EB Weekly Portfolio Report - Sunday, April 2, 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, April 3: None
Tuesday, April 4: None
Wednesday, April 5: None
Thursday, April 6: None
Friday, April 7: 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 was a superb week for the bulls. Historically, we tend to see bullish trends emerge as March comes to an end and April arrives. That was certainly the case last week as our major indices gained ground as follows:
- Dow Jones: +3.22%
- S&P 500: +3.48%
- NASDAQ: +3.37%
Here were a few key ETF relationships that we like to watch, first value (IWD) outperformed growth (IWF):
- Value (IWD): +4.02%
- Growth (IWF): ++3.21%
Next, consumer discretionary (XLY) crushed consumer staples (XLP), which is always notable and, in this case, bullish:
- Discretionary (XLY): +5.62%
- Staples (XLP): +2.38%
All 11 sectors participated in last week's explosive move higher, but only energy (XLE) was able to outperform the red-hot discretionary stocks:
It was certainly a mixture of strength, though the clear rotation into discretionary stocks should be viewed quite bullishly.
Model Portfolio:
The Model Portfolio jumped 4.15% 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 spiked 5.39% last week, easily 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 4.65% 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 surged 4.05% 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:
I provided 9 setups last week as I was expecting a very strong week. I try to have more exposure during bullish weeks and less exposure when market direction isn't so clear. Last week turned out to be very bullish and exactly what we were looking for. Our setups were outstanding, with all 9 profitable and only TSCO trailing (barely) the S&P 500's return of 3.48% last week.
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 remain bullish heading into earnings season, but I'd lessen exposure a bit after such a strong week:
From Portfolios:
ABNB (Model Portfolio):
Recent downtrend was broken, and now turning back up off 50-day SMA on increasing volume. I want to stick with this one another week.
ULTA (Model Portfolio):
I typically prefer to buy strong stocks that pull back to key price support or moving average. In ULTA's case, however, the breakout from a cup with handle pattern late last week suggests more strength ahead.
SONO (Aggressive Portfolio):
The second half of Q1 was a period of consolidation for SONO. I believe Friday's strength, however, could be a signal of renewed strength.
TSLA (Aggressive Portfolio):
I'm sticking with TSLA too. I know the history of this stock suggests it could soar into its next earnings report. Friday's volume accelerated as TSLA approaches its February high.
From ChartLists:
I reviewed a number of charts from our various ChartLists and here are two I like for this week:
DKS (SECL, SADCL, RGCL, BTCL):
DKS had a very bullish reaction to its recent earnings report. It fell back to test its 50-day SMA and nearly filled its gap. It's just moved back above its 20-day EMA and I see further gains ahead. It's one of a short list of stocks on our Bullish Trifecta ChartList (BTCL).
UTZ (SECL, RGCL):
The 16.00-16.50 level has been solid price support and I don't think it would take much buying for UTZ to challenge key price resistance at 17.62, representing a potential 7% gain in the near-term. I do expect UTZ to eventually clear that resistance with its next stop in the 19.00-20.00 range.
The Week Ahead
Last week, we were set up to rebound in banks ($DJUSBK), which we did, and I had mentioned that 60-minute negative divergences on the NASDAQ 100 ($NDX) and semiconductors ($DJUSSC) were no longer a threat after PPO centerline tests. All of that, combined with our sentiment, historical, and other technical indicators, suggested we were in for a strong week. And that's exactly what we saw. So what will the week ahead hold? From a bigger picture standpoint, we do remain in a very bullish historical period. That's a major plus right now. We also saw technology (XLK) clear its August 2022 high:
While that absolute price breakout, albeit barely, is bullish, check out the XLK's relative strength vs. the benchmark S&P 500. I know many folks are screaming "earnings recession" ahead, but honestly that's not what the charts are saying. Technology stocks would not be accumulated if Wall Street felt threatened by a nasty earnings recession.
I would - in no way, shape, or form - bet against the stock market. Stay the bullish course, even if we see the inevitable pullback along the way.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."