EB Weekly Portfolio Report - Sunday, June 4, 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, June 5: None
Tuesday, June 6: None
Wednesday, June 7: None
Thursday, June 8: None
Friday, June 9: 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, May 18th, and were all entered into as of the close on Friday, May 19th 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: +1.83%
- Model Portfolio: +0.16%
- Aggressive Portfolio: +2.44%
- Income Portfolio: +1.17%
- Model ETF Portfolio: +1.84%
Weekly Summary
Benchmark S&P 500:
It was a very solid week for U.S. equities as every asset class posted gains. Small caps ($SML) were the leaders as this index jumped more than 3%. There were several important breakouts last week that included the IWM (ETF that tracks the Russell 2000) and transportation stocks ($TRAN). Check out both charts:
IWM:
TRAN:
These two breakouts are likely to trigger more buying in the week ahead.
The May jobs report came out on Friday and easily exceeded expectations, while the April jobs number was revised higher. The economy remains quite resilient and with the inflation numbers now in check, it frees up the Fed to lower rates sooner rather than later. The Fed doesn't meet again until June 13-14, but I believe the market will continue to anticipate a pause in rate hikes, which could be the catalyst for yet another stock market advance.
Model Portfolio:
The Model Portfolio edged up 0.16% last week, underperforming 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 jumped 2.44% last week, 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 climbed 1.17% 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 1.84% last week, essentially matching 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
We had one long-term swing trade last week - DraftKings (DKNG) - and we added 5 additional setups. Some had decent weeks, others not so much. Our plan, however, is to hold all of these 6 stocks. Here are the latest charts for each:
DKNG:
Price support continued to hold and DKNG rebounded late last week. We're holding for the long-term.
BKNG (Model Portfolio):
BKNG pulled back a bit more than I was expecting, but the recovery last week puts BKNG right back in control.
TPR (Aggressive Portfolio):
Nice island cluster reversal with Friday's gap higher leaving the prior two days' candles on an island after a downtrend. Expect a solid week ahead.
AMZN (Aggressive Portfolio):
Nice gains thus far. PPO looks solid, as do relative strength and its AD line.
SKX (Aggressive Portfolio):
SKX held in its gap support zone and rallied to end the week. I'm looking for further short-term profits ahead.
WING (Income Portfolio):
Price and trendline support both are holding. I'd be careful on any close beneath 195. Otherwise, WING remains a solid short-term trade.
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.
We already have the 6 stocks from previous weeks that were discussed above. Here's one more portfolio stock that looks attractive to us:
CMCSA (Income Portfolio):
I liked Friday's reversal after dipping just beneath the 50-day SMA. A close below gap support at 37.70 would be reason to exit. Otherwise, I'd hold until you make your money on CMCSA. I'm looking for a return trip to 42.
The Week Ahead
There will still be several earnings reports in the week ahead, but the overwhelming majority of key earnings reports have already been released. With the Fed still more than a week away, traders will be looking mostly at technical indicators for directional clues. The good news is that most of those remain clearly in the bullish camp. One significant breakout from last week came on Friday in the form of consumer discretionary as the XLY was able to penetrate key price resistance:
It's quite possible that the XLY has another big week ahead. Or could it be the transports leading industrials higher? And let's not forget about the small cap explosion on Friday. There are still plenty of reasons to be bullish and that's exactly what I am. Bullish.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."