Bought Tyson Foods

The S&P 500 continues to ping pong around 2850. It has closed poorly for the past two sessions, especially today.

ALERT: today I purchased Tyson Foods TSN. It was a small position, no more than 3% of portfolio value…call me CHICKEN !!!

For a quick explanation of the rationale, please watch this short video: https://youtu.be/Ofe-N8b2EdQ

FYI- comments are always appreciated on the YouTube channel.  I may not have the opportunity to reply, but I do read them all.

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COVID Range Bound Recovery

The S&P 500 has been faltering for the past three sessions and is back near mid-April levels.  For now it’s range bound between the upper 200 day moving average and the lower 50dma.  Flip a coin to determine if the market will breakout or breakdown from here. 

Here’s my assessment of the current situation:

 MEDIA NARRATIVE

  • Second Wave of outbreaks as economies reopen
  • Declining corporate earnings
  • Depression level unemployment
  • Food shortages

TRUMP

  • Points blame at China and increases rhetoric about tariffs, reparations, and economic de-linking.

INVESTOR SENTIMENT

  • Investors develop amnesia about recent Stimulus intervention and demand more SPENDING.

What I find interesting is that today’s levels are similar to the peaks seen in Jan 2018, Sep 2018 & Jun 2019.  Back then the FEAR was Trade War, Tariffs, Impeachment…ultimately none of that static mattered and the Market went on to set new record highs.

I remain cynically hopeful for another dip, to be used as a long term buying opportunity.

FYI- watch for the next episode of the Wealthsteading Podcast, #312 will be informative & FUN !!!

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COVID confirmed breakout above 50dma?

The Market looked like it might take a dip due to poor economic data.  Then today it popped back up when Gilead announced positive results from their COVID-19 treatment trial.

Is this a head fake or a real breakout above the 50 day moving average?  It looks solid and the S&P 500 is only 2% away from its 200 day moving average.  I’ve been hoping for a secondary pullback so that I could take advantage of another dip.  But that opportunity might be fading.

Either way, I think this is still a buyable market.  The critical risks are:

  • 2nd wave of infections as the economy opens back up or during the Fall/Winter flu season.
  • Unemployment stays high.

Follow-on infections are a real threat, but just like a bad Hollywood horror movie, the sequel is seldom as frightening as the original.

Elevated levels of unemployment would be detrimental to some sectors of the economy, but remember what’s bad for Main Street, isn’t necessarily harmful for Wall Street.  As we saw after the Great Recession, laid off workers generally equate to higher profits for the Fat Cats.

S&P 500 corporate earnings will eventually surpass $170.  Zero interest rates will support escalated price per earnings valuations, likely above 20.  That puts the future value of the S&P 500 at or above 3400 (170 x 20). More than 15% higher than today’s price.

My math might be wrong, but I continue to see this “crisis” as a buying opportunity.

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Sold Amazon

Today I sold my position in Amazon that was acquired on 12/11/2019: (https://www.investablewealth.com/bought-amazon/ )

Amazon has weathered the COVID-19 storm very well.  While I believe that it has an excellent future, I wanted to use the recent run up as an opportunity to lock in a profit. 

Amazon has hit resistance at around $2425 multiple times.  It could be about to breakout…or breakdown.  I’m happy with my profit and plan to deploy that money into a stock that has yet to recover.

Wish me luck.

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2nd Wave Panic- Relief Rally Failing

As the COVID19 death tolls peak and stabilize, the Relief Rally looks like it’s failing. 

The S&P 500 lost support at its 50 day moving average.  If it breaks its short term trend line at 2700, then it’s likely the index will fall to at least the 2500-2600 range.

Given the extreme media pessimism over “depression level unemployment” and “zero Oil”, I wouldn’t be surprised if the lows of March 23 are tested.  In fact, I’d welcome the dip as a buying opportunity.

INVESTING TIP:  It’s important to realize that your biggest enemies are the evil emotional twins of FEAR and GREED.  

  • When the market drops, don’t fearfully panic and sell. 
  • Likewise, don’t be greedy and try to exactly time the bottom.

To be wealthy and happy, avoid the evil twins and instead focus on the beautiful triplets: Faith, Hope & Charity !

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