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Expect More Bankruptcies in 2021. Caution and Opportunity Ahead, by Mike Simonato.

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Written by:  Mike Simonato, Ontario Presenter: “My Three Friends”, Dec. 3, 2016, VectorVest International Online User Group (Click here to View: My Three Friends)

What I’m watching: I expect a lot of Bankruptcy and Court cases in the first half of 2021 which will affect the markets. Previously I mentioned a K Shaped Recovery. I still believe this. There are businesses that will survive and some will thrive however many won’t. This will not only affect the markets it will make it very important to choose wisely which stocks we chose to trade. While there are risks involved in this market environment there is also an opportunity for big rewards.

As always nothing more than my 2 cents and I hope it is of Interest and Value.

Now for the markets:

USA:

DOW JONES:               Stuck at stubborn resistance  RT Bearish

NASDAQ:                      Possible Bull Flag  RT stuck in a tight channel between 1.09- 1.17

S&P 500:                       Possible Bull Flag  RT Bearish

MKT TIMING:             Price stalled this week.  RT and BSR Fell, MTI still sideways

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READ:                           Views, Earnings update, Strategy

From VectorVest Views: EARNINGS UPDATE.
As of tonight, our Market Climate Graph shows that the 50-Day MA of the VV S&P500 WatchList Average EPS, rose another $0.02 to $6.72 per share, while forecasted average earnings growth remained at 2%/yr. The Market Climate Graph shows that the Earnings Trend Indicator, ETI, also rose 0.01 point to a level of 0.93. It is important to note that both the 50-Day MA of the S&P500 Watchlist and the ETI have been trending higher for the last 12 weeks. Nevertheless, since it is still below 1.00, the market is in a Bear Market Scenario. Stay tuned for our next Earnings Update.

VectorVest Strategy: After five straight week-over-week wins, the Price of the VectorVest Composite (VVC) was unable to shake stimulus concerns, rising COVID cases and a jump in weekly jobless claims this week and ended lower. Overall, it traveled $1.332 per share through the week to close just $0.004 per share lower at $57.346 per share, enough for the Primary Wave to turn Dn. All of our other key Market Timing indicators, the BSR, RT and MTI, also lost ground. Nevertheless, we’ll want to see the Price of the VVC move lower for one more week to give us a preliminary signal of a sustainable downtrend. VectorVest does not advocate buying stocks with three yellow lights and a DnUp situation:

CANADA:

PTSE:                            Stalled at January level but holding 8 EMA, RT also holding around 1.26

VENTURE:                  Pulled back to 8 EMA.  Now rising again and RT Rising

MKT TIMING:           Price stalled this week  MTI fell, BSR fell then flat and RT fell slightly

READ:                         Views and Strategy

VectorVest Strategy: Vaccine hopes and rising healthcare stocks boosted sentiment this week and the Price the VVC/CA finished higher. Overall, it gained $0.14 per share over the last five trading days to close at $24.18 per share, a new all-time closing high. Additionally, all three of our key Market Timing indicators, the RT, BSR and MTI, also ended higher compared to last Friday. Nevertheless, with the MTI finishing above the historically oversold level of 1.30, investors should cautiously play the market to the upside and keep an eye on the Color Guard in the coming week for further market direction.

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