EB Weekly Portfolio Report - Monday, December 26, 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 26: None - Market Closed
Tuesday, December 27: None
Wednesday, December 28: None
Thursday, December 29: None
Friday, December 30: 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:
Crude oil prices ($WTIC, +6.85%) were higher for the second consecutive week, helping to lift energy shares (XLE, +4.26%). The long-term uptrend in the XLE remains intact, as you can see from the channel below:
The XLE has solid price support near 80 and the rising 50-week SMA has held as support for more than two years now. If both of those are lost, then we re-evaluate. Until then, energy remains a leader. Here's how all 11 sectors performed last week:
Our three aggressive sectors were in spots 9 through 11 last week. We're very unlikely to see a sustainable move higher until we see much more support from these three sectors. In particular, I want to see strength in semiconductors ($DJUSSC, -4.24%), software ($DJUSSW, -2.20%), internet ($DJUSNS, -1.47%), automobiles ($DJUSAU, -15.54%), and retail (XRT, -1.01%). Every one of these groups underperformed the S&P 500. That will need to change in 2023 if this bear market is cyclical, which I believe it is.
Model Portfolio:
The Model Portfolio dropped 1.26% 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 slid 1.14% 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 gained 0.42% 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 lost 0.07% last week, slightly outperforming the S&P 500.
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:
The S&P 500 lost ground for the third consecutive week, making it much more difficult for long trades. However, our trades among Portfolio stocks actually held up quite well, while the other two stocks provided struggled.
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.
Outside of a few housing-related reports, we won't have much economic news to trade off of this week. And there will be NO significant earnings reports out. Historically, we tend to move higher this week, but strong December seasonality has yet to play a role in 2022. Here are the trading setups for this week:
From Our Portfolios:
DBX:
Price support and 50-day SMA test.
AAPL:
Major price support test.
IGT:
PPO centerline, gap, and 50-day SMA tests. Also bullish engulfing candle.
PODD:
Price support test.
SPT:
Gap support test.
JPM:
PPO centerline and 50-day SMA tests.
From Our ChartLists:
FLEX (from SECL, SADCL, RGCL, and BTCL):
20-day EMA test.
MCHP (from SECL, SADCL, RGCL, and BTCL):
PPO centerline and 50-day SMA tests.
The Week Ahead
It should be a fairly quiet week in terms of volume as many market participants will be on vacation. But that doesn't mean we can't still see big moves and critical changes in volatility. Last week, I pointed out that the NASDAQ had lost the top of gap support, stemming from the October CPI report that was released on November 10th. Well, now we're testing the bottom of that gap support. I will be watching two levels on the NASDAQ 100 ($NDX) very closely - first, the gap support at 10.797.55 from November 10th (October CPI) and second, the gap support at 10,481.58 from October 13th (September CPI). If those two levels go, that would be a very significant breakdown on one of the most important growth stock indices. If the NDX does touch or approach that 10,481.58 gap support level, that would be another time where growing more aggressive with a leveraged ETF (QLD - 2x, or TQQQ - 3x) would make sense. However, if support fails, I wouldn't be holding ANY leveraged ETFs.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."