Jobs report was super strong but stocks sold off on concern of interest rates rising sooner than expected.
S&P 500 @ 1881.14, low 1878.50, high 1891.33
RSI @ 56.14
CMF @ 0.106
Internals were :
UP volume led by 1.51 to 1 in NYSE & .91 to 1 in Nasdaq
Advancing stocks led by 1.32 to 1 in NYSE & 1.06 to 1 in Nasdaq
Net new 52 wk highs were leading by 111 in NYSE & new lows were leading by 16
VIX Down 2.57% @ 12.91
Oil @ $99.76
Gold @ $1302.90
Canadian $ @ 90.17
Stocks which were UP 1% or more included LULU
KOG RAD LEN TSLA AG LVS JKS SU X
FSLR CRUS MFLX ABX SLW GG
AEM CSOD WLT WYNN......
Here is my weighting @ close :
MU 35.68%
LULU 27.84%
WUBA 20.02%
GRPN 5.89%
OWW 5.52%
SWIR 5.05%
Exposure 179%
Next post by 2 PM on Sunday.
BLOG does NOT give buy or sell.
Saleem
2 comments:
Hey Saleem,
A rough Monday morning turned into a good week as the portfolio gained 0.83% versus the S&P's 0.95%.
Weekly Winners: WLH (+5.4% from purchase), GM (+3.7%), AAL (+1.4%)
Weekly Losers: JKS (-5.4%)
YTD Info:
Portfolio: -3.24%
S&P 500: +1.77%
After a rocky start Monday morning, the indices grinded higher the rest of the week, taking profits on Friday ahead of the weekend. I sold my TZA hedge on Tuesday after I felt an "all clear" and added exposure the rest of the week as economic data and earnings were mostly positive. Here's the updated portfolio:
Top holding (20.2%): AAL
Larger holdings (13.5-9.0%): M MS GM FDX MOS
Smaller holdings (6.8-6.0%): WLH JKS PFPT
Cash: 4.5%
Closed positions: TZA
New positions: FDX WLH M MS PFPT
Add-ons: AAL M MS
Everything went pretty much according to plan from last week's writeup. The question is where from here. I think based on the economic data improving and earnings decent despite a 0.1% GDP 1st quarter, which is likely to get revised into negative, we should see more grind higher in the market.
The hiccups to this potential outcome are based mostly in Ukraine. The violence and rhetoric are both heating up, and based on elections late in the month, things are likely to get worse before better. How much the market discounts this activity is up for debate, but I think it will hold mostly well given that headlines do seem to be having a diminishing effect. Any spillover into Europe would be more hurtful though, such as a cutoff in natural gas supplies or an actual invasion by Russia.
The other market negative that people have recently cited is China. After hanging on to this as a potential negative for some months, I think the time is right to retire it. Chinese government officials have explicitly stated they are willing to accept lower growth, and the numbers have been fairly awful, but the market has taken it all in stride. I think based on this, we need to acknowledge that barring some kind of serious further slowdown, unlikely given Beijing's policy tools available, the potential new catalysts from China are positive ones if things do rebound some, which would be supportive of our market.
Given a Q1 GDP of only 0.1%, I am very surprised how well the quarterly earnings have come out so far. This tells me that as the economy rebounds in Q2, we could really see some companies shine. If I was a portfolio manager, I don't see how I'd be scared of Q2 earnings, so I don't think we'll see much selling ahead of July, providing an underlying upward bias for the markets.
I am currently focused on low P/Es and economically sensitive stocks as I feel that in a positive market environment, these are the best positioned to rise. My top four holdings and current year P/Es are AAL (7.1), M (12.7), MS (12.4), and GM (11.0), and all of these could see accelerating earnings if in a strong economic tailwind. I still like my high growth stocks, and may select a few for the portfolio, but I think there's too many other good options right now in the stock universe for these high growth stocks to see consistent money flows.
The only portfolio earnings this week is MOS (Tue AM), but some other watched companies include: Monday (DATA), Tuesday (TRIP FEYE FSLR SGMO), Wednesday (TSLA SCTY Z), Thursday (PCLN), and Friday (RL). Also this week is more economic data with ISM services on Monday, as well as the China PMIs and an ECB meeting. Although not as hectic as last week, these events should give more indication on the economic and market direction.
Overall, I'm expecting a move higher in the markets as sentiment is skeptical and economic data is improving. The driver of these gains will be an unwillingness to sell ahead of better earnings ahead, which will make the incremental buying more impactful and short-covering necessary. I do expect a broad-based move, but I prefer the cyclical stocks right now, especially those will still low PEs and expectations.
Good luck to all! :)
Stocktrader
Hi Stocktrader,
US economy which is the-biggest economy in the world is "humming" @ a nice clip...which is good news for world economy.
China has been discounted already as they may do 6% to 6.5% GDP growth..which is close to India may do in coming fiscal year....
Good luck in coming week.
Saleem
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