EB Weekly Portfolio Report - Sunday, December 15, 2019

Portfolio Rules and Objectives

Here are the common traits and objectives of each portfolio:

• There are 10 leading stocks from 10 leading industries in each portfolio (at the time of selection)
• They are held for an entire 90 day period, with no stops in place
• Every stock will be held through ONE earnings report
• The expectation is that relative winners will carry the portfolio to outperformance
• They are all entered into as of February 19, May 19, August 19, and November 19 (these dates are used as we are generally past the majority of earnings reports by these dates)
• Primary objective is to outperform the benchmark S&P 500

Here are several considerations for EB members:

• I would expect the Aggressive portfolio to be the riskiest, followed by the Model portfolio, and then the Income portfolio
• The Value portfolio is a new breed and is much different from the others; it's quite diversified, but how it ranks in volatility among the four remains to be seen - I would anticipate high volatility
• The Income portfolio stocks will all pay dividends, with the expected average dividend yield to be at least 1.5%
• Drawdowns (losses) should be much milder on the Income portfolio, with more volatility expected on the other three
• You should own or trade these stocks in whatever manner is most comfortable for you; while we buy all 10 stocks as of the dates identified above, feel free to trade certain stocks or wait for pullbacks if the stocks are overbought
• We have no idea what risk each member is willing or able to take. We are not registered investment advisors so be sure you understand the risk you take.
• EarningsBeats.com shareholders/employees may own all or some of the portfolio stocks from time to time.

Snapshot

Here's a weekly recap:

Weekly Summary

Benchmark S&P 500:

We've made it through the most historically troubling part of December unscathed, which is definitely a great sign. Long-term weekly charts remain extremely bullish. We still have a few technical issues on the daily S&P 500 chart, but the weekly chart may overrule. The second half of December is generally quite bullish.

Last week, we saw a bit of volatility, but still ended the week with the S&P 500 higher by 0.73%.

Model Portfolio:

The Model portfolio took a hit last week, dropping 1.35%. Most of the weakness could be attributed to a lackluster Friday, where all of our portfolios underperformed. Here's the updated inception-to-date chart of the portfolio:

Here are how the Model portfolio component stocks performed last week:

AMAT finally regained strength, but it didn't matter given the weakness in both ROKU and EVER. ROKU has solid price support in the low 130s and trendline support was highlighted last week. That's in the upper 120s. EVER had been extremely bullish, but high volatility currently accompanies the stock. Last week, EVER was hit significantly to the downside, although the chart remains bullish.

Aggressive Portfolio:

The Aggressive portfolio also struggled on Friday and ended up losing 1.13% on the week. Here's the Aggressive portfolio chart since its inception on May 19, 2019:

Here are how the Aggressive portfolio component stocks performed last week:

CDLX fell quite a bit last week, but managed to print a nice reversing doji on its 20 day EMA on Friday. I'd expect to see a rebound this week:

But the primary culprit in last week's move lower was APPS:

I would expect to see a turn back higher on APPS from 7.25 down to 6.75.

Income Portfolio:

The Income portfolio gained 0.66% last week, nearly matching the S&P 500's return. Here's a look at the inception-to-date chart:

Here are how the Income portfolio component stocks performed last week:

PNC saw fresh new highs on excellent volume, which should lead to further strength ahead. The only problem last week for the Income portfolio was MSCI. Its breakout last week came on moderate volume and a negative divergence printed. We could see additional short-term selling or more consolidation in the near-term. But I believe we'll see higher highs after any near-term selling ends.

Value Portfolio:

The Value portfolio was extremely volatile last week, but closed out the week with a 0.55 loss. It was up nearly 2% on the week at Thursday's close, but like the other portfolios, struggled badly on Friday. Here is the inception-to-date chart:

Here are how the Value portfolio component stocks performed last week:

RL broke out to its highest close since May, which is very encouraging as its chart grows more and more bullish. SQ, on the other hand, held back the portfolio and needs to hang onto price support:

Summary

The portfolios has a pretty solid week....until Friday. I'm not sure why so many of our stocks were down on what turned out to be a very solid day. Value stocks (IWD) broke out on Thursday, while growth stocks (IWF) joined the party on Friday, yet several of our portfolio stocks saw profit taking. I'll be watching closely to see if that trend continues, but I expect to see small cap stocks ($SML) lead again this week and that should help the Aggressive and Value portfolios.

Happy trading!

Tom Bowley, Chief Market Strategist

EarningsBeats.com

"Better timing. Better trades."