Tag Archive for: stock market

Spencer Li

Market Analysis – Which Tech Stocks to Buy? (Shopping List)

market analysis pic 5 1

As tech stocks continue to surge, while the S&P 500 and the general economy lags behind, it is important to select the right sectors and stocks to invest in.

Also, as the US gradually opens its economy and talks of a new potential vaccine surfaces, will these be able to boost the V-shaped recovery of the stock market?

And more importantly, which specific stocks are the best to invest in?

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Market Overview

Market Overview

While most of the markets are sideways or in weak trends, we see that a few things continue to remain strong, such as Gold, the US dollar, and the NASDAQ.

 

Upcoming News for the Week

Upcoming News

 

How is the Economy Faring?

There seems to be a large disparity between various sectors, and last week several famous fund manager like David Tepper and Stanly Druckenmiller said that they feel the market is too expensive at current levels.Economy Faring

 

Some good news on the virus front, with a potential vaccine being found. It might still take months before we see an end product, but at least this gives us some hope.Economy Faring 2

 

As the US gradually reopens its economy, so far we have not seem any sharp spike in cases, so that is a good sign. However, since there is a delay between infections and testing, only time will tell.
Economy Faring 3

 

Is Gold Starting a New Super Trend?

We have been getting some solid buy signals for Gold, and the charts show that it has potential to break new highs.

Super Trend Super Trend 2 Super Trend 3

 

NASDAQ vs. S&P 500

There is a curious divergence on the NASDAQ versus the S&P 500, which is due to the fact that tech stocks have fared much better and recovered faster than the rest of the economy.

Since this divergence could persist or even widen, it makes sense that we should continue focusing our investments in tech counters.

Since my visit to Silicon Valley and various offices there in 2018, I have been very bullish on the tech sector.

NASDAQ

Which Tech Stocks to Buy 3

NASDAQ 2

Choosing the Right Sectors to Invest In

Looking at where the big money is flowing, Warren Buffett is selling off the airlines and financial stocks, while the Saudi sovereign fund is buying up huge chunks of US stocks.

Invest In

Invest In 2

 

Best Tech Stocks to Invest In

Here is the shopping list of my favourite tech stocks, which I plan to buy and hold for the long-term.

  • Alibaba (BABA)
  • Tesla (TSLA)
  • VISA (V)
  • Mastercard (MA)
  • Facebook (FB)
  • Amazon (AMZN)
  • Mircrosoft (MSFT)
  • Apple (AAPL)
  • Google (GOOG)
  • Disney (DIS)
  • Nvidia (NVDA)
  • Shopify (SHOP)
  • Paypal (PYPL)
  • Salesforce (CRM)

 

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If you are interested to start your journey with our closely-knit community, click here: https://synapsetrading.com/the-synapse-program/

Here is some feedback from our students:

“Spencer has simplified a system which allow us to identify trade opportunities from the chart. The step by step identifying the market and setups helps making technical analysis simpler to understand.” – Siong Boon

“You make it so easy to trade, just by following the 4 setups.” – Tan Jiansen

“Course is awesome with key examples and setups to start trading!” – Robert Tan

“Gd. Anyone who want to trade profitably should attend this program.” – Jason Tan

“I learn how to read charts more accurately without tedious drawing of charts and proper money management techniques. 2 thumbs up!” – Joel

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Spencer Li

Market Analysis – Economy is Tanking But Stock Market is Rising?

market analysis pic 6

As various countries started loosening the lockdown to save the flailing economy, we get news reports of new infections starting to surge.

At the same time, we see multiple asset classes surging in the market, creating a stark contrasting reality.

The big question is, which is leading and which is lagging? (Economy vs. Financial markets)

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5 Bullish Asset Classes

Economy is Tanking But Stock Market is Rising

It is quite rare to see so many asset classes perform so strongly, especially when the economy is not doing well, and this is probably due to excess liquidity.

In addition, many of these asset classes usually move in opposite directions from one another, which makes it all the more strange.

Here are the 5 asset classes:

  • NASUSD – Nasdaq stock index
  • XAUUSD – Gold
  • USDIDX – US Dollar index
  • TNOTEUSD – 10-year treasury bond
  • BTCUSD – Bitcoin (not listed above)

 

V-shape Recovery for the Stock Market?

The stock market (especially the Nasdaq) has already recovered almost all its losses for the year, but will it be able to chug ahead and make new highs?

V-shape Recovery for the Stock Market

 

According to the Wall Street Journal, here are 5 reasons why the stock market is rallying so strongly despite the economy not doing well.

