[Editors note: Due to Thanksgiving, the next email Alert will be sent out after the market closes on Tuesday, November 23.]
Following a strong open to the month, the major indexes we routinely track did pause and pullback modestly ahead of mid-month. Over the past week, S&P 500, NASDAQ and Russell 1000 have all traded higher with NASDAQ leading the way. However, DJIA and Russell 2000 have traded lower. This divergence is noteworthy as DJIA and Russell 2000 are the indexes that are actually most closely following the typical trading pattern observed in November over the last 21 years. This dip by DJIA and Russell 2000 may be all the weakness the market offers in advance of strength usually observed ahead of Thanksgiving and at the end of November.
Stock Portfolio Updates
Over the last three weeks since last update through yesterday’s close, S&P 500 climbed 3.0% higher while Russell 2000 advanced 5.5%. During the same time period the entire portfolio was up 2.1%, excluding dividends and any fees. The Mid-cap portion of the portfolio performed best, advancing 4.5%. Small caps were second best, up 2.1%. Large caps were essentially flat, off 0.02%.
Weakness in the Large-cap portfolio was primarily the result of its concentration in defensive, dividend paying positions that weakened as 10-year Treasury rates crept modestly higher. AT&T (T) and Verizon (VZ) declined further as both agreed to pause their C-Band 5G rollout due to concerns from the FAA while rival T-Mobile continued to expand its network which uses a different frequency spectrum. Considering C-Band 5G is already deployed in nearly 40 other countries where planes safely operate daily, and the pause was voluntary the selloff does appear excessive.
T and VZ can be considered near current levels up to their respective buy limits in the table below. For tracking purposes we will add to the existing T position using its average daily price on November 19. VZ was officially stopped out today. We will close the old position out in the next update and establish a new position using VZ’s average price on November 19.
Recently added Mid-cap positions, A10 Networks (ATEN), Green Brick Partners (GRBK) and Pacira Pharmaceutical (PCRX), have all advanced nicely since being added last month. ATEN is up 23.0% and GRBK is also up over 20%. Aaon Inc (AAON) and Encore Wire (WIRE) did not trade below their respective limits. WIRE has run away and appears to be overbought so we are going to cancel this trade idea. AAON has risen as well but remains attractive up to its new buy limit of $76.95.
Newly added Small-cap positions have also fared well led by a 25.3% gain by Sterling Construction (STRL). Entravision Communications (EVC), up 7.3%, as of yesterday’s close was as high as $9.34 last week. Both STRL and EVC are on Hold. Last update we elected to wait and see if USA Truck Inc (USAK) would pullback below it buy limit. That did not occur. Increase USAK Buy limit to $22.25. For tracking purposes, USAK will be added to the portfolio using its average daily price on November 18.
Please see table below for updated stop losses and current advice for each position.