EB Weekly Portfolio Report - Sunday, April 16, 2023
Special Note
Many earnings dates for our portfolio stocks have changed. The stocks in the various portfolio ChartLists include the earnings dates/times in the name of the chart. I have changed as many as one-third of the earnings dates. If you want updated earnings dates in your portfolio ChartLists, you should re-download the portfolios into your StockCharts.com account.
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 17: None
Tuesday, April 18: None
Wednesday, April 19: TSLA
Thursday, April 20: None
Friday, April 21: FCX
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:
The S&P 500 gained less than 1% last week, but remains technically sound. The weekly price action is trending above the 20-week EMA, which is above the 50-week SMA. The weekly PPO is strengthening, which suggests improving momentum. Its AD line is absolutely soaring, which I believe foreshadows a strong Q2 ahead. Value stocks were the primary beneficiaries of higher price action. Financials (XLF, +2.78%), energy (XLE, +2.65%), and industrials (XLI, +2.11%) were the only 3 sectors to gain more than 2% for the week. Technology (XLK, -0.28%), easily having the highest representation in the S&P 500, lagged a bit or we'd have seen a much stronger week.
Model Portfolio:
The Model Portfolio edged higher by 0.91% last week, slightly 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 surged 3.42% 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 2.53% 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 jumped 1.05% 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 was a bit cautious heading into last week and it was probably a wise decision. While our major indices all finished the week with fractional gains, much of the strength was related to value-oriented stocks. The one truly aggressive growth stock that I picked - Cirrus Logic (CRUS) - was, by far, the worst-performing stock across all three of our portfolios last week. Sometimes, individual trades go completely against us and CRUS was a perfect example of that last week, tumbling 13.21%. It was our only portfolio stock to lose more than 1.4%. In fact, 23 of our 30 portfolio stocks beat the S&P 500 for the week.
I'd rather be lucky than good. I wasn't either 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.
I am going to pass this week on Model Trade Setups. I don't want to short any stocks, because of my belief that we're in the midst of the secular bull market resumption. Personally, I only trade on the long side when I believe the market is heading higher. On Tuesday evening, we'll have our April Max Pain webinar, where we'll focus on a few short-term trades that could benefit from options-expiration-Friday-related manipulation.
The Week Ahead
It's Opposite George week (Seinfeld reference). That means that there's a tendency for sectors, industries, and stocks that have been performing well....to reverse. And the areas that haven't done so well to perhaps rally. Communication services (XLC) and technology (XLK) have the highest SCTR scores among our major indices at 90.7 and 90.3, respectively. Accordingly, these two sectors carry a higher risk heading into next week. It does not guarantee lower prices, it simply points out the higher short-term risk.
Both the SPY and QQQ, ETFs that track the S&P 500 and NASDAQ 100, respectively, currently show a total of $1.4 billion of net call premium. This will make trading this week a bit more uncertain on the long side.
Earnings kicked off on Friday, with a number of large banks ($DJUSBK) reporting their latest quarterly results. Overall, the market reaction was very bullish. JP Morgan (JPM, +7.55%) led the banks higher as its relative strength pointed to solid results.....and that's what JPM delivered:
The pace of quarterly earnings results will accelerate very rapidly over the next 3-4 weeks and that, along with guidance, will likely be a key determinant of where our major indices are one month from now.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."