The Hot Stocks Outlook uses VantagePoint’s market forecasts that are up to 87.4% accurate, demonstrating how traders can improve their timing and direction. In this week’s video, VantagePoint Software reviews forecasts for Southern Company ($SO), Callon Petroleum ($CPE), Baker-Hughes($BKR), HESS ($HES) and Jazz Pharmaceuticals ($JAZZ)
Hello again, traders and welcome back to the Hot Stocks Outlook for August 20th, 2021. I hope you’re all having a great week out there in the financial markets. And as always, plenty to cover in today’s Vantagepoint Hot Stocks Outlook. So we’ll start out here. We have shares of Southern Company, a utility stock. Going to act as a really good example highlighting how all these tools work and then continuing on with many of the themes we’ve talked about over the past couple months, really since the beginning of July recognizing that there’s an issue with some of these energy stocks. But overall, S&P looks stronger than things like the Russell and energy certainly looks very weak. And that’s opened up a very straightforward theme as far as how you might want to then go in with Vantagepoint tools to then do some short-term trading here.
So with Southern Company, again, a good example of how all of these tools work. And so what you have here is daily price action. So each one of these candles represent a full and complete trading day, as well as the high, low, open and close. And what you have right up against those candles is you see that there is a black line and also a blue line there. Now the black line that you’re seeing there, that is a simple moving average or what we refer to as the actual simple moving average. And it’s a very common technical indicator. If you’ve ever used a tool like this, it’s very easy to understand what it does. And it looks back at the previous price action, in this case the last 10 closed prices. It’ll add those all together and divide by 10.
And that indicator is a good measure of where market prices have already been. And it helps to smooth out the overall price data, but traders need to know where the market is going ahead of time, where things are headed next. And so what we’re able to do here is compare that lagging simple moving average or that measure of where average prices have been to this forward-looking predicted moving average, which is anticipating where prices are headed.
Now it’s important to understand what’s going on here. So for that number to get calculated each and every trading day, Vantagepoint is utilizing its technology of artificial neural networks. Now it’s a type of artificial intelligence, but it’s important understand that it’s utilizing that technology and doing a type of analysis called intermarket analysis. And what that means is that you may be trading the target market, in this case Southern Company. But there are many markets that are known to drive and influence the future price of this share price.
And what the neural networks are able to do is derive some of that very important market data out of those relationships, which as an individual just looking at the charts, you wouldn’t be able to really pull out these really significant whether they be leading or lagging relationships, positive or inverse correlations. So that can be things like the utilities ETF. That can be things like individual stocks. That can be things like the energy markets like crude oil, natural gas. That can be things like global currencies or global interest rates. And it’s factoring in all these global market relationships and how it is affecting, again, this target market that you the individual trader has to go in and then manage a position and how they want to navigate this.
So what we have here with these tools is whenever that blue line crosses above the black line, it’s suggesting average prices are going to start moving higher as a trend trader naturally you’d say, “Okay, well, I want to take long positions and take profit on those long positions.” Pretty much any timeframe we’d say, “Look, the overall trend is up. You’d want to get long.”
Now, in addition to that, predicted moving average, which can really anticipate very early some trend shifts in the market, what we have at the bottom of the chart you see that there’s a bar here that goes from green to red. And if you look at the very right-hand side of the chart, what will happen is every single trading day, this will update either green or red. And what it’s doing is forecasting very short-term strength or weakness in the market. So it’s either yes or no, right or wrong. And it gets this right with on average around 80% accuracy, upwards of 86, 87% accuracy consistently across many markets.
But you can think of this as getting this right about four to five times as far as short-term strength or weakness. And again, utilizing that technology, but applied to just a 48-hour timeframe. Now at the very right-hand side of the chart though, you’ll see this shadow candle. And again, what these neural networks are able to do is say, “Okay, well now we’re going to have these neural networks trained to try to identify intraday levels whether that be a predicted high and predicted low before the next trading day occurs.”
So you really have all of this information at the right-hand side of the chart, much like you had all the way back here on July 6th letting you know that there’s a new trend to the upside. The neural index is saying strength over the next 48 hours. And then you can use the roadmap of that predicted high and low every single trading date to guide you. And so what we can do now is take a look at how accurate the prediction of that predicted high and low is against the actual trading day. So just like today here, we have a range there. The actual trading day will fill in and we’ll see how accurate the prediction is.
But when you can understand and you can build a case that says, “Okay, well, I’ve found a market where I want to be long and taking profits on longs.” As long as that blue line remains above the black line or the overall trend is up and it would make sense. Again, this can change based on your trading style and timeframe, but you want to buy at or near these Vantagepoint predicted lows. And so there’ll be these days where you see some volatility and you come out of the range. But overall, the market gets right back into that range, potentially breaks to the upside. And you see how this acts at very good levels letting you know where to take profit, add to a position and manage the position over the course of a very long period of time.
