Selected Portfolio Position Review: 02-06-19

Each week we produce a chart book of 10 of the current positions we have in our equity portfolio. Specifically, we are looking at the positions which warrant attention, or are providing an opportunity, or need to be sold.

While the portfolios are designed to have longer-term holding periods, we understand that things do not always go the way we plan. This monitoring process keeps us focused on capital preservation and long-term returns.

HOW TO READ THE CHARTS

There are four primary components to each chart:

• The price chart is contained within the shaded area which represents 2-standard deviations above and below the short-term moving average.  
• The Over Bought/Over Sold indicator is in orange at the top.
• The Support/Resistance line (green) is the longer-term moving average which also acts as a trailing stop in many cases.
• The Buy / Sell is triggered when the green line is above the red line (Buy) or vice-versa (Sell).

When the price of a position is at the top of the deviation range, overbought and on a buy signal it is generally a good time to take profits. When that positioning is reversed it is often a good time to look to add to a winning position or looking for an opportunity to exit a losing position.

With this basic tutorial let’s get to the sector analysis.

CMCSA – Comcast Corp.

• CMCSA has rallied above both the 50- and 200-dma
• With the “buy” signal still intact, a pullback to the moving average support will provide an opportunity to add to the existing position.
• Stop-loss moved up to $36.

COST – CostCo Wholesale Corp.

• Rally from lows has run into the downward trending 50-dma.
• Currently on a sell-signal and near oversold levels.
• Short-Term Positioning remains “bearish” for now.
  • Holding 1/2 position currently
  • Stop-loss moved up to $205

CVS – CVS Health

• Despite the fact I really like CVS, it just isn’t performing with the bounce in the market. This suggests it will likely outperform in the next market decline. 
• Currently, CVS is on a “sell signal” and is oversold. 
• Short-Term Positioning: Neutral
  • Looking for a suitable position to swap into.
  • Stop-loss moved up to $64

DOV – Dover, Corp.

• DOV broke out to new highs following a strong earnings report. 
• We sold part of the position just to take some profits and will look to add back into the position on a pullback or consolidation.
• With DOV about to trigger a “buy signal” we could be adding back into the position very shortly if the overbought condition can be reduced.
• We like the company longer-term but stops are moved up.
• Short-Term Positioning: Bullish
  • Looking to add to position @ $82.50-85
  • Stop-loss moved up to $80

VMC – Vulcan Materials, Co.

• With the partial sale (profit taking) from DOV, we added a position VMC
• VMC is just triggering a “buy” signal and has significant upside.
• VMC has already cleared the short-term moving average and the longer-term moving average is just ahead.  
• A good earnings report on the 15th of February could provide a significant boost to the price.
• Short-Term Positioning: Cautious
  • Looking to add to position above $110
  • Stop-loss at $100
• Longer-Term Positioning: Bullish

FDX – Federal Express

• Following the December plunge, FDX has recovered and is pushing back into the 50-dma.
• Currently still on a “sell signal” and very oversold we still expect some upside.  
• However, we are tightening up stops markedly as performance has been weak.
• Short-Term Positioning: Bearish
  • Look to add to position at $190
  • Stop-loss moved up to $170

MDLZ – Mondelez International, Inc.

• A great “earnings” report sent the stock soaring above the long-term consolidation and triggered a “buy” signal. 
• MDLZ is current 2-std dev above the moving average and overbought
• We are looking to add to the position on a pullback or consolidation.
• Short-Term Positioning: Bullish
  • Look to add to position on pullback to $45
  • Stop-loss moved up to $42.50

MSFT – Microsoft, Corp.

• MSFT reported a “so so” quarter and the stock initially sold-off but recovered and rallied above the 200-dma. 
• Still on a pretty deep “sell signal” keeps us a little cautious at the moment but we will add to the holding above $107.50
• Stop-loss is tight at $100 currently.

MMM – 3M Company

• Following a good earnings report, MMM rallied into resistance at the long-term moving average. We stated last week, MMM needed to move above resistance to add to the position.
• It is attempting to do that currently but we need a bit more “conviction” first.
• Current sell signal is close to triggering reversing. 
• Short-Term Positioning: Bullish
  • Add to position above $200
  • Stop-loss moved up to $195

PEP – Pepsi, Inc.

• PEP has moved up recently and is challenging the 200-dma
• Currently on a sell-signal (bottom panel) but is beginning to improve.
• Short-Term Positioning: Improving to Bullish
  • Look to add to position above $114
  • Stop-loss moved up to $110