Stock Portfolio Updates: Rally Stalling, Maintaining Defensive Posture
By: Christopher Mistal
July 19, 2016
Even though today’s DJIA gain was a modest 25.96 points, it was enough to extend DJIA’s daily winning streak to eight consecutive days. The last such DJIA daily winning streak was in March 2013 when it advanced for 10 straight days. Prior to the current streak of eight, there have been just 47 DJIA daily winning streaks of eight or more days since 1950. The longest was 13 straight in January 1987. Of those past 47 streaks, 24 of them ended at eight days (51.06%), 12 streaks lasted until a ninth day (25.53%), 7 streaks went 10 days (14.89%), 2 streaks lasted 11 days (4.26%) and 1 each lasted 12 and 13 days (2.13%). The average loss on the day the streak ended was 0.5%.
[30 Trading Days Before and 60 After 8 or more Day DJIA Winning Streak]
In the above chart the 30 trading days before and the 60 trading days after all 47 previous DJIA winning streaks of eight or more days have been plotted. There are approximately 21 trading days in an average calendar month. Based upon the above chart, even after the current streak ends further gains are likely over the next 1-, 2- and 3-calendar month periods. If NASDAQ and Russell 2000 can join DJIA and S&P 500 in record territory, further gains would be more likely, absent confirmation, less likely.
Portfolio Updates
In the five weeks since last update, S&P 500 was up 4.2% and Russell 2000 gained 5.0% as of yesterday’s close. The Almanac Investor Stock Portfolio’s sizable cash position and short positions held its performance in check. Overall, the entire Stock Portfolio climbed 1.3% higher over the same time period. Large-cap positions, up 3.7%, in the portfolio were responsible for the majority of the overall gain. Mid-Caps and Small-Caps also contributed, up 1.4% and 0.7% respectively.
Per last month’s update, Sunoco Lp (SUN) was sold and closed out of the portfolio using it average price on June 15 for a 10.7% loss. SUN is slightly higher today, but with crude oil slipping back into the mid-forties SUN’s struggles are likely to persist.
Last week’s basket of Summer Shorts have been inputted into the Stock Portfolio table below. Of the 16 new short ideas presented then, four have satisfied their respective shorting criteria and have been officially added to the Portfolio’s holdings. Terra Nitrogen (TNH), Vermilion Energy (VET), Praxair (PX) and Union Pacific (UNP) were all shorted near resistance and could still be considered near current levels. All other “Summer Shorts” have not yet meet their shorting criteria and can still be considered near resistance (the price listed in the Buy Limit column) or on a breakdown through support (level found in Current Advice column). All short trade ideas are labeled with “(S)” and are also shaded grey in the table below.
DJIA and S&P 500 have broken out to new all-time highs, but NASDAQ and Russell 2000 have not. Earnings season has commenced and we have already seen a mixed bag. The momentum off of June’s lows appears to be fading. Long positions remain on Hold. Please note many stop losses have been increased. New short trade ideas can still be considered. Many of them were from the energy sector where seasonality is turning unfavorable.
[Almanac Investor Stock Portfolio – July 18, 2016 Closes]
Disclosure Note: At press time, officers of the Hirsch Organization, or accounts they control did not hold any positions in the stocks mentioned, but may buy or sell at any time.