EB Weekly Portfolio Report - Sunday, November 20, 2022
Fall Special - One More Week To Go!
We're a week into our Fall Special and we've received a GREAT response so far! It'll be ending in a week and it's our BEST deal of the year, so be sure to take advantage. For more information, you can CLICK HERE.
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 21: None
Tuesday, November 22: None
Wednesday, November 23: None
Thursday, November 24: Market Closed - Thanksgiving Day
Friday, November 25: None
PLEASE NOTE: The above companies were provided using Zacks.com. 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 typically 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 likely 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
- All portfolio stocks were announced on Thursday, November 17th, and were all entered into as of the close on Friday, November 18th
- Primary objective is to outperform the benchmark S&P 500 over time; quarter-to-quarter performance can be extremely volatile, especially if significant rotation takes place intra-quarter
Here are several considerations for EB members:
- The Income Portfolio should have the least amount of volatility as it will typically be comprised of quality large cap stocks with solid dividends
- The Model and Aggressive Portfolios should be viewed similar to aggressive growth funds; they will typically have a lot of volatility and periodic drawdowns can be significant from time to time
- 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 two; 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 and the November 2021 to February 2022 periods 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
- 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 options-expiration week and I'm here to say that Opposite George week is alive and kicking. We discussed the market's directional likelihood at last Tuesday's max pain event. Both the SPY and QQQ suggested we could see short-term weakness on our major indices and, right on cue, we saw our major indices struggle. We didn't reach the level of max pain, but we were certainly weak. Furthermore, we sometimes see the "max pain effect" carry over into the early part of the week following monthly options expiration. Historically, the Monday after options expiration is the WORST performing day of the calendar month. So remain on your toes!
While we saw some selling last week, our major indices show bullish technical price configuration. Index values are now above their rising 20-day EMAs, which, in turn, are above their 50-day SMAs. In addition, PPOs have made bullish centerline crossovers (blue circle below). Even if you remain quite bearish, you should respect this technical development - at least until price action turns back down beneath these moving averages. For instance, check out this NASDAQ 100 ($NDX) chart, which shows a bullish golden cross (20-day EMA crossing above 50-day SMA, green circle below):
No doubt there's plenty of technical work ahead for the bulls, but to ignore the recent improvement that comes on the heels of a sentiment reset would be a BIG mistake, in my view.
Model Portfolio:
The Model Portfolio rose 0.94% last week, outperforming 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:
Aggressive Portfolio:
The Aggressive Portfolio gained 0.56% last week, outperforming 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:
Income Portfolio:
The Income Portfolio climbed 0.75% last week, outperforming 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:
Model ETF Portfolio
Our Model ETF Portfolio fell 0.72% last week, essentially matching the S&P 500 performance.
Here's the updated inception-to-date chart of the Model ETF Portfolio:
Here are how the Model ETF Portfolio components performed last week:
Model Trade Setups
I will provide Model Trade Setups each week in this Weekly Portfolio Report, which will simply be to outline possible trades based on key support, resistance, relative strength, and where these trades come from. For instance, my trading strategy for Strong AD ChartList (SADCL) stocks might be completely different than my trading strategy on Strong Earnings ChartList (SECL) stocks. Obviously, it would be different from a Short Squeeze ChartList (SSCL) trading candidate. I'll lay out the annotated chart and my reasoning for the (potential) trade. I may provide follow-up on some or all of these setups in the Daily Market Report (DMR). I'll also provide full disclosure, if I own any of the setups provided. Feel free to trade these Model Trade Setups based on the annotated charts provided, or according to your own trading strategy. Or ignore them. It's completely up to you. I am not a Registered Investment Advisor (nor is EarningsBeats.com). THESE TRADING CANDIDATES SHOULD NOT BE VIEWED AS INVESTMENT ADVICE.
I view EarningsBeats.com as a market research, market guidance, and market education platform. We do not attempt, in any fashion, to manage anyone's money. We have no idea the risk tolerance of each of our members, nor do we have any idea of your financial goals and objectives. It would be irresponsible for us to provide advice to any of our members. Therefore, please consult your own financial advisor before considering any buy/sell decisions. You are completely responsible for the financial decisions that you make.
This Week's Setups
I will start this week's setups with 3 stocks that I suggested you keep an eye on last week. Let's check out the updated technical view:
From Strong Earnings ChartList (SECL):
WIX:
We did see the breakout on WIX that I suggested we watch for. However, volume was just so-so and there was no confirmation. I still view this bullishly and I now expect WIX to hold its rising 20-day EMA. Therefore, the best reward-to-risk entry would be at that 20-day EMA, currently at 81.64.
DOCS (also in our Aggressive Portfolio for the upcoming quarter):
So last week, in addition to providing DOCS as a potential trade candidate, I also suggested having patience and waiting to see if DOCS would return to the top of gap support for a much better reward-to-risk trade. I illustrated how you can use the Alerts feature at StockCharts.com so that you don't miss a pullback. I set it up in my SC.com account and bought DOCS after I received my alert from StockCharts. I'll likely use the feature much more in my trading as we move forward. DOCS had closed at 34.94 on Friday and I mentioned that it might seem unlikely for the stock to drop back to 30.82 any time soon, but that I see it happen all the time. Well, check out Monday's action. DOCS fell back to a low of 30.86 that day. On Thursday, it fell all the way down to 29.71 intraday, but it closed above 30.82 every day last week. DOCS also has seen its AD line strengthen considerably. Even the recent pullback to gap support has resulted in a strengthening AD line (pink circles above) as DOCS continues to finish each trading day fairly strong (long tails to the downside show that buyers come in on morning weakness).
FICO:
I pointed out last week that FICO was very similar to DOCS. We need to remain patient to see if we can buy at or much closer to gap support at 525.74. Again, think about using the Alerts feature to make sure you don't miss a quick intraday pullback.
The Week Ahead
The holiday season is upon us. The stock market has historically performed very well from just before Thanksgiving Day all the way through New Years Day. November 21st (Monday) begins a very bullish historical period. Check out the annualized returns for the period November 21st through December 6th:
- S&P 500: +33.62% (since 1950)
- NASDAQ: +44.60% (since 1971)
These annualized returns for this upcoming bullish period compares quite favorably to the average annual returns we typically see on the S&P 500 and NASDAQ. History favors a continuing advance as we move through the balance of 2022. My only hesitation is the potential short-term impact from monthly options expiration that I discussed earlier. IF that derails the market short-term, I'd expect it to be out of the way by mid-week.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."