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Market Avengers



As the market has been making new lows (expectedly for those who follow me) I went though my watchlist to pick ideas for playing the bounce.


My method is simple - make a portfolio of stocks that have

  1. a long-term demand for its goods and services

  2. a name and a chart history allowing to judge about the long-term trend

  3. financials and fundamentals are ok (there is nothing inherently wrong with the stock)

  4. a clear Elliott Wave structure, demonstrating clear and deep correction

  5. a divergence on Relative Strengh Index, signalling that the bottom might be in place

If everything aligns chances are that the stock outperforms the market when the latter bounces or resumes the uptrend.


Why I decided that the market is poised for a bounce when headlines scream sky is falling?

  1. Headlines, generally, are good indicator of public mood. They pump extreme fear or non-substantiated optimism at market bottoms and peaks respectively.

  2. Nasdaq, SP500 and DJI charts indicate possible pause and rebound from current levels before next wave of decline. See my previous posts here and on Tradingview. Such rebound can take months and live through the summer. It may be a sharp move or the market can waver sideways - I do not know at this point. However, those individual stocks that satisfy all 5 criteria above are likely to bounce harder.

Ok, now let's look at the list.

Name

Ticker (click for chart)

Industry

Paypal

Payments, crypto

Block, Inc.

Payments

Coinbase

Cryptocurrency exchange

DocuSign

​Digitalisation integrating AI and blockchain solutions

Transocean

Energy, offshore drilling

Teva

TEVA

Pharmaceuticals

Biogen, Inc.

Biotechnology

Kinross Gold Corp.

KGC

Gold mining

Mosaic

MOS

Fertilisers

Word of caution: all of the stocks mentioned above are non-dividend stocks (except MOS and KGC). The portfolio is fairly leveraged, aggregate level of debt to equity is below.

However, financially all companies are in good shape despite recent terrible stock price performance.

Such terrible performance is exactly the factor that drew my attention to the above stocks. In most cases the price formed a text book example of corrective wave 2 and I expect the portfolio to generate xx% results.

https://www.investopedia.com/terms/e/elliottwavetheory.asp


You can track how well Market Avengers are doing using this link. I will post updates here and via Instagram and Telegram. The below allocation is arbitrary, heavily skewed towards RIG since I expect a major short-term move in oil on the back of geopolitical issues. After that I am likely to reallocate.


Check back later for links to TEVA, KGC and MOS charts from the table detailing the Elliott Wave count.


Good luck with investing,

Denis


Disclaimer: the above is not an advice and represents my personal view and intention.

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