EB Weekly Portfolio Report - Sunday, March 12, 2023

ChartLists Updated

I usually post this in our Daily Market Reports (DMR), and I will tomorrow. But I wanted you to know that the following ChartLists have been updated and can be viewed/downloaded from our website now:

• Strong Earnings ChartList (SECL)
• Strong Future Earnings ChartList (SFECL)
• Raised Guidance ChartList (RGCL)
• Bullish Trifecta ChartList (BTCL)

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, March 13: None

Tuesday, March 14: None

Wednesday, March 15: None

Thursday, March 16: None

Friday, March 17: 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, February 16th, and were all entered into as of the close on Friday, February 17th 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 knew the stock market was vulnerable and considerable selling did indeed take place last week. We held up well initially in March, which is typical historical performance. New money inflows occur during the first few days of calendar months, so there's a clear tendency for stocks to rise to open any given month. After that, however, we can see some profit taking and that's at least partially responsible for last week's selling.

Banks ($DJUSBK, -11.72%) were significantly responsible for financials (XLF, -8.50%) lagging performance last week. But the worst performing industry group was actually aluminum ($DJUSAL, -19.11%, which lost nearly a fifth of its value. As a result, materials (XLB, -7.59%) was the 2nd worst performing industry. All 11 sectors were down, though the blow was cushioned somewhat in two defensive sectors - consumer staples (XLP, -1.97%) and utilities (XLU, -2.76%).

Model Portfolio:

The Model Portfolio fell 3.89% 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 tumbled 7.47% last week, significantly 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 dropped 4.16% last week, slightly 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 5.33% last week, underperforming 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 gained approximately 2% from February 24th through March 3rd, the week we provided the above setups. You can see that buying stocks at or near support makes a lot of sense, especially when the stock market is in a good mood. We can't expect trades like this every week, but by sticking with solid stocks, like the ones we include in our portfolios, we can look to improve our odds.

Last week, we didn't provide any weekly setups as I was on vacation. But I'm back this week, so let's check out a few more candidates.

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.

I've been discussing the stock market's vulnerable since mid-February. The second half of Q1 can be a bit unsettling as that's been its history. Once earnings season begins to die down, so too do the opportunities for big market advances. But there are always stocks setting up for possible trades, so let's get to it.

Here are this week's Model Trade Setups, all from our Model and Aggressive Portfolios:

H (Model Portfolio):

Negative divergence likely sent stock down to test 50-day SMA. Almost there and nearing price support.

MSCI (Model Portfolio):

Testing 50-day SMA and area of price support.

HOLX (Model Portfolio):

Testing key price support level.

TDG (Aggressive Portfolio):

Recent negative divergence likely sent shares down to 50-day SMA. Looking for a bounce from there.

FCX (Aggressive Portfolio):

Hitting key area of price support, with max pain at 41.00.

Other trade setup:

DDOG (Max Pain):

Approaching key price support, with max pain near 76.00.

The Week Ahead

The upcoming week will be interesting on a number of fronts. First, there'll begin to be more speculation as to what the Fed might do on March 21-22 at their next meeting. The 10-year treasury yield ($TNX) has plummeted recently from 4.09% to Friday's close at 3.70%, well below its 20-day EMA and just beneath its 50-day SMA. The direction of the TNX next week could play a role in how the stock market reacts. One economic report that'll likely have a big impact on both the stock and bond markets is the February CPI due out on Tuesday morning. That's followed up by the February PPI on Wednesday morning, along with retail sales. There are a large number of economic reports due out this week, but the inflation-related CPI and PPI reports are the two I'm most interested in. I think it's also important to note that sentiment is likely to play a role this week. The Volatility Index ($VIX) soared late last week, hitting 28.97 on Friday afternoon - its highest level since October, which is when the stock market bottomed. The equity-only put-call ratio ($CPCE) hit 1.10 on Friday, an extraordinarily bearish reading from a historical perspective. That extreme reading sent the 5-day moving average of the CPCE to .81, a level where we see many stock market bottoms form.

Oh, and by the way, it's March options-expiration week. I remain VERY BULLISH the balance of 2023, but the short-term? I see the possibility of more short-term downside, but if that's the case, I believe it'll set up a tremendous buying opportunity ahead of Q1 earnings season, which starts in mid-April.

Happy trading!

Tom Bowley, Chief Market Strategist

EarningsBeats.com

"Better timing. Better trades."