The Trend Is Still Your Friend, With Fear & Greed Trader (Podcast)

Summary

• Steven Wells rejoins the Marketplace Roundtable Podcast to discuss his views on markets as reflected in his Fear & Greed Trader service.
• Concerns over the coronavirus are real, but Wells' long term trend lines still call for a bull market.
• Favorite ideas include Abbvie (ABBV), Blackstone (BX), CVS (CVS), Fidelity National Information Services (FIS), Salesforce (CRM).

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By Nathaniel E. Baker

Steve Wells, aka the Fear & Greed Trader, rejoins the podcast to update listeners on his views of markets as reflected in the Savvy Investor Fear & Greed Trader service.

Recorded during one of last week's days of heavy selling in global equity markets, Wells conceded the coronavirus is "a real event." In general terms though, the market was due for a pullback and Wells is not overly concerned about the big picture. The long-term bullish trend remains intact.

The key is for investors not to get overly emotional over short term moves -- and moving averages. Only if the S&P 500 were to approach levels around 2940 would there be reasons for concern. (The low in the S&P was around 2954 on Feb. 28).

Wells was on the podcast last summer, where he expressed bullish sentiments especially over Alibaba (NYSE:BABA), Cisco (CSCO), Google (GOOG, GOOGL), Amazon (AMZN) and others.

He's still bullish on technology, health care, consumer discretionary, "and to some degree financials" and provided some favorite ideas for 2020.

Contents:

• 2:45 - Catch up on the last 6 months and view on today's market.
• 6:30 - Trend line discussion
• 10:45 - What level are you looking for?
• 17:00 - What concerns do you have regarding the Coronavirus?
• 21:45 - Bullish sectors and stock picks
• 29:30 - When would you look to add to your position in CRM?
• 30:45 - Time to take profits from BABA?

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Nathaniel Baker has no positions in any of the securities mentioned on this podcast. Steve Wells is long all companies mentioned on this podcast (CVS, BX, CRM, BABA, FIS) with one exception: Newmont Mining (NEM). Nothing on this podcast should be taken as investment advice.

Comments

[Mort19]

Good to hear you do another one of these Mr. Steve Wells aka Fear and Greed Trader.

Tuesday, 3/3/20 the market held the breakout area just below 3027.98 and is now giving it all back after the Fed's 50 basis point cut.

CNN Fear and Greed registering only 10 as I type.

I think we get more fear but then again the VIX registered 49.48 only a few days ago.

At least we closed above the 20 month in February, let's see what March brings.

Keep up the good work.

Peace.

[ocartaya]

Nathaniel and Steve,

Very nice podcast, well-developed line of reasoning and satisfactory conclusions. I see only one flaw in this presentation and that is the lack of mention to the role the Fed is playing and has played upon market activity. Today (3/3/20) is a good demonstration of what I am saying. The SP opened today at 3086, down from yesterday's close of 3096. It promptly went further down until at around 10:00 A it made a low at 3056. This was followed by the announcement that the Fed was cutting interest rates by 0.50% which caused the SP to go up to 3133.71 almost immediately. However, this flush of buying did not persist and at this time (1:02 P EST) the SP has gone down to 3043.04. Whatever may be concluded from this kind of price action, it should be clear that the current market is deeply connected with Fed actions.

I have no idea where the market will end today, or how it will behave in the coming days or weeks. I hope the bull trend reestablishes itself. However at this point in time, what I see is the need to be cautious, and expect tremendous volatility. As I have posted in Steve's thread, I am staying the course with one exception, yesterday I sold my shakiest stocks, the noncore ones, mostly at a loss. This was done to raise cash and to take tax losses. This also positions me better for what I see is a coming period of high volatility and instability, but also of opportunity.

Steve is completely correct in saying that the bull trend will establish itself again. The issue that is not clear to me is how long it will take and how far down the market (SP) will go before the bull trend is again established. I want to point out that every time the Fed cuts rates it decreases its ability to intervene to buoy the market as it just did early this morning. I cannot say if the intervention was successful or not until a few days go by. However, the margins the Fed is playing with are thin and the amount of debt in its balance sheet is very large, and I am afraid it may deplete its ability to intervene in the market before very long.

Again, it was a very nice presentation, all the best.

[Nathaniel Baker]

Fair point. The Fed is always a wild card and we saw that again today. But you can't fight the Fed. Even people who read the tealeaves for a living don't always (or ever) get the Fed right.

We'll just have to see what happens. For now I'm pretty sure that Steve's trend lines are holding but perhaps he can speak to that in a little more detail.

[ocartaya]

@Nathaniel E. Baker

I am not trying to read, predict or anticipate the Fed in any way, all I am saying is that they are running fast out of room to support the market.

[UNCLEJUNIORSOPRANO]

STEVEN WELLS SOUNDS MORE CREDIBLE THAN JIM CRAMER. I BELIEVE HIM, & I DO BELIEVE THAT BABA IS VERY LIKELY TO HIT 250+ ALMOST IN 2 SHAKES OF A LAMB'S TAIL.

[OlderThanDirtDave]

Awesome interview!! Thanks :-)

[therealjseo]

Long $ABBV