good. Still, suddenly it all can disappear because at some point interest rate cycle will simply be too high. Such numbers can kill the economy. Inflation and all the other things also accumulate to that point where people just suddenly, almost like out of nowhere, cut their expenses very hard. As a result, you will see huge drops in anything from Netflix subscriptions to morning Starbucks coffee cups. The inflation and the recession stocks will be the place where you want to be while people refuse to spend more money.
So what are the things that will not be bulletproof but, let's say, better in this period? Well, it is where we spend our last money: utilities, groceries, and other necessities we have to have. These are the stocks that will hold the very best because we have to buy bread, we have to buy milk, and we have to do certain things. These stocks will be able to put more on the cost on us because we simply need these companies' products. So this is where you want to have half your portfolio for sure.
I would go for stocks with a low P/E ratio meaning that they already have taken some beating because that will help you get some dividends and reduce risk. If I am correct, trading in a downturn market will be hard all over this year, you heard weeks after weeks of green trading tips, and it is not just pure luck. It is simply because we play longer lines.
The general risk reduction will allow you to act more riskily and a little easier finding good opportunities during the year.
Why? The governments will still spend money building up their forces and armrests.
There is already brewing a massive conflict with China, which I think will happen in 2023, so the armor industry is also where you want to be.
Now let's say that you think these big weapon companies are a little bit too high for you. Remember, you can go down the chain because there will be suppliers for them that are making insane money. And here comes another tip:
Some of these sub-suppliers can do very well as raw materials will get into a squeeze. The cost of specific components will be very high, which will make for a somewhat okay profit in some of these segments, especially anything electronic-related, so if you can go down the chain, pick out these companies which deliver to the weapon industry.
We know the United States government is sending all they can of weapons to Ukraine, and this also causes the U.S. armor inventory to go down. And they have to restock to prepare for the upcoming conflict with China.
Ethically it is not a nice thing. It's borderline disgusting, I would say, but you can avoid it or play on it. Unfortunately, the common investor opinion will not change the world. So if you play it, you can stay longer in the market as it will soon come to an upturn.
Week 51 - All you need to know:
Anyway, that was 2023. We will have more time to speak about that. Let's focus more on week 51.
Nothing is majorly coming out this week.
- U.S. Existing Home Sales Report - December 21, 2022;
- Mullen Automotive, Inc. (MULN) will host a Stockholder Meeting on December 23, 2022, at 9:30 a.m;
- U.S. stock markets on Friday, December 23, 2022. The stock markets close at 1 p.m. on early-closure days. Bond markets close early at 2 p.m.
Oil is moving up. As I said last week, I would buy Chevron Corporation (NASDAQ: CVX) because I think there will be a rebalance in oil, and that very low oil price should hold good support below, meaning low risk with a potentially huge upside.
I still stick to that, believing that energy prices will just explode shortly. Finding that exact day when it happens is very hard. However, I position myself into these things with expectations that they will be correct. So far, I've been fortunate.
And there are more than oil stocks when it comes to energy. Gold was up $8 last week to $1807, and the ten years treasury yields fell slightly, staying around 3.48. As is all of this, bruise for, I would say, a high chance for a good end of the week.
A few interesting earnings reports will be released this week as well:
- Monday (December 19): HEI, CUK, EBF
- Tuesday (December 20): NKE, FDX, BHP, GIS
- Wednesday (December 21): MU, CTAS, TTC
- Thursday (December 22): PAYX, KMX, AVO
Some of these stocks follow a certain pattern, and you can trade that pattern. It doesn't have to happen the same all the time, but generally, it can give you a slight idea.
At StockInvest.us, we analyze more 26 000 tickers, and right now, 25% of all these tickers give BUY signals. In comparison, it was 32% last week.
We are getting into a place where things are starting to get oversold. A much more interesting place to be if you want to be lucky. Because being lucky in something that is going up is ten times easier than in something going down.
Trading Ideas:
It would be best if you remembered that the risk is high. We are playing on statistics and the fact that the percentage of the BUY signals is low.
Since this portfolio has performed well, and these two weeks have been generally good, I can afford to be gambling.
If you have any doubts, you shouldn't do it. You better stick to the safer stocks and not gamble too much.
I will, however, go for three more stocks this week, putting us up at five stocks in the portfolio which is a long time since we have to go back to week 43 when we opened four trades. In total, this week, I will have five positions.
I have found three stocks that are very different. They are risky and can go either very well or very badly.
Firstly, I searched for a stock that can hold somewhat well with still potential upside, to be a safer stock. So, I decided to choose - Meta Platforms Inc (NASDAQ: META).
We have been trading META several times before with success, so I think it is time to repeat. Last time (week 45), when I bought it for $94.50 and sold om $112.80, it gave us a 19.37% profit.
I believe there is an upside to META since the downside should be somewhat limited, so if I am wrong and the markets go down, I suppose META might hold relatively okay, not bringing us into a very deep red.
So Meta is the first trading tip. Then I will go for ZIM Integrated Shipping Services Ltd. (NASDAQ: ZIM). It is interesting one, but I see a 20% short-term upside. We are gambling on a swing trade here, which comes with some risk but shouldn't be the highest risk.
While META is very liquid, the two following stocks are not that liquid. However, ZIM should still have enough trading volume.
The last one will be highly gambling, we will not put as much into it, but if I am lucky, we can kick off something. It will just be in and out. We will not sit for very long. I am speaking about Exela Technologies, Inc. (NASDAQ: XELA). Trading around some 10 cents will be extremely risky. So, I recommend it only for those of you who have a high-risk portfolio, willing to take the gamble. I think there could be an upside as some of these penny stocks usually have a recap during the end-of-year trading. Not sure it will fall in. If I am correct, we go for an okay week. The portfolio should be somewhat good. If not, we will have to take some losses, but hopefully not.
Energy, gas, and oil will do very well, and transport companies should deliver them to consumers.
SUMMARY:
The stock market has been volatile lately, with the Nasdaq down 2.73% last week and the Dow Jones down 1.66%. This was unexpected, as the stock market was predicted to end the week on a positive note. However, despite the downturn, there are still opportunities for investors to make a profit.
One way to potentially reduce losses in the face of market uncertainty is to invest in recession-proof stocks, or stocks that tend to perform well during economic downturns. These might include utilities, groceries, and healthcare companies, as people tend to prioritize essential goods and services even during financial strain.
Another strategy is to focus on inflation-proof stocks or those that can withstand rising prices. These could include companies in the technology and healthcare sectors, as these industries tend to be less affected by inflation.
It's important to note that no investment is completely bulletproof, and it's always a good idea to diversify your portfolio to spread out risk. However, you can minimize losses and maximize gains by being strategic about your investments and keeping an eye on market trends.
Looking ahead, it's important to keep an eye on the economy and any potential recession or inflation. Some experts predict that we may be headed for a recession in 2023, with inflation potentially playing a role. This could be a difficult time for the stock market, but investors may be able to weather the storm by being strategic and focusing on recession- and inflation-proof stocks.
Overall, the key to successful investing is to stay informed, do your research, and be willing to adapt to changing market conditions. By following these principles, you can potentially make informed decisions and maximize your profits, even in the face of market uncertainty.