EB Weekly Portfolio Report - Sunday, November 28, 2021
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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 29: None
Tuesday, November 30: None
Wednesday, December 1: None
Thursday, December 2: None
Friday, December 3: 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 his/her 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, 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 70 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.
- Large drawdowns in the February through May 2021 period were due to the rapid rotation from growth stocks to value stocks; each quarter, our portfolios are based on themes and there is never a guarantee that our analysis and beliefs will be proven correct
- You should consider owning or trading 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:
Weekly Summary
Benchmark S&P 500:
It was a rough week all the way around. First, money rotated from growth to value as the IWF:IWD ratio fell more than 2% last week. But the bigger issue was the market itself. Friday saw a TON of selling as a new COVID-19 variant emerged in South Africa and spooked global equity markets. I've seen little in the way of long-term sell signs, so long-term buy and hold investors should ignore the renewed market fears - in my opinion. I wouldn't be shocked by another 2-3% market decline in the very near-term, but much will be dependent on breaking news relating to COVID-19.
Model Portfolio:
The Model Portfolio dropped 3.79%, trailing the S&P 500. Here's the updated inception-to-date chart of the portfolio:
Here are how the Model portfolio component stocks performed last week:
Travel stocks were hit hard last week, keying the big drop in ABNB. I'm still bullish the stock, but here's the latest technical picture:
We saw a beautiful reversal on Friday, with a hollow candle printing on excellent volume. A move back through the 50-day SMA is what I'm looking for here to restore the previous uptrend.
Aggressive Portfolio:
The Aggressive Portfolio tumbled 4.61%, crushed by 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:
LC saw a bunch of intraday selling on Friday, but it managed to recover by the close. Here's the latest chart:
LC has been weak for the past couple weeks, but it's now reached a level where I'd expect to see a big reversal.
Income Portfolio:
The Income Portfolio lost 2.14%, actually edging the performance of the S&P 500. Here's the updated inception-to-date chart of the portfolio:
Here are how the Income portfolio component stocks performed last week:
M took a big hit last week as broadline retailers ($DJUSRB) struggled. I believe M remains a very strong relative performer in the group, so any reversal to the upside should be respected:
Strong AD Portfolio:
The Strong AD Portfolio was clipped by 4.70%, a much steeper drop than what was seen on the 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:
MARA is an extremely volatile stock - one that could literally be at 80 or 30 in a month. I believe it goes higher and bounces off 50-day SMA in the near-term. But clearly, the moves higher and lower tend to be on steroids.
I'm honestly not sure which way MARA moves over the next week. It's been lying stagnant for the past week or two, but prior to that, absorbed a HUGE move lower. I believe MARA is poised to resume a shorter-term uptrend. We'll soon find out.
Earnings Reaction Portfolio:
The Earnings Reaction Portfolio fell %, . Here's the updated inception-to-date chart of the portfolio:
Here are how the Earnings Reaction portfolio component stocks performed last week:
Summary
Growth stocks took a beating last week and then many of the aggressive stocks saw even further selling on Friday as renewed fears about COVID-19 surfaced. History tells us to remain heavily invested on the long side, but the current technical picture is cloudy at best. Under no circumstance would be I be looking to liquidate as we move into next week's action. The reaction in global markets on Friday suggested a "sell on rumor" mentality. It's too early to tell if many long traders got the market timed correctly for this week as I believe we could see the market go either way in the very near-term.
Model ETF Portfolio
Our Model ETF Portfolio fell 3.10%, trailing the S&P 500.
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:
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."