Now, utilities is one of those areas that’s actually done well over the past couple months. The entire sector you see in an uptrend. Not a very exciting area, but when a market moves up 7.5% and you’ve got a predicted high and low range that you can be buying, taking profit multiple, multiple times along the way, that’s a good place that can generate some profits for your trading account. But we’ve highlighted some areas very clearly that can weigh on not only the Russell 2000 energy stocks, but even the broader market here and energies have been quite weak.
And so today we’re really seeing energies go lower, but you’re seeing the S&P hold up a little bit better. Certainly the volatility is there throughout the markets, but it’s been very clear that energies there’s something really going on here. It looks like they may be going into a sustained longer-term downtrend, but that’s not the whole story. There are some places where you can get long and even some places where potentially on this weakness looks like some new opportunities to get long. But energy is clearly we’ve understood that’s not been one of these areas.
So Callon Petroleum, you see getting this crossover to the downside and the exact same approach. We can just take the longer view here and say, “Clearly, you’re only shorting energies taking profits on short positions.” Go back and watch two months ago, the July videos going into the month of July, we saw this weakness in energies and understood that this is an area to not only avoid, but hedge your long positions in the portfolio by taking short positions on those Russell 2000 energy stocks. Not a bad way to go.
And you see Callon here has just not gone very well here. And you’re certainly seeing these things really start to accelerate to the downside. But these are positions we’ve talked about potentially being in the portfolio for months now. This crossover is going all the way back to the beginning of July. And we brought this through I think two times already highlighting that this is clearly a market in a downtrend. We can move over to Baker Hughes. And I wanted to bring this example through to highlight how Vantagepoint works in these shorter-term timeframes and how it can help you as a trader once you understand how to piece these things together of what is the strategy and how do Vantagepoint shorter-term forecast work?
Well, we can see here with Baker Hughes very similarly. This is one of the earliest stocks to really start seeing weakness. We saw this in June even seeing that weakness, but you see here how this crossover comes to the upside. But notice what’s going on here is we understand that energies are still very weak. We know what’s going on with Callon. We can look at the energy futures, but look at the quality of this forecast. As a crossover moves to the upside, your neural index gets bearish. So you see some weakness coming in over these trading days, but how that predicted moving average and actual moving average, it’s remaining on the bullish side, but somewhat reluctantly.
Where energies have actually, there’s been a lot of volatility, but you notice how Baker Hughes has actually gone up over this time period. And let’s look at the accuracy of those predicted highs and lows. So as that short-term trader coming in and saying, “Hey, I know I want to be short energy.” You still understand that. Look, in the short-term, you may want to take some profit at least improve your entry as far as shorting at predicted highs if you want to remain short, but this goes on for a month of time. And that’s where the short-term forecasting from Vantagepoint is going to be a benefit to you.
So when you want to do that trade management and accumulate a position and understand that, “Yeah, Callon Petroleum take some shorts there. Things are still in a strong downtrend.” You need to make some adjustments here because this may not work well a month of the market actually moving up as far as your overall trading system. But we look at Callon here very clearly the downside has more recently, again, seeing more of this weakness come in that says, “Look, this is very weak here.” You see this going back to the beginning of August. And again, we can look at the quality of the forecasting of these predicted highs and lows saying, “You only want to be short, take profits on shorts.”
A little bit of sideways action. You see the neural index gets bullish there and things run sideways for a bit, but clearly here there’s been just so many alarm bells is going off as we see either consistent trends from really the beginning of July continuing to the downside. Or constantly volatility coming through in these new trends moving lower and saying, “Look, you only want to short in these energy areas.” There’s potentially areas we can get along. We’ll use Vantagepoint to do that, but clearly recognizing how to hedge the portfolio or how to just make money on the bearish side of things.
Now moving forward, this weakness in energies, again, it leads to just overall market volatility. And again, there’s these areas where we’ve seen the forecast fairly weak here.
So here Jazz Pharmaceuticals crossover to the downside. You see you’re getting some pops with the neural index here, but the overall forecast, very bearish here. Again, just wanting to bring in more of these opportunities highlighting at least some of the weakness in a lot of the volatility come in. And if this wants to reverse, we’ll see that blue line cross above the black line and things moving higher. But what you really want to do is understand that, look, the markets are still in a downtrend and these energy stocks are still moving lower. You don’t want to get out of the way quite yet, but identify some areas where there’s some strength.
And it’s a little interesting here where over the past couple of weeks it’s been clear that get short energies. Be careful here. We’ve seen some of these warning signs and that’s what happens when energies go lower. It shares a correlation with the S&P 500 in stocks more broadly. And while the S&P grinds higher and grinds higher, you’ve seen Russell go lower, energies get really hammered lower. NASDAQ moving much lower, but the forecast doing an excellent job here helping you navigate all of this. And understand how that portfolio should be structured, what sectors to be focused on and where opportunities are really opening up even now with this volatility coming into the market.
So have a great rest of the week. Once again, this has been our Hot Stocks Outlook for August 20th, 2021. Thanks again, best of luck and bye for now.