Stock Portfolio Updates: Passover & Not Chasing Market
By: Christopher Mistal
April 19, 2016
Although Passover is not an observed official market holiday, it is a holiday that is observed. This year Passover begins on this Friday evening (4/22) and lasts until the evening on Saturday, April 30. In the table below, DJIA’s performance the three trading days before and three trading days after Passover appears. When the first full day of Passover falls in a weekend the day after is used otherwise DJIA’s performance on the first full day of Passover is used.
Since 1971, the second and third days before have a bullish bias average gains on both days. The day before however, has an average loss of 0.02% even though there have been more advancing days than declining days. On or after the first full day of Passover, DJIA is generally positive with average gains on the day, two and three days after. Since 2012, the three days before Passover have been notably weaker and could represent a new or developing trend. With Passover landing in either late March or April right around the time the market is at or near its highs, it would not be out of the question for those that observe the holiday to take profits and square positions prior to taking any time off.
[Passover Holiday Table]
Portfolio Updates
Over the past two weeks since last update, S&P 500 has climbed 1.4% and Russell 2000 2.8% as of yesterday’s close. Once again, the portfolios sizable cash balance held its performance in check. The entire Almanac Investor Stock Portfolio edged just 0.4% higher. This overall gain was essentially spread equally across its three market-cap ranges; Small- and large-caps added 0.4% and Mid-caps moved 0.5% higher. Of the 13 stocks currently held, only Hanesbrands Inc (HBI) has a modest loss of 0.6%.
The January/February market rout very effectively removed the weaker positions from the portfolio this year well ahead of our usual thinning that normally occurs when, or not long after, issuing our Tactical Seasonal Switching Strategy Sell signal for DJIA and S&P 500. It is tempting to try and take advantage of recent market strength and the run towards all-time highs. However, we believe the portfolio would be better served by sticking to our tried and tested strategy that has consistently outperformed the broader market since inception back in July of 2001. Should the market fail at resistance at its previous all-time highs, which it is likely to do, the sizable cash holding will no longer be a drag on performance.
Currently the best performing open position, Global Brass and Copper Holdings (BRSS) has resumed its march higher. Again today it is trading at new 52-week and all-time highs. A weaker U.S. dollar is lifting copper prices and giving many commodities a boost. Even Southern Copper (SCCO) has seen in healthy rally over the past three months from just over $22 per share in mid-January to over $29 today. Both BRSS and SCCO are on Hold.
Stein Mart Inc (SMRT) was a Free Lunch stock added to the Small-Cap Portfolio last December. Other than a brief pop at the start of March, shares have done little less. Current strength has pushed SMRT back into positive territory and now is a good time to close it out. Sell SMRT.
Spring has arrived bringing with all warmer weather and yard work. Scotts Miracle-Gro (SMG) is a direct beneficiary and that fact is reflected in its recent performance. SMG traded at a new 52-week and all-time high in late March and remains within striking distance today. SMG is on Hold.
Also benefiting from the arrival of spring and soon the summer driving season is Sunoco Lp (SUN). As a fuel wholesaler and retailer SUN is less exposed to the daily ups and downs of crude oil. Overall U.S. fuel demand and refining margins are what matters. Motor fuel demand will be on the rise again soon once driving season officially kicks off Memorial Day weekend. In the meantime shares pay a handsome dividend. Hold SUN.
United Health Group (UNH) reported first quarter earnings earlier today. Revenue rose 25% and adjusted earnings increased 17% despite losses from participating in Affordable Care Act (ACA) exchanges. UNH plans to exit all ACA exchanges in 2017. The company also enjoyed solid results from its Optum, health service business. UNH is on Hold.
Please note stop losses for several positions have also been increased. All other positions not previously mentioned are on Hold.
[Almanac Investor Stock Portfolio – April 18, 2016 Closes]
Disclosure Note: At press time, officers of the Hirsch Organization, or accounts they control held positions in CNC, CVS, HBI, SMG and TSCO.