V-shape Recovery for the Stock Market 2

 

On the other hand, we are also seeing a large outflow of funds from stock markets, so could this be investors starting to take profits after the recent strong rally?

V-shape Recovery for the Stock Market 3

 

Will Lockdowns End Soon to Save the Economy?

Last Friday we also had the NFP (non-farm payroll), and although it was slightly better than expected, the numbers still do not look good, unless they find a way to reopen the economy safely.

Save the Economy

 

Several countries have started to loosen the lockdowns and get the economy back to normal, but it seems like a tricky balancing game / whack-a-mole, because any small outbreak can trigger new lockdowns all over again.

Over in Russia, the outbreak seems to be getting worse as well.

Save the Economy 2

Taking My Profits for Bitcoin at $10,000

Recently, Paul Tudor Jones mentioned in an interview that he is bullish on the stock market, and buying Bitcoin to hedge against inflation.

Taking My Profits for Bitcoin

 

If you have been following our Bitcoin trades, we have been accumulating since $4,000+, and we have taken profits at $10,000 last week, so we will be waiting for lower prices to buy again.

Taking My Profits for Bitcoin 2Taking My Profits for Bitcoin 3Taking My Profits for Bitcoin 4

This is one of our best trades this month, with a profit of more than 100%. This shows that you do not need to be making many trades a day, but rather be patient and wait for the best opportunities, then strike when the iron is hot. Congrats! ???

 

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If you are interested to start your journey with our closely-knit community, click here: https://synapsetrading.com/the-synapse-program/

Here is some feedback from our students:

Trading Journey Today

“I signed up for the training course just 2 weeks ago, and i am still quite new to trading. Took some trades on the daily signals that Spencer posts daily, and very happy to have made 17% returns so far and covered back my course fee.” – Sandy

“I followed Spencer and bought Bitcoin, and have made more than 50% returns although I entered a bit late. Very impressed by the accurate timing.” – Kai

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Spencer Li

How to Pick the Market Bottom (As Well As Market Tops)

how to pick the market bottom

There is a common fallacy amongst many investors that because you cannot time the exact market tops and market bottoms in the stock market, therefore you cannot time the market at all, and market timing should be avoided.

This is simply not true.

While it is impossible to buy at the exact market bottom and sell at the exact market top, it is definitely possible to time your entries and exits to minimise your risk and maximise your returns.

A wise trader once told me that if you want to time the market, you must be willing to give up the top 1/8 and the bottom 1/8 of any move.

This means that instead of trying to capture the precise turning points in the market, we should focus on capturing the remaining 75% of the move, which forms the meat of every trend.

This is true not just for the stock market, but also very relevant to any market, like forex, commodities, etc. It also works on any timeframe, such as swing trading, intraday trading, position-trading, etc.

In this video, I share 2 simple strategies that a new investor or trader can use to pick tops and bottoms easily.

The first method has to do with scaling in, which is similar to dollar-cost averaging.

By studying how much stock markets usually decline (30-60% during corrections, you can allocate your capital to buy in at certain fixed points, such as the 30% mark, the 40% mark, the 50% mark, etc.

This allows you a low-risk way to buy in near the bottom, and the best part is that you do not even need any knowledge about how to read charts or how to analyse price trends.

The second method requires a bit more skill, as you will need to be familiar with technical analysis and reversal chart patterns.

By identifying bearish reversal chart patterns (such as the double top at the 2008 top), as well as bullish reversal chart patterns (such as the inverse head and shoulders pattern at the 2009 bottom), you will be able to time your trade near the top and bottom of every major move.

Enjoy the video, and remember to “like” and “subscribe”!

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Spencer Li

Market Analysis – Oil Futures Hits Negative for the First Time in History!

asset classes 210420

If you have been keeping up with the news, you will know that oil futures (May) have hit negative territory for the first time in history, and that has spooked the stock market as well.

Going forward, will this be the catalyst that causes another leg down in the stock market, or will we see the lockdowns ending soon, and the economy returning to normal?

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Did You Catch This Epic Oil Crash?

If you are wondering why oil prices managed to go negative, the reason is quite simple:

Oil costs money to store.

Due to the economic collapse, oil isn’t being used much.

So all the storage facilities are filled up. So nobody who can store it will buy it from you.

If you want to get rid of oil, you have to pay someone.

Epic Oil Crash

When oil was trading at $20, we were already short with a target of $10.

To be honest, I did not really think it could go that low, and was prepared to take profits along the way.

But sometimes if you get the direction right, you might get lucky and enjoy a windfall profit.

