AI Recommends This Oil 🛢and Emerging Markets Bond 📈 Fund

This week started off with a major headline: Pfizer and BioNTech’s vaccine has been found to be over 90% effective. Markets were flying – the Dow surged 800+ points in a single day and investors began to shift their focus away from stay at home stocks and towards the COVID-sensitive investments. However, it’s difficult to ignore the surging daily cases of COVID, and markets have responded like so. In the last nine days, seven have been all-time record highs with Thursday breaking 150,000 for the first time. This is only in the U.S. We will likely see markets slide on a global scale in the oncoming weeks.

Starting with stocks, our AI models highlight Adobe Inc (ADBE), the only tech stock in this pick list, as a Top Buy for the next month. It has factor scores of B in Technicals, A in Growth, B in Low Volatility Momentum and A in Quality Value. Lowe's Inc (LOW) and Archer-Daniels-Midland Co (ADM), both from very different sectors, are also Top Buys for the next month. 

Lowe’s is rated C in Technicals, A in Growth, B in Low Volatility Momentum and B in Quality Value while Archer-Daniels is rated B in Technicals, B in Growth, C in Low Volatility Momentum and C in Quality Value. Adobe and Lowe’s are two companies that have benefited from COVID lockdowns, so it makes sense why the two companies are showing up on our Top Buys list.

Over the next week, Chevron Corp (CVX) is rated Top Short and has been assigned Q-Factor Scores of D in Technicals, F in Growth, D in Low Volatility Momentum and D in Quality Value. Its dividends are coming up, which will be $1.29 per share. This is in comparison to $5.16 in the last 12 months, an indication that the stock has come into hard times. The industry as a whole has been adversely affected by COVID, as has the airline industry. That’s why Southwest Airlines (LUV) continues to be a Top Short for the next week and has Q-Factor Scores of C in Technicals, F in Growth, C in Low Volatility Momentum and F in Quality Value.

A very interesting collection of ETFs were selected by our AI for the next week. iShares 1-3 Year Treasury Bond (SHY) and iShares iBoxx USD High Yield Corporate bond (HYG) are both rated Top Short while iShares JP Morgan USD Emerging Markets Bond (EMB) holds a Top Buy rating during the same time period. The other two ETFs rated Top Buy for the next week are SPDR S&P Regional Banking (KRE) and iShares MSCI Spain (EWP). 

Oil has received favorable ratings from our AI these last few weeks. Over the next month, the United States Brent Oil Fund (BNO) and United States Oil Fund LP (USO) are both rated Top Buy. The two ETFs rated Top Short – iShares MSCI EAFE Min Vol Factor (EFAV) and iShares MSCI Emerging Markets Min Vol Factor (EEMV) –  are both minimum volatility ETFs.

Some of our favorite options trades this week: 

Put Spread Collar in SPDR S&P 500 ETF Trust (SPY) – Leveraged bullish trade on Large-Cap US Stocks.  Great way to introduce upside exposure to the US stock market without actually reallocating an investment portfolio.

Short Call Spread in iShares MSCI EAFE ETF (EFA) – Bearish trade on international stocks.  A trade for investors interested in lowering exposure to international stocks in an investment portfolio without actually reallocating or selling securities.

Performance Update:

Our Monthly Top Buys are up over 123% since the start of 2014, beating the SPDR S&P 500 ETF Trust (SPY) by more than 20%. In September our Top Buys were up -1.37% vs SPY -3.74% and up -1.28% in October vs SPY -2.49%†

We are also closing Long Call Spread in Financial Select Sector SPDR Fund (XLF) that was posted on November 3rd for a 180% profit.††

The Latest

One stock that has not made headlines this week is Regeneron. Despite not being the focus of vaccine news, our AI suggests it is still a stock worth keeping an eye on.

With the vaccine news, we’ve seen a rotation of tech stocks as investors begin to reshift their focus to stocks that have been sensitive to COVID. What does this mean for tech? Our AI takes a look at the biggest tech ETFs by fund flows and provides ratings for this month.

Update: The beta version of the Forbes AI Investor investment discovery platform is now live! It’s a simple, easy to use, jargon free platform that helps users discover new investments using AI. Our goal is for investors to kickstart their research with Forbes AI Investor so that they spend less time finding ideas and more time on optimizing their decisions. The platform takes guesswork out of investing and provides AI driven high conviction stocks and ETFs ideas. We opened up the platform to the first 100 users. Investors who are part of our investing slack channel will get priority access.

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†As of 10/30/2020. The calculated returns above are based on paper trades and back tests during the relevant measuring period and therefore represent hypothetical performance. The average holding period for each security is 1 month with the return calculation assuming an equally-weighted theoretical portfolio. Returns reflect full reinvestment of dividends. The hypothetical returns do not include advisory fees or transaction costs as Qai does not maintain an investment advisory business and has no assets under management. However, an investor paying a professional advisor would have its return affected by any fees or commissions paid. Past performance is not an indication of future returns. Changes in economic conditions and market factors will affect the returns of investments in different ways. Any investment involves a risk of a loss. All information herein is from sources believed to be reliable but have not been independently verified. No representation or warranty can be given with respect to the accuracy or completeness of the information, and is subject to updating, revision, and amendment. Hypothetical returns are shown against the actual returns for the SPRD S&P 500 ETF Trust (SPY) during comparable periods. The strategy is based on buying an equal amount of all stocks ranked as Top Buys by the Q.ai Factor Models for US Large-Cap Stocks (and an identical back tested strategy employed in the earlier stages of the measuring period January 1, 2017 through October 30, 2020). The Q.ai Factor Models are calibrated to focus on capital appreciation. Q.ai is the trade name of both Quantalytics Research, LLC and Quantalytics Holdings, LLC.

††All returns for Options Trades are hypothetical returns and no live assets were used in the calculation of the returns of these assets.  As a result, all recorded traded are simulated paper trades conducted on a real-time basis during the measuring period. Options involve risk and are not suitable for all investors. The hypothetical returns do not include advisory fees or transaction costs as Qai does not maintain an investment advisory business and has no assets under management. However, an investor paying a professional advisor would have its return affected by any fees or commissions paid.  Past performance is not an indication of future returns.  Changes in economic conditions and market factors will affect the returns of investments in different ways. Any investment involves a risk of a loss.  The Q.ai Options Trades are based on applying models that measure whether implied moves of options are too large or too small based on the Q.ai Factor Models.  The Q.ai Factor Models are calibrated to focus on capital appreciation.  Q.ai is the trade name of Quantalytics Research, LLC and Quantalytics Holdings, LLC.