EB Weekly Portfolio Report - Saturday, November 26, 2022
Fall Special - Coming To An End!
It's hard to believe, but our Fall Special is nearly over! Tomorrow is the THE LAST DAY. If you haven't already taken us up on our BEST DEAL OF THE YEAR, you should do so NOW! Our market guidance, research, and education is second to none, in my opinion. And you will never get a better deal or lower cost, so please ACT NOW! For more information on the Fall Special, 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 28: None
Tuesday, November 29: None
Wednesday, November 30: None
Thursday, December 1: None
Friday, December 2: 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 for tracking purposes
- 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:
We saw short-term weakness to open the week as we suspected we might. Options expiration was lingering early in the week and the S&P 500 hit its weekly low on Monday morning, before more bullish action kicked in during the balance of the week. All 11 sectors finished the week higher, though we did see additional relative weakness in two critical areas - technology (+1.14%) and consumer discretionary (XLY, +1.16%). The only sector to perform worse last week was energy (XLE, +0.26%) as crude oil prices ($WTIC, -4.78%) fell to close at $76.28 per barrel, the lowest close for crude since the first trading day of the year on January 3, 2022.
Materials (XLB, +2.98%) trailed only utilities (XLU, +3.04%) last week, getting a big lift from steel stocks ($DJUSST, +4.80%), which closed at a 6-month high:
I would certainly expect to see any pullback in this group hold the rising 20-day EMA, which is currently at 479. If you like to trade, I'd narrow down my choices of possible trades within this space to stocks that meet the following criteria:
In plain English, I'm looking for Steel stocks with SCTR's above 70 that are on EITHER the Strong Earnings ChartList (SECL) or the Strong Future Earnings ChartList (SFECL) AND also on the Strong AD ChartList (SADCL). This effectively combines technical and fundamental strength, along with relative strength (high SCTR), plus adds a shot of accumulation. Here were the stock returned:
Model Portfolio:
The Model Portfolio rose 0.14% last week, underperforming 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 0.47% last week, underperforming 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 1.15% last week, underperforming 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 gained 1.54% last week, 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 breakdown any setups between our Portfolio stocks and our ChartList stocks. My preference is to trade Portfolio stocks, when appropriate. These stocks are in our portfolios for a reason - they're generally leaders within leading or improving industries.
Here are trading setups for this week:
From Our Portfolios:
AAPL:
20-day EMA test.
NFLX:
20-day EMA test
PODD:
In gap support zone and near 20-day EMA support
SPT:
In gap support zone and short-term price support at 57.73.
DXCM:
20-day EMA test and near key gap support.
From Our ChartLists:
LPSN:
(Full Disclosure: I own LPSN shares) LPSN came from our Downtrend Reversal scan. I would consider this stock VERY risky, so please consider this before taking a position or considering position size. A potential target would be the recent high close at 14.06, nearly a 30% profit potential from its current price. Gap support at 10.12 would be the key "line in the sand" for me to the downside. A close beneath 10.12 would be a significant technical violation.
HDSN:
Breakout to 52-week high on increasing volume. While we could see HDSN absolutely take off higher, you have to be prepared for a possible short-term fake out with a quick return to the 20-day EMA. For that reason, I wouldn't take a full position and consider a 2nd entry at the rising 20-day EMA with the trade being more of a swing trade. That way, if HDSN takes off, you still benefit from 1/2 of a position. If it pulls back, it'll provide an opportunity for a 2nd entry at a lower price.
The Week Ahead
We know we're in a bullish historical period. And, if we take a step back and consider where we are in the Big Picture, things are playing out almost PERFECTLY from what was discussed at MarketVision 2022 back on Saturday, January 8th. I suspected we could see a test of the blue-dotted trendline, before resuming our secular bull market advance. Check this out:
We had SERIOUS sentiment issues at the beginning of the year that are no longer with us. Sentiment now suggests we could rally to new all-time highs at any time. Sentiment doesn't guarantee us we'll go to all-time highs. It's simply no longer an obstacle for the bulls. Also, note the slowing buying momentum (negative divergence) as we headed into 2022. Now it's the bears that are seeing slowing selling momentum (positive divergence), which suggests this rally is just beginning.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."