Selected Portfolio Position Review: 03-20-19

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.

• As we stated previoulsy, following the brutal sell off last year, Wall Street got 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 last week, and the stock has run up to resistance at the 200-dma.
• We are looking for a pullback to flesh out the position, so either a pullback that holds support at $170 or a break above the 200-dma that triggers a buy-signal.
• Stop-loss set at $160

BA – Boeing Co.

• As noted, we bought 1/2 position in Boeing (BA) following the initial announcement of the 737 MAX crash in Ethiopia.
• The sell-off held support at previous highs and the 200-dma and is starting the process of building a potential base. This process will take some time as the “news” filters out.
• Fundamentals remain strong and this event will pass.
• We are going to give BA some initial leeway and then will tighten up stops as the stock finds its footing.
• Stop remains at $340
  • Holding 1/2 position currently
  • Looking for opportunity to increase exposure opportunistically.

CMCSA – Comcast Corp.

• CMCSA finally broke above important resistance and is very overbought currently.
• We noted previously we were looking for a pullback which works off some of the overbought condition. That has not occurred as of yet, so we will remain patient.
• We are looking to add to the position at $39 and would like to see some consolidation first.
• Stop is at $37

FDX – Federal Express

• We are going to sell Federal Express (FDX) in the morning, as the company has now missed earnings twice in the last two quarters. While the company fundamentals remain sold, the global weakness continues to weigh on performance.
• We will look for a replacement for FDX after we close out the position tomorrow morning.
• Stop was at $170

MSFT – Microsoft

• Since adding MSFT to the portfolio, it has broken out to all-time highs.
• While close to triggering a “buy” signal, MSFT is extremely overbought short-term.
• We are looking for a pullback to the recent highs, or some consolidation of the recent advance, to add to our position.
• Stop-loss is moved up to $110

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.
• After the initial failure at resistance, MMM is trying again to break above multiple tops.
• However, we are tightening up stops to protect our profits.
• Stop is at $200

HCA – HCA Healthcare

• HCA, along with UNH, had sold off previously on concerns of “Medicare For All.”
• We used that sell off as an opportunity to add to both positions.
• Both positions have rallied off the recent lows reinforcing support levels.
• Stop-loss moved up to $125

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

• JPM has rallied recently above its 50-dma finally broke out of its price wedge it had been building to the upside.
• With JPM very close to a buy signal, we added 1/2 position to the portfolio last week.
• 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.

UTX – United Technologies

• We previously added 1/2 position in UTX to our portfolios and since then have had a stellar advance.
• With the recent break above the 200-dma, and a triggering of a “buy” signal, we are looking for a bit more consolidation to add to our current holdings.
• If UTX can hold $125 during the this consolidation, we will add the second 1/2 to our holdings.
• Stop-loss is currently $117.50