EB Weekly Portfolio Report - Sunday, November 22, 2020
Upcoming Earnings Reports
According to Zacks.com, the following companies will be reporting earnings this week and each is a component of one of our portfolios:
Monday, November 23: None
Tuesday, November 24: None
Wednesday, November 25: DE
Thursday, November 26: None - Thanksgiving Day holiday, U.S. markets closed
Friday, November 27: None - U.S. market closes early at 1:00pm ET
PLEASE NOTE: The above companies were provided after scanning the Zacks Earnings Calendar. My research is limited to what Zacks provides and I also can make a mistake from time to time, so please check for earnings dates for all companies that you own. We do hold our portfolio stocks through one earnings report, but every EarningsBeats.com member must make their own investing/trading decisions about holding stocks into earnings reports as it's the most volatile (risky) time to own a stock.
Portfolio Rules and Objectives
Here are the common traits and objectives of our portfolios:
- There are 10 leading stocks from up to 10 leading industries in each portfolio (at the time of selection). Generally, there will only be one stock per industry group, but there could be exceptions.
- They are held for an entire 90 day period, with no stops in place. We strive for consistency, transparency, and simplicity in our portfolios. EB.com members may hold these stocks for the entire 90 days, trade them, use stops, etc., but for purposes of our calculation, we will make no exceptions to our "buy and hold for three months" strategy.
- Every stock will generally be held through ONE earnings report
- The expectation is that relative winners will carry the portfolio to outperformance
- They were all entered into as of the close on Thursday, November 19th; members may choose to try to time better entries, but EB.com "purchased" as of November 19th's closing price
- Primary objective is to outperform the benchmark S&P 500
Here are several considerations for EB members:
- I would expect the Strong AD and Aggressive portfolios to be the riskiest, followed by the Model portfolio, and then the Income portfolio
- The Strong AD portfolio will be selected from a combination of rising accumulation/distribution lines and SCTRs above 80 at the time of selection. It is the only portfolio that does NOT require a revenue and EPS beat in its most recent quarterly earnings report
- The Income portfolio stocks will all pay dividends, with the expected average dividend yield to be at least 1.0%
- Drawdowns (losses) should be much milder on the Income portfolio, with more volatility expected on the other three; please review inception-to-date charts below to gain an idea of the volatility associated with each
- I believe the larger drawdown on the Income portfolio at the beginning of the pandemic was an anomaly, occurring as many defensive, higher-yielding companies uncharacteristically underperformed during a market decline.
- You should own or trade these stocks in whatever manner is most comfortable for you; while we will buy all 10 stocks in the manner 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. Please consult your financial advisor.
- EarningsBeats.com shareholders/employees may own all or some of the portfolio stocks from time to time.
Weekly Snapshot
Here's a weekly recap:
We saw very nice relative performance in our portfolios last week, especially our Model and Strong AD portfolios. It was a volatile and solid ending to an overall good performance for the quarter.
Weekly Summary
Benchmark S&P 500:
The S&P 500 was down slightly for the week, but it came after a recent breakout to an all-time high. Once again, it was positive vaccine news on Monday morning - this time from Moderna (MRNA) - that jumpstarted the action on Wall Street. After that strong start on Monday, however, there was mostly selling throughout the balance of the week. That wasn't surprising to us at all, given the max pain discussion that we had with members on Tuesday after the market close. We might even feel a bit more of that into the beginning of this week, though history would argue.
Historically, we're entering another very strong bullish period on Monday as the S&P 500's annualized return (since 1950) for the period November 21st (which was Saturday) through December 6th is +33.90%. That's nearly 4 times the average annual return of 9% on the S&P 500 over the past 7 decades.
Model Portfolio:
The Model Portfolio jumped 7.45%, trouncing the benchmark S&P 500 to close out last quarter and beating that benchmark for the 7th time out of 8 quarters. It was the 5th quarter of 8 where the Model Portfolio has outperformed by at least 10 percentage points. Here's the updated inception-to-date chart of the portfolio:
Our portfolios were represented four of last week's five days by our OLD portfolio stocks, so we'll summarize those in each of our portfolios. We'll begin to review the current quarter's portfolio stocks next week. Here are how the Model portfolio component stocks (from last quarter) performed last week:
Aggressive Portfolio:
The Aggressive portfolio gained 0.55% last week, staging a slight relative comeback after a disappointing performance the week prior. Here's the updated inception-to-date chart of the portfolio:
Here are how the Aggressive portfolio component stocks (from last quarter) performed last week:
Income Portfolio:
The Income portfolio advanced 0.62% last week, beating the S&P 500, but it failed to keep up with the S&P 500 for the quarter. Here's the updated inception-to-date chart of the portfolio:
Here are how the Income portfolio component stocks (from last quarter) performed last week:
Strong AD Portfolio:
The Strong AD Portfolio surged 5.60%, crushing the S&P 500 by more than 21 percentage points for the quarter. Here's the updated inception-to-date chart of the portfolio:
Here are how the Strong AD portfolio component stocks (from last quarter) performed last week:
Summary
The S&P 500 was down slightly last week, but whether the recent breakout to an all-time high truly is the start of the next uptrend comes down to a likely upcoming test of the rising 20 day EMA. Generally speaking, a rising 20 day EMA provides support during a trending market, so watch this moving average support (green arrow) closely this week:
The PPO has strengthened and momentum is quite bullish. That, combined with the 20 day EMA at 3514 and gap support at 3509 (from PFE's vaccine news two Mondays ago), suggests we're more likely than not heading higher. We'll find out more this week.
Model ETF Portfolio
Our Model ETF Portfolio has held up fairly well during the recent market rotation. Here's how the Model ETF Portfolio component ETFs performed last week:
The clean energy portion of our ETF Portfolio surged last week and helped to carry our Model ETF Portfolio higher. We're still trailing the benchmark S&P 500 (+3.45% vs. +3.81%), but that difference narrowed considerably last week.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."