EB Weekly Portfolio Report - Sunday, December 4, 2022
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, December 5: None
Tuesday, December 6: None
Wednesday, December 7: None
Thursday, December 8: LULU
Friday, December 9: 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:
U.S. equities advanced last week, mostly across the board. All of our major indices finished higher, led by the more aggressive NASDAQ 100 ($NDX, +2.03%). 9 of 11 sectors advanced as well. Communication services (XLC, +3.47%), one of the weakest sectors in 2022, led the action last week. Internet stocks ($DJUSNS, +4.72%) were a primary reason for that strength. Consumer discretionary (XLY, +2.33%) was also very strong, led by footwear ($DJUSFT, +5.85%).
The S&P 500's advance has left it in an interesting position as both trendline resistance and the 50-week SMA come into focus:
Model Portfolio:
The Model Portfolio rose 2.55% 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 5.18% last week, significantly 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 0.51% 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 0.68% last week, underperforming 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.
Last Week's Setups
Here were the setups provided last week and how they performed:
Given the S&P 500's gain of 1.13%, it was a solid week for the setups provided in last week's EB Weekly Portfolio Report.
This Week's Setups
Every week, I will provide setups among 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:
ON:
20-day EMA test, also handle in a bullish cup with handle pattern.
UAL:
20-day EMA test, also bull flag setup.
MUR:
Trendline test. Also, recent negative divergence suggests 50-day SMA test would be a buy as well.
ENPH:
Big volume breakout.
FCFS:
20-day EMA test.
CHX:
From Our ChartLists:
NCLH:
I like it as it nears price support at 15.79.
FVRR:
Gap support is 32.99. The closer it gets to that level, the better the reward to risk entry.
DDS:
20-day EMA test.
The Week Ahead
Well, we're past the latest jobs report and more than a week away from both the November CPI report, to be released on Tuesday, December 13th, and the next Fed meeting, which will be held on Tuesday, December 13th and Wednesday, December 14th. Through it all, our major indices have turned much more bullish with price action above rising 20-day EMAs.
There won't be a lot of economic reports out this week. The biggest will likely come on Friday, when the November PPI report will be released. Currently, both the headline and core numbers are expected to come in at +0.2%. Anything significantly higher could result in key price and/or moving average tests on our major indices. One big positive that we saw last week was the breakout in the home construction group ($DJUSHB):
This breakout is significant, because home construction stocks have very bullish tendencies this time of year, as you can see from the seasonality chart below:
It would be extremely bullish for the overall market if the DJUSHB continues to power forward. It would be sending a strong signal that any recession will likely be shallow and brief.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."