EB Weekly Portfolio Report - Sunday, April 30, 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, May 1: HOLX, LSCC

Tuesday, May 2: ETN, TRI

Wednesday, May 3: WERN

Thursday, May 4: TDC, CRUS, H

Friday, May 5: 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:

• S&P 500: +0.87%
• Model Portfolio: +0.89%
• Aggressive Portfolio: -3.39%
• Income Portfolio: -0.24%
• Model ETF Portfolio: +1.05%

Weekly Summary

Benchmark S&P 500:

Technically, the rebound that we saw during the second half of last week was extremely important. At the beginning of the week, our major indices lost key 20-day EMA support and the NASDAQ 100 even tested its 50-day SMA. Perhaps even bigger was the test of major price support on the semiconductor index ($DJUSSC):

7200-7400 has proven to be THE most important trading range over the past couple years. Therefore, bouncing off 7200 with a hammer on Thursday and then following up with strength on Friday was extremely bullish. Note also that the RSI dropped almost exactly to 40, before reversing higher. The RSI 40 level is typically support during an advance. I believe this could be the most important chart during the coming week. It will be very difficult for the major indices to move appreciably higher without participation from semiconductors. Watch 7200.

Model Portfolio:

The Model Portfolio rose 0.89% 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 tumbled 3.39% 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 0.24% last week, underperforming 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 1.05% 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

I only provided 3 trade setups last week as we still had the potential to see more options-related weakness. Meta Platforms (META) was a huge winner, but you had to be willing to hold through earnings on Wednesday after the bell:

Tesla (TSLA) was hit hard early in the week, but rallied back nicely, finishing close to the flat line for the week:

Lattice Semiconductor (LSCC) was a different story altogether. It had a rough week, unable to muster a rally after falling considerably:

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 the setups for this week. There is one from our Portfolios, two from our ChartLists, and one from outside of both.

ORCL (Income Portfolio):

Recent selling on light volume down to 20-day EMA.

RLI:

Test of earnings-related gap support.

ROK (SECL, SADCL, RGCL, BTCL):

Bullish wedge breakout.

EPAC (SADCL, RGCL):

Positive divergence prints at key price support level.

The Week Ahead

Well, earnings reports will continue coming at us "rapid fire". Last week, recent leadership in stocks like Microsoft (MSFT, +7.52%) and Meta Platforms (META, +12.88%) paid off handsomely when earnings were reported as Wall Street's reactions were quite bullish. But strong leadership and strong reports didn't always translate into strong reactions. Take Crocs (CROX, -15.97%) as an example. CROX enjoyed a huge beat in both revenues and EPS, yet the "sell on news" bit shareholders badly.

We have more big earnings news coming out this week. Here is a list of several big names that show tremendous leadership and relative strength:

• Stryker (SYK, $113 billion market cap, medical equipment leader)
• Vertex Pharma (VRTX, $87 billion market cap, biotech)
• Arista Networks (ANET, $48 billion market cap, telecom equipment)
• Starbucks (SBUX, $129 billion, restaurants & bars)
• Mercado Libre (MELI, $62 billion, specialized consumer services)
• Apple (AAPL, $2.66 trillion, computer hardware)
• Booking Holdings (BKNG, $98 billion, travel & tourism)
• Regeneron Pharma (REGN, $86 billion, biotechs)
• Monster Beverage (MNST, $57 billion, soft drinks)
• Motorola Solutions (MSI, $49 billion, telecom equipment)

Clearly, AAPL will be the really big report, but SBUX and BKNG will help provide us clues as to the consumer when they release their reports.

From an economic perspective, we'll get jobs data out this week. The ADP employment report will be out on Wednesday, followed by the nonfarm payrolls on Friday. And looking into the week beyond that, April CPI will be released on the morning of Wednesday, May 10th. There's still plenty for traders to chew on, but I'll mostly be interested in seeing follow through from Friday's breakout on the NASDAQ 100 index ($NDX). Closing resistance on the S&P 500 is 4179.76. Friday's close was 4169.48. Seeing the S&P 500 follow the NDX lead would be further bullish confirmation.

Make no mistake about it, though. The biggest resistance level ahead will be the August 2022 closing highs. The S&P 500 and NASDAQ 100 had highs then of 4305.20 and 13667.18. If and when those two levels are cleared, the bulls will be ready to party.

Happy trading!

Tom Bowley, Chief Market Strategist

EarningsBeats.com

"Better timing. Better trades."