Stock Portfolio Updates: Tightening Stop Losses By: Christopher Mistal | June 13, 2017 | Email | Print

After taking a backseat to NASDAQ throughout much of April and May, it was DJIA and S&P 500 (and Russell 2000) that closed at new all-time highs today. All three new highs were modestly above their previous records and the across-the-board confirmation by all four indices is still lacking. Based upon the recent 21-year history of June’s performance and the fact that the market is entering the period where some mid-month strength is common, the market may try to continue to slowly move higher over the next few days, but it will first need to overcome the Fed’s announcement tomorrow.

 

 

Looking at the three charts above, DJIA and S&P 500 are right around projected monthly resistance (red-dashed line) while their respective Stochastic, relative strength and MACD indicators (lower three panes) are flat-lining. NASDAQ’s chart and technical indicators are more sanguine following last Friday’s rout. Technical indicators stretched and major indices at or near resistance just ahead of typically weak end of June is a near perfect setup that could surprise the bulls.

 

 

This past Friday, after the close, we issued our Seasonal MACD Sell Signal for NASDAQ. With the issuance of this sell signal, the “Best Months” have officially concluded and the “Worst Months” have begun. This does not mean a major selloff is imminent, it merely means the broad market has most likely logged the majority of its gains for now. A few more percentage points higher would not be uncommon, but the time to take some profits, trim weak or underperforming positions, tighten stops and take a more cautious and defensive posture in the portfolios has arrived. But, we will also let our winners continue to run. 

 

In the three and a half weeks since last update, S&P 500 was 3.1% higher while Russell 2000 was up 4.7% as of yesterday’s close. The Almanac Investor Stock Portfolio’s blend of cash and long positions was not as strong, up 1.0% over the same time period excluding dividends and any trading costs. Our Large-Cap portfolio performed best, up 3.5% while Mid-Caps climbed 1.6% and Small-Caps edged 0.2% higher.

 

Once again, Arista Networks (ANET) was a strong performer over the past three and a half weeks even after taking a sizable hit last Friday. Prior to Friday, shares were trading at new all-time highs, above $158. ANET’s chart is still bullish and its uptrend remains intact.  ANET is on Hold and its stop loss has been bumped higher.

 

UnitedHealth (UNH) also continues to contribute to Large-cap gains. UNH was also recently trading at fresh new highs above $183 per share. Its chart is bullish and healthcare has a solid history of performing well during the “Worst Months.” UNH is on Hold and its stop loss has also been raised.

 

The Hershey Company (HSY) broke out and bullishly closed above its 50-day moving average and $110 just after last update. HSY has come under some selling pressure this month, but remains close to all-time highs. If HSY can shake off recent weakness and resume its uptrend quickly, then further gains are likely. HSY is on Hold.

 

Although not reflected in today’s portfolio table (below), Scotts Miracle-Gro (SMG) may have finally broken out of the funk it’s been in since the start of May with a better than 7% gain today. Management did cut its full-year profit and sales outlook, but SMG remains one of the few, well-established names that can be purchased to gain exposure to the rapidly growing cannabis industry. SMG is on Hold.

 

Regrettably Lydall Inc.(LDL), was stopped out of the Small-cap portfolio on May 19 when it closed below $48.51. LDL was closed out for a gain of 47.4%.  

 

All other positions, not mentioned above, are currently on Hold. Please refer to the updated portfolio table below for Current Advice about each specific position. Please note that some stop losses have been updated.