EB Weekly Portfolio Report - Sunday, April 4, 2021
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, April 5: None
Tuesday, April 6: None
Wednesday, April 7: None
Thursday, April 8: None
Friday, April 9: None
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 Friday, February 19th; members may choose to try to time better entries, but EB.com "purchased" as of February 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 a relative rebound in NASDAQ shares last week and it was timely, just as April rolled in and ahead of earnings season, which begins in just a couple weeks. It was also important technically as the 20 week EMA served once again as excellent support:
Weekly Summary
Benchmark S&P 500:
The S&P 500 gained 1.14% last week, closing above 4000 for the first time in history on Friday. But the rebound in NASDAQ shares were more impressive at illustrated above. The biggest reason was the resurgence in technology shares (XLK), the best performing sector of the week:
Outside of real estate, defensive groups retreated on a relative basis, a signal that an appetite for risk is returning as we approach earnings. I'll be watching to see if this continues in the week ahead.
Model Portfolio:
The Model Portfolio jumped 4.19% last week, gaining on the S&P 500 in the current quarter. Here's the updated inception-to-date chart of the portfolio:
Here are how the Model portfolio component stocks performed last week:
After printing a recent negative divergence, SONO fell back to test its 50 day SMA and its PPO nearly reached centerline support:
It's nice to see SONO break back above its 20-day EMA. Relative strength remains excellent, so I'd look for further upside here.
Aggressive Portfolio:
The Aggressive Portfolio surged 3.99% last week and it's now down less than 4% this quarter as it attempts to catch the S&P 500. Here's the updated inception-to-date chart of the portfolio:
Here are how the Aggressive portfolio component stocks performed last week:
HUBS looks particularly attractive after closing back above its 20-day EMA and breaking its 5-6 week downtrend line:
Relative strength and the AD line also remain quite strong, suggesting last week's recovery could be on solid footing.
Income Portfolio:
The Income Portfolio gained 0.98%, slightly trailing the S&P 500 last week. Here's the updated inception-to-date chart of the portfolio:
Here are how the Income portfolio component stocks performed last week:
LRCX had a very strong week as part of the red-hot semiconductors group ($DJUSSC). Its relative strength is quite apparent when looking at this chart:
It's not exactly an ascending triangle breakout because the two highs were not equal, but it's certainly similar to that pattern. The increasing volume the past two days confirms the breakout and suggests LRCX is heading higher over time.
Strong AD Portfolio:
The Strong AD Portfolio rebounded 4.49%, making up a few points of its underperformance this quarter vs. the benchmark S&P 500. Here's the updated inception-to-date chart of the portfolio:
Here are how the Strong AD portfolio component stocks performed last week:
SQ is rebounding nicely and has established excellent price support near 200:
The AD line on SQ remains strong and it now needs a technical breakout above its recent resistance zone from 250-260.
Summary
It's been an uphill battle for our portfolios since starting the current quarter with 2-3 weeks of awful performance. I do see a light at the end of the tunnel, given that most of the AD lines have held up so well. Hopefully, last week's rebound in technology stocks is a precursor to a strong earnings season. We'll know more as earnings season plays out.
The NASDAQ does appear to have begun another leg higher, bouncing off its 20-week EMA on its long-term chart, while clearing both its 20-day EMA and 50-day SMA on its daily chart. It was also a psychological milestone for the S&P 500 to finally close above 4000. It took nearly two years for the S&P 500 to clear its next 1000 point threshold after it cleared 3000 in July 2019. I don't believe it'll take that long for the S&P 500 to reach 5000. I actually believe we could threaten it later in 2021, though I don't expect to close above it until sometime in 2022.
Model ETF Portfolio
Our Model ETF Portfolio also rebounded last week, gaining 2.40%, with its inception-to-date performance passing the S&P 500 once again. This portfolio still has work to do to catch the S&P 500 for the current quarter and its chances aren't great considering that we only have until April 19th to do so. Perhaps we can make up a bit of ground though as earnings season kicks in.
Here's the updated inception-to-date chart of the Model ETF Portfolio:
Here are how the Model ETF Portfolio component ETFs performed last week:
All of our week-to-date performances include the past FIVE trading days. Since there were only 4 days last week due to the Good Friday holiday on Friday, this one week performance includes the action from the prior Friday. I don't have the option of looking at just the past four trading days or I would.
ARKW has been rebounding nicely as this high octane growth ETF recovers as the NASDAQ and technology recovers.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."