 

Epic Oil Crash 2

It is worth noting that only the May contract dropped drastically, while the June and July contracts remained much higher.

This means that traders are expecting some economic recovery (and an increase in demand?) in the coming weeks or months.

 

Epic Oil Crash 3

Epic Oil Crash 4

Something interesting to note is the divergence between stocks and oil, shared by one of community members.

How Will This Affect the Stock Market?

Affect the Stock Market

Comparing across different asset classes, we can see that crude oil and the 10-year treasury are bearish, while the long-term treasury bonds and Gold are bullish.

The S&P 500 is somewhat sideways, and has not decided which way it would follow.

 

Affect the Stock Market 2

Most fund managers seem to think that the recovery will be U-shaped, meaning we can expected a prolonged sideways movement in the stock market while the real economy takes its time to recover.

The second most popular option is the W-shape recovery, meaning they expect another leg down to test the prior lows. This one has my vote as well.

And lastly only 15% think a V-shape recovery is likely.

 

Affect the Stock Market 3

Based on what I posted last week, there are 2 potential areas which I feel offer a high probability short trade, and if prices manage to clear the 3000 level, then I will rethink the W-shape hypothesis.

Updates Regarding the Covid Situation

 

Covid Situation

Although the number of cases seem to have peaked in most major economies, and the US might want to relax its lockdown and resume the economy, there is a high risk of a second wave of infections, which might actually drive the second leg down of the stock market.

Also, the number of cases in developing countries seem unusually low, which is likely a case of not doing much tests. Hence there is a real risk that we might see an explosion of cases once the testing scales up.

Covid Situation 2

Now that things have started to stabilise, many countries are starting to point fingers at China for their slow disclosure of the virus, thus allowing it to spread globally and wrecking havoc worldwide.

This could lead to more global tension and conflicts going forward.

As you can see, there are always many exciting trading opportunities in the markets, and I think that another big move is coming really soon, so now would be a really great time if you plan to start learning about trading & investing.

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Here is some feedback from our students:

“I am more confident to trade better with the setups I have learnt. I confident to meet my goals if I take action.” – Joseph Benjamin

“Really enjoyed the training by Spencer. He makes a complicated topic easy to understand and actionable.” – David Lee, Offset Pte Ltd

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“Happy with the course as it gives a good intro and holistic approach. A unique TA approach to market. Also comes with many tools to help us kickstart the process.”

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“A comprehensive and insightful course that is useful for those looking to understand technical analysis better.” – Daniel Tan

“Would recommend this course to others. I think, more focus on each type/setup will be good.” – Junnaidy

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If you are interested to start your journey with our community, click on the link below: https://synapsetrading.com/the-synapse-program/

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Spencer Li

Market Crash: Is it Better to Sell Everything or Hold On? (For Your Long-Term Investment Portfolio)

market crash hold or sell

Recently in this stock market crash I have been getting this question a lot, and I think it applies not just to this market crash, but to all large market corrections in general.

So, is it better to sell everything in your investment portfolio, or to hold on till the market recovers?

In this video, I share my thought process on how I make my investment decisions for my long-term investment portfolio, and I offer you two important pieces of advice which you can use to strategize your own investment portfolio.

In deciding whether to cash out, you need to determine if you are using an active or passive investing strategy.

If your portfolio strategy is passive investing like dollar-cost averaging, or annual rebalancing of an all-weather portfolio, then whether the market is up or down should not have an impact on your strategy, and there is no reason to change your portfolio strategy and panic sell just because there is a market crash.

If your investing strategy is more active, such as value investing, or asset rotation, and you are good at it, then by all means follow your strategy of rotating your assets into safe haven products like cash or bonds.

The problem that most people face is that they do not have a portfolio strategy in the first place. And if this is the case, then should you hold on to what you have, or sell it in case it goes lower?

In the past 50 years, the market has only corrected 30% or more about 5 times, and only 50% or more about twice. So we need to think about this in terms of a trade-off between upside vs. downside potential.

If the market has already corrected 30%, and you did not manage to liquidate your portfolio earlier, at this very point in time, how much lower can it go? Another 20-30% more?

But if you sell off and it recovers to the previous highs before you can buy back in, the gains you will miss out are 40-50%.

So you need to decide if the downside risks you are avoiding is worth the potential gains that you could miss out on.

Another major consideration is whether you are currently adding to your portfolio (cash inflow), or drawing out from your portfolio (cash outflow). This will determine how aggressive your portfolio strategy is, and I will talk more about it in the video.

Enjoy the video, and remember to “like” and “subscribe”!

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