Selected Portfolio Position Review: 03-13-19

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.

AAPL – Apple, Inc.

• After a brutal sell off last year, Wall Street has gotten very negative on the companies prospects. This sets up a reasonable opportunity for an upside surprise during earnings season.
• We added 1/2 of a position this past week and we will look to flesh it out on a pullback that holds support at the 50-dma.
• Stop-loss set at $160

BA – Boeing Co.

• BA had broken out recently to all-time highs following earnings and literally went “soaring” off.
• However, that gross extension set the stage for a sharp pullback which happened this week on news of the second 737 crash in 5-months.
• The sell-off held support at previous highs and will likely begin a basing period here for sometime as news works its way through the system. Fundamentals remain strong and this event will pass.
• We took on a 1/2 position and will add to the position on any weakness that doesn’t violate more critical levels of support.
• We are going to give BA some intial leeway and then will tighten up stops as the stock finds its footing.
• Stop is currently $340
  • Holding 1/2 position currently
  • Looking for opportunity to increase exposure opportunistically.

CHCT – Community Healthcare Trust

• CHCT recently broke out to new highs along with the rest of REIT complex following the pullback in interest rates.
• We noted previously that we were looking for a pullback which works off some of the overbought condition. That process is in the works now.
• Looking to add to the position during this pullback to $32, would like to see a bit more consolidation first.
• Stop is at $30

COST – Costco Wholesale

• I almost gave up on COST despite its fundamentals as the trade just didn’t seem like it was going to work out. Fortunately, the stock has come roaring back.
• While COST is not overbought as of yet, we are looking for a pullback to support between $220-225 to add to our position.
• Also, this will give COST time to register a buy signal which should help buoy the stock in the near term.
• Stop has been moved up to $210

FDX -Federal Express

• FDX has struggled since we added it to the portfolio. As with COST we like the fundamentals but performance during the recent market rally has been disappointing.
• FDX remains oversold and is close to a buy signal.
• Nonetheless, we are keeping a tight stop on the position and may look to swap for a better performing company if we don’t start seeing improvement heading into earnings.
• Stop-loss is moved up to $170

MMM – 3M Company

• We initially bought MMM on the idea of a trade war resolution.
• The recent rally has triggered a “buy” signal, but MMM is extremely overbought.
• We initially bought 1/2 postion in MMM and are looking for an opportunity to increase exposure. A break above $210 will likely be that entry point.
• However, the recent failure at resistance is concerning due to multiple tops at $210. A resolution to the “trade war” will likely be the boost needed to move MMM above resistance.
• However, we are tightening up stops to protect our profits.
• Stop is at $200

HCA – HCA Healthcare

• HCA, along with UNH, sold off over the previous week on concerns of “Medicare For All.”
• We are using this sell off as an opportunity to add to both positions as the sell off is over something that is highly unlikely to happen in the near term.
• We added to our position yesterday bringing the whole position up to target weights
• Stop-loss moved up to $120

IAU – IShares Gold Trust

• We recently added a position in gold to our portfolio after having been out of the metal since 2013.
• The recent pullback to support gave us the right opportunity to add the second position bringing IAU to target portfolio weight.
• Stop-loss is tight at $12.20 currently.

JPM – JP Morgan Chase

• Outside of Visa (V) we have no financial exposure to speak of in our portfolio. JPM has rallied recently above its 50-dma and has been consolidating.
• With JPM very close to a buy signal, we added 1/2 position to the portfolio for now.
• If JPM can break out above its 200-dma we will add the second 1/.2 of the position.
• However,we will carry a fairly tight stop for now at $100.

PPL – PPL Corp.

• We recently added 1/2 position of PPL to our portfolio.
• Fundamentally the company is fairly inexpensive and had been lagging much of the utility companies in our portfolio like DUK and AEP.
• However, the recent breakout above resistance is bullish so we added 1/2 position of PPL to the portfolio for now.
• We are looking for a pullback to support to add the second 1/2 of the position.
• Stop-loss is currently $29.50