Bull Bear Investor Newsletter 5-8-2023

Thank you for being a reader of the Bull Bear Investor Newsletter.  This is where I put together an analysis on the S&P 500 and the NASDAQ.  This week I'll be giving you SPY and QQQ suggestions along with three stocks.  Also this week I'll give a Bitcoin Analysis for a ninth straight week. Finally I'll discuss PayPal as the stock I'm dollar cost averaging into based on it fundamentals for the ninth time as well. 

S&P 500 - SPY is still showing bullish sentiment based on the simple moving averages (SMA) and technical analysis.  After apple reported earnings after the bell last Thursday we got a strong close on the S&P the following day.  The regional banking crisis that I've been talking about for weeks is still playing out and we have two more banks that were seeking sale.  PacWest Bank (PACW) and Western Alliance (WAL) are the latest to be having trouble.  Neither bank has gone into FDIC receivership like First Republic the previous week.  We saw the market sell off only to bounce back on Friday on the positive outlook from Apple's earnings.  Last week we saw the Fed raise rates another 25 basis points but no real big effect on the market. I'm still taking my trades with caution because I don't believe this banking crisis is over. We do have the major economic reports coming this week that could have a effect on the market with the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday. On Friday we have the Consumer Sentiment report.  I expect to see the market to react to the CPI if we come in above expectations.  Last week's jobs report was not what the Fed wanted to see as the inflation fight continues.

Putting the Bull Bear Momentum System parameters over the SPY we get a cross of the 5 SMA below the 20 SMA about two trading days ago.  As stated in the rules 5 SMA crossing the 20 SMA is our first warning sign. Notice how the 5 SMA, 20 SMA, and price are above the 200 SMA. Probabilities say that price will continue in a uptrend.  The way this cross below looks like it will be short lived so lets wait to see if it can stay below 6-8 days before we go bearish.  What I'm anticipating is that after the CPI report on Wednesday the 5 SMA will be back above the 20 SMA.  If it plays out this way I'll wait for a bullish confirmation to enter call options.   

Looking at the NASDAQ 100 - QQQ had the 5 SMA cross above the 20 SMA about four trading days ago.  QQQ looks like its RSI is headed to 70 so if it opens positive you can enter.  If you would rather wait until the RSI pulls back to 50 or below that can work also.

Bull Bear Momentum System (BBMS) Trades

When markets are in bullish or bearish trend we look for stocks following either trend and we adjust our charts with the BBMS parameters.  See my top two below:  ORCL, META, and AMAT.

ORCL - (Bullish) Oracle just had a bullish cross of the 5 SMA crossing the 20 SMA on Friday.  You can still enter this stock if it opens positive on Monday because it looks like it will be above 70 for a few trading days. If you don't want to do that you can wait for a pullback on the RSI to 50 or below to enter a call option.

META (Bullish) META has a lot of momentum to the upside.  This stock was a pick from last week as I'm still watching it.  The 5 SMA  crossed above the 20 SMA seven trading days ago after their earnings report.    Last week the RSI didn't drop below 50 but it's currently at 54. If it opens positive you can enter since its near the 50 line.

AMAT (Bullish) Applied Materials had the 5 SMA cross the 20 SMA on Friday.  Just like the last trade you can enter on Monday if it open positive because it looks to go above 70 for a few trading days.  If you don't want to enter on Monday you can wait for a the RSI to drop to 50 to enter call options.

If you haven't read the book The Bull Bear Momentum System please take the time to do so and watch the videos for better understanding. The link is at the bottom of the email.

Bitcoin

Bitcoin is still showing price support around $27k.  I stated last week that we could get a pullback to the 50 SMA.  Last week we saw Bitcoin bounce off of the 50 SMA and push back up to $29k only to be pulled back.  This past week we have seen Bitcoin bounce up and down off of the 50 SMA showing strong support.  As I stated previously I'm looking to buy the pullbacks to the 20 SMA and the 50 SMA.  I believe it is still ok to add because Bitcoin just got back above the 20 SMA.  The block halving for Bitcoin is one year away and adding to a position now you will be early in the trend.  As I have stated in the previous weeks less supply will be on mined in the markets once the halving occurs.  Combined with inflation we could see a Bitcoin price that could 20x off of its bottom price of $15,500.  It seems impossible but we are talking $310k Bitcoin price.   Just keep dollar cost averaging.

Fundamental Analysis Stock Pick

This week PayPal (PYPL) did come back into my margin of safety (MOS) price of $72.44 this week.  I did have a buy order set to add to my position as it hit the MOS price.  It closed at $74.97 which is above our MOS on Friday.  Nothing has really changed here as it is safe to still buy at the current price because you are still in the ball park of the MOS price.  You are also well below the intrinsic value of $145 roughly. On Monday May 8th PayPal will report earnings and price has been going sideways since the last report.  I expected a earnings run to happen but it stayed between its sideways range.  I'm expecting a big move after earnings due to a possible revenue increase after layoffs taking place.  Check the chart because our MOS price is becoming a strong support level as I reported last week.  I'm still drafting my article on how I get these numbers for my upcoming blog.  I plan to have this completed soon.  As I stated in the previous weeks you can read the book Rule #1 by Phil Town to get a understanding of these numbers.

Thank you for reading 

Brian - The Bull Bear Investor

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