EB Weekly Portfolio Report - Sunday, August 25, 2023
Schedule Change This Week
I'll be traveling all day on Tuesday for personal reasons, so there will be no TP Live show that day.
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, August 28: None
Tuesday, August 29: None
Wednesday, August 30: None
Thursday, August 31: LULU
Friday, September 1: 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:
- Historically, there have been 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. For the latest August portfolios, we made changes to this strategy, specifically, including more than our traditional 10 equal-weighted stocks. We're including more than 10 stocks in each portfolio, with several weighted at 5% instead of 10% of the portfolio.
- 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, August 24th, and were all entered into as of the close on Friday, August 25th 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 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 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: +0.82%
- Model Portfolio: +0.63%
- Aggressive Portfolio: +0.16%
- Income Portfolio: +0.08%
- Model ETF Portfolio: +0.76%
Weekly Summary
Benchmark S&P 500:
Last week was truly about two things. The HUGE quarterly earnings report from NVIDIA Corp (NVDA) and then the Jackson Hole speech from Fed Chief Jay Powell. Both were highly anticipated and I'd say the reaction to both may been the opposite of what many traders were expecting. NVDA has been a semiconductor ($DJUSSC) leader, so their revenue and earnings beat was probably to be expected. But after gapping higher, NVDA sold off nearly all day on Thursday, taking both semiconductors and the overall market with it.
The reaction to the Fed was quite the opposite. Initially, it appeared as if there'd be another big selloff, reminiscent of 2022 when 6-7 weeks of selling followed Fed Chief Powell's remarks. But once the dust settled from Powell's comments on Friday, there was quite a bit of buying intraday.
For me, the current trading range of the S&P 500 is 4305-4340 to the downside, while 4440-4460 represents solid near-term resistance. I believe whichever way the S&P 500 breaks out of this range will dictate the directional move we see in September.
Model Portfolio:
The Model Portfolio gained 0.63% 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 rose 0.16% last week, 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 climbed 0.08% 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 0.76% 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.
Recent Setups
There were no Model Trade Setups 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'm going to pass once again this week on setups, mostly due to a lack of time as a result of personal matters. I will, however, continue to look for solid setups throughout the week and post them in the DMRs.
The Week Ahead
One week ago, I was mostly concerned about two aggressive areas - semiconductors ($DJUSSC) and software ($DJUSSW) - holding onto key support. So far, so good. Check out these charts:
$DJUSSC:
$DJUSSW:
Historically, the early part of next week is bullish. That, combined with the look of these two charts, suggests that maybe the bulls can hold off the bears until a very significant August nonfarm payrolls report is released on Friday morning.
One other chart to watch is the 10-year treasury yield ($TNX). The October 2022 high was 4.33%. Recently, the high close was 4.34%. There's a double top in play. A definitive breakout above those two highs could be very damaging short-term to the above two industries, as well as all other aggressive growth industries. It will be critical to watch this chart leading up to the Fed meeting later in September.
Happy trading!
Tom Bowley, Chief Market Strategist
EarningsBeats.com
"Better timing. Better trades."