Seeker Newsletter - Week of Aug 24th 2020

Good Morning,

I hope you are doing well. With the markets set to open in a few hours, let’s dive in and go over some important market points and put together a plan for the week.

Stock Market Update

As investors, we have digested a lot of market and economic data the past few weeks. The majority of Q2 earnings have been reported, still some large corporations report this week, but the economic data continues to be mixed.

Just this past week we saw extremely positive data and sentiment from the homebuilder sector, but at the same time we saw jobless claims reclaim above the 1 million threshold, that it briefly dipped under in the previous week.

Congress has still been unable to come to agreement on another round of stimulus, but I think it is more a matter of “when” not “if” we get it. It will be interesting to see how the market will respond being that this next round has been discussed for quite sometime now, it should not be a shock to anyone.

The S&P 500 hit a fresh new record high this week, but things have started to slow down as we grind closer to election time. Volume levels have also decreased and with much of the earnings and major data behind us, I am not sure the market has much of a catalyst to take a huge leap higher any time soon. I fully expect this choppy trading as the markets begin to consolidate.

Let’s take a look at how the markets did last week and through the year.

YTD/Previous Week:

Dow: -2.8% Dow: +0.3%

S&P 500: +4.8% S&P 500: +0.5%

Nasdaq: +25.6% Nasdaq: +1.7%

Pretty flat week for all the major averages, but some larger tech names helped keep their respective averages in the positive with the likes of Apple (AAPL) and Tesla (TSLA).

Both companies are moving closer to their actual stock splits they announced last week, and both stocks remain on fire since the announcement.

Last week, shares of TSLA rose 11.7%, while shares of AAPL increased 8.5%.

Many technology names have massive valuation surpluses right now, many that I believe are MUCH too high, but due to the current conditions and the momentum, I believe if you own them you stick with them.

I have received MANY direct messages over the past few weeks regarding TSLA and AAPL and whether or not I would buy them. If they are not in your portfolio currently, I personally do not feel comfortable adding at these levels.

Now, that does not go on to mean ALL technology names are overvalued, because they are not and I will mention a few below.

Watchlist

Here are a few stocks on my watchlist this week:

$PEP $SBUX $CSCO $CRM (earnings) $VZ $OKTA (earnings) $RTX $ABBV

A Look At The Charts

The charts we will take a look at today include: $CSCO, $OKTA, and $RTX.

1) Cisco Systems (CSCO)

If you are a $CSCO shareholder, you recall the pain from a few weeks ago. In a time when many are working from home and technology companies from all over have been making out like bandits during this pandemic, old reliable Cisco Systems has been stuck in the mud.

Few weeks back the company reported decent earnings, but shareholders were not impressed. I believe it was more there product mix was impacted more so than others and it was not a look at things to come.

As such, I believe shares of CSCO are appealing at these levels. The day the stock fell 10+%, I did not want to jump in for fear of “catching a falling knife,” as they say.

When stocks fall that aggressively, look for them to find their footing or support before jumping in.

As you can see in the chart above, shares of CSCO have tested that 42 level about 5x now, which gives me some comfort that $42 seems like a solid support level and the downside is limited. In addition, the RSI is trading at 33, signaling oversold territory.

I am comfortable entering a position around $42.

2) Okta, Inc. (OKTA)

Okta reports earnings this week after the close on Thursday. If you have followed me for awhile now, you know I am a fan of $CRWD. The cloud security play is an angle I like moving forward and both $CRWD and $OKTA are major players with strong growth ahead in the space.

Be careful getting in before earnings on Thursday, but as of right now the chart looks enticing. Some of you may remember how I called the $CRWD pop a few weeks back. $OKTA is trading in a similar fashion.

The stock has found strong support at the $194 level with resistance at the $227 level. Right now the RSI is at 51, but if you look at the MACD, we are going to get a BULLISH crossover take place today, which should drive the stock higher in the near term. Of course earnings can change everything for better or worse.

If I get in at all, it will be before the bell today with the MACD crossover about to happen.

3) Raytheon Technologies (RTX)

Next, let’s look at a chart from a different angle now. The first two names have bullish indicators, but $RTX, a name I am VERY fond of long-term, has a chart headed in the wrong direction.

Let’s just start from the top with the RSI. RSI of 44 is a great number, but as you can see we are trending down at a rather steep pace. I want to see that begin to flatten and turn around soon before making any moves.

Next, the stock price has been falling consistently, though rather slowly, for the past few weeks. The stock blew through the $62 support level last week. The next level of support is $58 and then $56 after that, which the $56 level looks pretty strong.

Lastly, to pile on even more, the MACD is about to make a BEARISH crossover, which is negative for the short-term.

Ok Mark, so what’s the plan? Well, I would like to see some of these indicators turn around for me, especially the RSI, but if the stock falls around the $58 level, I will most likely be adding to my position.

Here is a look at some of my potential moves this week

$CSCO - Buy around $42

$OKTA - Buy pre-market or wait until AFTER earnings

$RTX - Buy around 58 (if technicals turn around)

$PEP - Buy $135

$SBUX - Buy around $74/75

$ABBV - Buy around $92

Seeker Portfolio

The Seeker Portfolio was started at the beginning of August with $10K as a way for many of you to follow along on building a portfolio and the moves I am making.

• Additions this week:

Not really an addition, but the $ABBV put I sold expired worthless to the buyer so I retain the $70 premium.

Here is an updated look at the current portfolio:

Solid week for the portfolio this past week, looking to keep the momentum going. Current portfolio dividend yield is 5.1%.

New Resource On REITs

For those of you unaware, I put on presale a new eBook I have coming out at the beginning of September. The book is titled “A Guide To Understanding REITs.”

Being that Real Estate is a sector I have worked in for a number of years, REITs are a passion of mine and an area I look to have roughly 20-25% exposure to.

If you are interested in obtaining a copy, I will leave the presale price up for subscribers. Click HERE to obtain a copy.

As always, if you have any questions at all, please feel free to DM me on Twitter or simply email me at [email protected].

Have a great week!

Mark