Lao Li discusses the potential for a rebound in the U.S. stock market during May and June, analyzing recent market trends, influential factors, and specific stocks to consider. He also reviews his current account performance and provides actionable investment advice.
Account Performance Update
Lao Li's account has increased by slightly over $1,000, bringing the total assets to over $233,000. The primary factor influencing this performance was Tesla's underperformance, which negatively impacted the overall portfolio.
U.S. Stock Rebound Prediction
Lao Li anticipates a U.S. stock market rebound in the near future, specifically within May and June. He bases this prediction on several factors and believes this is a normal market correction after recent gains. He emphasizes that markets don't move in straight lines, and corrections are healthy.
Market Analysis
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The U.S. stock market has been on a continuous rebound, rising for a month with minimal pullbacks.
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The signboard white index has been rising steadily since April 22nd, approaching the 6,000 mark.
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Lao Li expects a rebound of around 5% to 10% before the index reaches its peak at approximately 6,100.
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He believes the rebound's lowest point will remain above the 5,500 support level.
Reasons for Expected Rebound
- Moody's Credit Downgrade: Moody's downgraded the U.S. government's credit rating from AAA to AA1, potentially triggering a market correction. Historical downgrades by Standard & Poor's and exchange rates have previously resulted in approximately 10% market declines.
- High Valuation: The recent market rally has pushed valuations higher. The S&P 500 index's long-term adaptability rate is above its 5 and 10-year averages.
- U.S. Debt Crisis: The impending expiration of national debt in June and the subsequent issuance of new debt could create concerns about financing costs.
- Greed Index: The panic index indicates that the market is currently in a state of greed, suggesting a potential correction. A rapid shift from extreme fear to greed indicates an unstable market sentiment.
Investment Strategies During the Rebound
Lao Li suggests that a rebound provides an opportunity to adjust portfolios.
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Those with cash can consider initiating positions.
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Those with existing holdings can identify strong stocks to potentially increase their positions.
Stock Recommendations
Lao Li recommends three stocks to consider during the potential rebound: Nvidia, Tesla, and MAGS (Magnificent Seven ETF).
1. Nvidia (NVDA)
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Nvidia has demonstrated significant growth over the past years.
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Despite recent gains, Lao Li believes Nvidia still has substantial growth potential, especially given its expected revenue growth in fiscal year 2026.
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He notes that Nvidia's valuation is reasonable, with a forward PE (future market rate) of 31.45. He would consider it perfect if it were below 30.
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He plans to add to his existing Nvidia position of 170 shares if the price drops to $108 or below, aiming for a total of 180 shares.
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He notes that Nvidia tends to fall after releasing financial reports, so it should be considered.
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He suggests considering buying Nvidia at $118 as a first opening position.
2. Tesla (TSLA)
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Tesla requires faith in its future business prospects and Musk's leadership.
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Analysts predict slow net profit growth for Tesla in the current fiscal year, followed by a more substantial increase in the next fiscal year.
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Tesla's trailing PE and forward PE are high.
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Lao Li recommends considering opening a position in Tesla around $300 or below, with additional buying opportunities at $270 and $242.
3. MAGS (Magnificent Seven ETF)
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MAGS is an ETF that bundles the seven major technology giants.
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This ETF is suitable for investors who lack the time to research and select individual stocks.
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It offers a balanced and diversified portfolio of these leading tech companies.
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MAGS has outperformed the U.S. stock market index in recent years.
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He suggests considering entering MAX at $48.
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Increase position at $43.
Closing Remarks
Lao Li encourages viewers to conduct their own research and consider their risk tolerance before making investment decisions. He reminds viewers to use his exclusive invitation link to open a US stock exchange.
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