If Markets Don’t Rally This Week, It’s Going to Get Ugly
Talk about ugly; last week was “fugly.”
Surging COVID spikes across Europe caused closedowns and some lockdowns.
The U.S. registered almost 100,000 new COVID cases on Friday, bringing the total number of infected Americans to more than 9,000,000.
The Dow fell 5.5% on the week, the S&P fell 5.6%, and the Nasdaq Composite fell 7.1%.
Like I said, it was an ugly week.
The once-vaunted tech darlings, the leadership group that levitated equity markets since 2009, faltered.
Despite some good earnings numbers and some misses on some metrics, tech stocks looked ugly.
- Facebook Inc. (NasdaqGS:FB) ended the week down 7.59%.
- Apple Inc. (NasdaqGS:AAPL) lost 5.3% on the week.
- Amazon.com Inc. (NasdaqGS:AMZN) lost 5.21%.
- Netflix Inc. (NasdaqGS:NFLX) lost 2.56%.
- Microsoft Corp. (NasdaqGS:MSFT) lost 6.36%.
- And Google’s parent company Alphabet Inc. (NasdaqGS:GOOG), which was up 3.43% Friday, still ended the week down 0.12%.
The only good news last week came on Friday when stocks rallied, if you want to call it that, into the close, as opposed to selling off and closing on their lows of the day. Markets could have sold off brutally into the close and freaked out investors heading into this week.
Instead, Friday’s close sets up a possible bounce this Monday. The ugly Friday that could have been a whole lot uglier, is our best hope this week.
If we don’t see buyers come in Monday and close markets higher, and don’t see more buying on Tuesday, even if markets end up higher by a little on Tuesday, the worst may be yet to come.
Be Smart, Be Cautious
The narrowing gap in the polls between Biden and Trump and how a tight race could lead to a contested election, which could lead to more selling, is what’s worrying investors the most.
To boot, it’s happening at the same time as COVID spreads and closedowns loom, and there’s no stimulus to tide people and businesses over.
With no stimulus in sight, headed into what’s likely to be a contested election, with prospects for civil unrest and who knows what else, investors might be hard-pressed buying this dip with any conviction.
But they better start buying, because if they don’t, we’re headed lower, maybe 10% lower, maybe more.
Just be careful out there. It could get rough.
In the event that we do know the outcome of the election sooner rather than later, I’ve already lined up my top three buys for each scenario:
If Biden wins, you’re going to want to think of scooping up shares of Brookfield Renewable Partners LP (NYSE:BEP), Nikola Corp. (NasdaqGS:NKLA), and Canopy Growth Corp. (NYSE:CGC). You can read the full article I wrote on it and the reasoning behind each stock choice here.
If Trump gets reelected, you should consider grabbing shares of Lockheed Martin (NYSE:LMT), Exxon Mobil (NYSE:XOM), and Summit Materials Inc. (NYSE:SUM). I also wrote a full article on these, so click here to check that out.
Now, these picks are contingent upon the outcome of the election. The picks for Biden’s potential win won’t work if President Trump gets another four years, and vice versa. They’re all situational.
More than ever, now’s the time to be extra cautious. That’s my job as your Chief Investment Strategist. To make sure you are prepared for anything.
Double-check your protective stops, turn on notifications from your brokerage app, and keep an eye on the futures.
You’re going to want, no matter what, to invest in stocks that are no-brainers and to purge your portfolio of ones that are doomed to fail, if not already on the path to ruin.
I’ve compiled a full list of 50+ stocks that are blaring BUYS and ones that are total losers. The ones you should consider buying are ones that I feel will stay strong no matter what 2020 throws our way. They’re solid picks, and they’ll carry you through every peak and valley.