Stock & ETF Portfolio Updates: Bouncing Back
By: Christopher Mistal
February 15, 2018
Over the past four weeks the ETF portfolio has been on a roller coaster ride. Immediately after last update, the majority of positions were higher, but that all changed in early February. S&P 500’s first 10% correction since the start of 2016 transpired in the matter of a few quick trading sessions. Some sectors fared better than the major indexes while others were worse.
As a result of broad weakness, iShares DJ Transports (IYT), iShares PHLX Semiconductor (SOXX), Vanguard REIT (VNQ) and SPDR Energy (XLE) were all stopped out. Each position was closed out in the following trading session using that day’s average price.
Mid-January’s new ETF Trade ideas in the natural gas sector, First Trust Natural Gas (FCG) and United States Natural Gas (UNG), were both added to the portfolio and then stopped out. The combination of warmer weather and broad weakness triggered the quick declines.
DB Gold Double Short (DZZ) was added to the portfolio yesterday when it traded below its buy limit. DZZ is on Hold. ProShares UltraShort Silver (ZSL) has not yet traded below its buy limit and can still be considered on dips. It is worth noting that gold and silver did not really respond to broad market declines that were at least partially fueled by rising inflation expectations. If market volatility continues to decline, then gold and silver could easy succumb to weak underlying demand.
Core “Best Months” positions in SPDR DJIA (DIA), iShares Russell 2000 (IWM), PowerShares QQQ (QQQ) and SPDR S&P 500 (SPY) have all given back a portion of their respective gains, but only IWM is currently in the red (using February 14, 2018 closing price). All four positions remain on Hold. During times of turmoil and volatility it is best to stick to the time-tested strategy and avoid making rash, emotional decisions that more often than not turn out to be wrong.
All other positions not previously mentioned are on Hold.
[Almanac Investor ETF Portfolio – February 14, 2018 Closes]
Disclosure Note: At press time, officers of the Hirsch Organization, or accounts they control held positions in IWM, QQQ, XLP and XLV.
Stock Portfolio Updates
Over the four-plus weeks since last update, S&P 500 is only down 1.8% while Russell 2000 is off 2.4% as of yesterday’s close. The Almanac Investor Stock Portfolio’s blend of cash and long positions slipped 3.5% over the same time period excluding dividends and any trading costs. Our Mid-Cap portfolio was the worst performer and responsible for the majority of the overall decline.
Once a top performer, Scotts Miracle-Gro (SMG) delivered a disappointing earnings report just as the market began to weaken. Their business is seasonal and winter generally is not a great period for them, but no punches were pulled and shares were slammed on January 30. SMG then closed below its stop loss on February 5 and was closed out of the portfolio the next day.
II-VI (IIVI) was another mid-cap position that suffered a sizable decline, dropping from over $50 per share in mid-January to under $40 now. What was a solid performing position turned into a minor loss when it was closed out of February 6.
Per last month’s update, positions in KBH, LGIH, MTH, ORBK and PATK were established on January 12 using the day’s average trading price for entry. This ultimately proved to not be the timeliest of purchases. LGIH was stopped out on February 8 and closed out of the portfolio the next day while KBH, MTH and PATK are currently all negative.
On a positive note, remaining Free Lunch stocks, shaded in grey have nearly all been closed out. A tight 8% trailing stop loss was in use and this ensured that nearly all of the positions were closed out for a gain. Only CECE was negative. Network-1 Technologies (NTIP) is the sole remaining Free Lunch stock and it should also be closed out. Sell NTIP. For tracking purposes it will be closed out using its average daily price on February 16.
Bank stocks and the oldest holdings in Large-Cap Portfolio are other bright spots. ABCB, WAL, UNH, SCCO, ANET and CBG are all higher today than in mid-January. ANET is by far the top performer, up approximately $50 since then.
All other positions in the Stock Portfolio are on hold. Please see following table for current advice, buy limits and stop losses.
[Almanac Investor Stock Portfolio – February 14, 2018 Closes]
Disclosure Note: At press time, officers of the Hirsch Organization, or accounts they control held positions in, ANET, BUSE, FAF, G, HII, LGIH, LII, MHO, OC, ORBK, SMG, SNX and TOL. They did not hold any positions in the other stocks mentioned in this Alert, but may buy or sell at any time.