EB Weekly Portfolio Report - Sunday, January 29, 2023
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, January 30: None
Tuesday, January 31: MCD
Wednesday, February 1: HUM, CHX
Thursday, February 2: AAPL, SBUX, FCFS
Friday, February 3: 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:
The downtrend has broken. The cyclical bear market of 2022 was a series of lower highs and lower lows. Connecting those lower highs resulted in a very defined downtrend - one that has now been broken on the S&P 500 daily chart:
When I review the stock market and make predictions or forecasts, I base them on probabilities and risk management. There are NEVER any guarantees and I can could be completely off my rocker. But an AD line that looks like the above, breaking out to new all-time highs and steadily increasing throughout much of the bear market, is one that suggests to me that the weakness is temporary or cyclical (short-term). The green arrow points to the now-rising 20-day EMA and 50-day SMA. I'd continue to watch that as support during any short-term profit taking periods.
Model Portfolio:
The Model Portfolio jumped 3.87% 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 climbed 2.43% last week, essentially matching 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 fell 0.37% last week, badly lagging 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 rose 3.43% last week, 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 finished the week down 0.66%, so having 2 of our 5 setups up nearly 10% makes .
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.
We were testing key trend line resistance on the S&P 500 heading into last week, but I really liked the action and remained on the offensive and we did make the trend line breakout this past week. This is excellent news, but I do want to respect the overhead price resistance from 4100-4110 on the S&P 500. Therefore, I am providing only a few setups as it's probably best to be a bit cautious given the end-of-day selling on Friday. We are in a bullish time of the calendar month (January 26th through February 3rd), so we'll have quite an opportunity to forge through this price resistance. A few big names will be reporting earnings this week, including huge market-moving stocks like Apple (AAPL), Alphabet (GOOGL), and Amazon.com (AMZN) - all set to report their results on Thursday, February 2nd after the market closes.
Here are this week's Model Trade Setups:
Portfolio Stocks:
DOCS:
Love Friday's candle and its strengthening price action.
CROX:
Part of very hot footwear industry ($DJUSFT). Recent pullback has CROX back closer to 20-day EMA, which I like as best entry point.
DXCM:
Sticking with this one for one more week as it finally turned back higher end of week. Want to see a break back above 20-day EMA.
Other ChartList stocks:
BYND (Short Squeeze ChartList):
Very aggressive position as we saw a breakout on Friday. Looking for an acceleration of volume this week and short sellers panicking.
GXO (from Raised Guidance ChartList):
Recently raised guidance. Now in uptrend and part of a strong transportation services group ($DJUSTS). After 8% pullback, now getting close to rising 20-day EMA. I'd look for a rally back to 55 initially.
The Week Ahead
Earnings reports will begin to accelerate this week and next and all eyes will be on guidance, just as much as last quarter's results. We also have a Fed meeting on Tuesday and Wednesday, with the Fed's latest policy decision due out on Wednesday at 2pm ET. Like with earnings, I believe market participants are much more interested in what the Fed sees ahead, not necessarily what action they take on Wednesday.
From a technical perspective, I'll be keeping a very close eye on this S&P 500 chart:
The breakout above 4100 would be significant and leadership from growth-oriented areas of the market would be much better than the alternative. This latest rally has been powered by outperformance in the NASDAQ, growth, discretionary vs. staples, and the economically-sensitive transports over defensive utilities. I want to see these ratios continue to perform well to accompany the breakout in S&P 500 price action. I'd feel much better about the sustainability of the advance - perhaps all the way to test the August 2022 high.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."