EB Weekly Portfolio Report - Sunday, March 26, 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, March 27: None
Tuesday, March 28: None
Wednesday, March 29: None
Thursday, March 30: None
Friday, March 31: 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:
Last week saw some ups and downs, but most of the volatility occurred after the FOMC's latest policy statement, which was released on Wednesday at 2pm ET. The Fed raised rates another quarter point, which is what most market participants expected. The Fed continues to hike, saying that it's fight against inflation isn't quite over. However, the bond market sees it completely differently. Bond investors, especially those on the long end, require higher returns if they're expecting inflationary pressures. Yet, from Wednesday's opening 10-year treasury yield ($TNX) at 3.64%, we saw a significant decline in yields, touching 3.29% by Friday morning. That's a 35-basis point drop, so clearly bond investors are not seeing what the Fed is seeing. The bond market is SCREAMING to the Fed to stop raising short-term rates. Banks ($DJUSBK, -0.66%) are saying the same thing, as they lost ground for the third straight week and haven't seen significant weekly gains since late January.
Model Portfolio:
The Model Portfolio rose 1.78% 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 1.57% last week, slightly 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 1.82% 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 gained 1.16% last week, slightly 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:
We only had 4 setups last week as I wasn't sure what to expect heading into the Fed meeting. We saw strength early in the week, with selling taking place mostly after the Fed announcement on Wednesday afternoon. There were solid opportunities for profitable trades on the three of the four stocks above, though ACM struggled throughout the week after some early strength Monday and Tuesday. I considered ACM as a setup for next week too, but ultimately went with 9 others.
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 this week's Model Trade Setups. I'm including more than usual as I'm expecting a strong week:
From Portfolios:
ABNB (Model Portfolio):
50-day SMA test.
GWW (Model Portfolio):
Price support.
TSCO (Aggressive Portfolio):
Price support.
TSLA (Aggressive Portfolio):
20-day EMA test.
TDG (Aggressive Portfolio):
Price support.
PAG (Income Portfolio):
Price support and reversing candle.
From ChartLists:
I selected the next 3 stocks after running a scan against our key ChartLists (SECL, SFECL, SADCL, RGCL, BTCL). It was a simple scan, reviewing all stocks with SCTR scores above 95. So the following stocks certainly have an element of relative strength and leadership.
IOT (SECL, SADCL, RGCL, BTCL):
Gap and price support.
WYNN (SFECL, SADCL):
Gap, price, and 50-day SMA support.
OI (SECL, RGCL):
Gap, price, and 50-day SMA support.
The Week Ahead
I'll be watching banks closely this week. Now that they've gone all the way down to test November 2020 gap support, I fully expect at least a short-term rebound approaching:
It's just about time to see stocks make their typical pre-earnings run higher. Since 1971 on the NASDAQ, there's an annualized return of +24.61% from March 29th (this Wednesday) through April 18th, roughly doubling the NASDAQ's average annual gain of +12.47%. Obviously, there's no guarantee that we see higher prices from here, but it's interesting that this historical bullishness coincides with my key bullish sentiment and technical signals.
The good news technically is that the 60-minute negative divergences on the NASDAQ 100 (QQQ) and semiconductors ($DJUSSC) saw PPO centerline resets (nearly) and 50-hour SMA tests. They're both poised to move higher this week and, if they do, it would definitely set up for a strong week ahead.
I remain 100% bullish heading into Q1 earnings season.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."