The S&P at 3,500?

July 24th, 2020

Join Chuck and Ken while they discuss the current state of the market on the Money Life Network.


Money Life Interview with Ken Berman


Chuck: It’s time to talk technical analysis here on Money Life. And we are doing that right now with Kevin Berman, strategist at GorillaTrades. He is The Gorilla in GorillaTrades. You want to learn more? On Twitter, @GorillaTrades. And perhaps more importantly, today Ken has put together something that well, it’s a benefit to you guys at Money Life nation, which is We will talk about what that gets you, but the basics are it’s going to get you a chance to read his new Ebook, which is gonna mention some very specific stocks that you might be interested in and why you might be interested in them. Again it’s if you want to get the book. Ken Berman thanks for joining me again on Money Life.
Ken: Thank you for having me Chuck.
Chuck: I say again, you know it’s been about five months the last time you were on the show. End of February before we got to where pandemic-mode was happening, but in the middle of the market being in part of that that drawdown and the you know the the start of that draw down that we were seeing as things got scary. At that point the S&P. 500 was somewhere north of 3,000 and you were saying 3,500 was the S&P for 2020.
Chuck: You know we’re now in the spot where we recovered from the downturn, so as we bring you back, I mean, I recognize everything is changed. But has nothing changed? Is it still S&P 3,500 for you?
Ken: You know it’s funny, I think a lot of people thought it was pretty silly because I made a prediction of 3,500 for the S&P 500 for 2020 at the end of February on your show. And then of course for the next 30 days I watched the major indices plumet 30%. So I did look too smart, but where are we now? We’re about what about seven percent away from that level. That’s pretty close.
Ken: I’m pretty confident still that that’s gonna happen another pullback could occur prior to 3,500, but look at the technicals. The long-term secular bull market is well intact. But I have to stress that uncertainty is unusually high do the pandemic. But a good working hypothesis, for me, is that the rest of the summer will be choppy but bullish with a possible sharper correction coming in the fall or early winter and then I feel rallies toward the end of the year again.
Chuck: And that rally, 3,500, seems reasonable?
Ken: We could actually see 3,500 before the correction.
Chuck: Wow, so a choppy summer, a bit of a correction, and a rally to the end of the year.
Ken: Correct.
Chuck: Okay so what’s going to lead to that?
Chuck: What makes that happen? Because this is not but a market where it’s like the whole market is going. And it’s tough to believe, post-pandemic that the rising tide is gonna lift all boats. It’s more like certain little inlets are going to have higher tides and certain other places are going to be bone dry.
Ken: I think investors should be focusing on sectors that areleast affected by the Covid crisis. So you did mention technology? Specifically public cloud, e-commerce, semiconductor companies, within the technology sector, are probably gonna be the strongest. I also like healthcare. I love biotech. And gold actually looks very promising. But companies with strong balance sheets and a domestic online focus- even from other sectors- should do very very well. Now real estate stocks, domestic focus, leisure, and other consumer discretionary stocks and utilities… They could be strong also, but they are riskier due to the exposure of the lockdown. The one thing I will mention are weaker sectors. Avoid energy and travel sectors and banks with large corporate exposure, but in the case of a positive Covid outcome, they’re likely to be explosive winners in those areas. So, it could be interesting.
Chuck: Well we have to get to where we have a positive Covid outcome. So, is that what you’re looking for? I mean, is everything in your or almost everything in your choppy-summer-correction-year-end-rally-kind-of-prediction dependent on we have a vaccine?
Ken: No, let let me tell you what I’m looking at. I’m looking more, right now, at monetary and fiscal policies that will be critical. So, I’m keeping an eye on Washington in August while monitoring the fate also of the European stimulus negotiations which look very promising at this point. The Democratic National Convention is next month. That’ll be crucial. Especially since Biden is supposedly winning in the polls. And then we’ll focus on the Fed and the annual symposium the final week of August.
Ken: After that, you have the elections and your possible second wave of outbreak that’ll take center stage and we’ll learn much more about the economic impact of the pandemic itself. If we can avoid another wave of lockdowns, which I believe we will, the economic recovery will remain on track here in the US with strength.
Chuck: Let’s put this all together. I talked a little bit about your latest Ebook. You were talking about how you got to find companies that have strong balance sheets and that have that domestic in their online focus. Well that puts it all together because your book is about stocks that you are looking at right now. So, explain what it is that people should be looking at specifically? What stocks appeal to you?
Ken: So I’ve been around long enough to know that in times like this investors want to take as little risk as possible. So, they tend to invest in those companies with strong financial positions. I actually compiled a list. I call it the 25 Blue Chips With Brawny Balance Sheets. I spent more time than I’m willing to admit sifting through balance sheets of so many different companies in search of the strongest. I came up with the 25 best. I compiled them into an ebook. And Kipplinger actually featured it. And yeah, the list includes the likes of Amazon, Apple, Facebook, Microsoft, Google, but many others will surprise you. There are a few biotechs. Even Costco made the list! The stocks in the list should continue to outperform. It’s a very good starting point or menu of ideas for you.
Chuck: And again, that’s available for folks by going to; a site set up for Money Life audience members to check out Ken Berman’s latest ebook. If you want to learn more about his training methods and more then just drop the “Chuck” from there and make it He’s on Twitter @GorillaTrades. Ken Berman, always great to chat with another University of Michigan graduate. Thanks so much for joining me. We’ll talk again soon.
Ken: Thank you Chuck.
Chuck: Well, we are heading for home on today’s edition of Money Life.
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