An Emotional Storm

There are no new trades from the Stock Trader Alert system today, but I would like to offer up my thoughts on the recent market action and provide a bit of insight into the current short-term pullback.

As you know, markets experienced a sell-off on March 20 and 21. It was the biggest one-day drop since the November election.

There’s no reason for this sell-off, economically speaking. Job numbers are good, housing sales are good, manufacturing figures are good and the Fed has indicated that it’s going to go slow on future rate hikes.

Every investment guru with whom I have spoken agrees: The downswing is driven by political and emotional factors — specifically, the failure of the American Health Care Act (AHCA).  For reasons I don’t quite understand, markets have assumed that everything they wanted to see from a Trump presidency and GOP Congress would come to pass quickly.

Given its centrality to the Republican agenda, a failure to repeal Obamacare quickly suggests that other critical issues — such as tax reform and infrastructure spending — may be at risk too.

I’ve predicted these issues since well before the election. And the markets’ emotional reaction to the fallout is one of the reasons I wanted to roll out the Stock Trader Alert portfolio. The whole point of this trading system is to remove emotion from trading and allow you to realize returns better than the broader market.

And while the short-term pullback has crimped our situation recently, the overall portfolio continues to succeed. (For more information on returns, see our backtesting data and the full portfolio history.)

Remember that to fully participate in this portfolio, you need to purchase all 10 stock positions and the ETF position.

The Stock Trader Alert Portfolio

We continue to hold 50% of our portfolio in the SPDR S&P 500 ETF (NYSE Arca: SPY).

The remaining 50% of your portfolio should be divided evenly among the following 10 stocks:

Once again, feel free to contact me at stocktrader@banyanhill.com. I appreciate every bit of feedback you send my way.

Kind regards,

Ted Bauman
Editor, Stock Trader Alert