Stocks continue to be overbought as we wait for this week’s earnings numbers — and more in Tuesday’s stock market recap.
I’ve identified a great commercial real estate stock that is set to benefit from our economy ramping back up. It also has an ascending triangle chart formation and may break out soon.
The second stock I’ll give you today is on a downward trend. Unlike the real estate stock, it is in a descending triangle and I expect it to pull back even further.
In today’s stock market recap, we’ll talk about current momentum levels and what I expect markets to do in the near future.
Government stimulus and the bond market has pushed stock levels too high, too fast.
The S&P 500 is trading at its highest level in 20 years, with 96% of stocks trading above their 200-day moving averages. The Nasdaq 100 is cooling off slightly. And if it continues to pull back, it may take the S&P 500 to lower levels. Most of the stocks in the Nasdaq are also part of the S&P 500.
With markets at their current levels, I would focus on industrial and basic materials stocks that are expanding-economy focused. These defensive sectors will be a good play until we see momentum levels dip down to around 50%. I would stay away from large-cap stocks for now.
CBRE Group Inc. (NYSE: CBRE) is up around 75% in the past six months and is currently in an ascending triangle. A stock in this position tends to break out — especially if it’s in a sector that is heating up. CBRE is the world’s largest commercial real estate services firm. As our economy gets going, companies are expected to increase operations. Office space and commercial real estate will expand as well.
The second stock is the world’s largest prepaid debit card company. It’s weak and falling into a descending triangle. As people make more money, the need for this sector will likely decrease. It is currently trading at around $44 and I expect it could fall back to its base of $35.
In today’s video, you’ll discover why medium-term momentum levels are overbought… whether the S&P 500 is set to rise or fall… trading action for the long bond… whether the 10 major sectors remain fragmented… and I’ll reveal my weak stock that’s breaking down.
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Check back each morning for Roger’s Radar and the most important news and numbers in the WealthPress stock market recap.