Selected Portfolio Position Review: 09-04-19

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.

The general theme of this week’s portfolio position review is to look at our positions which have been underperforming as of late, and are at risk of violating stop-loss levels. We have taken profits in many of our positions and are now looking to raise a bit more cash to hedge against market volatility and a re-accelerating “trade war.”

AAPL – Apple, Inc.

• AAPL continues to wrestle with its previous breakout of its downtrend. After selling 20% of position previously there is no reason to rush into adding back to the position until the stock makes a decision.
• Currently, on a buy signal, but overbought, we will likely have some resolution to AAPL over the next month as the “trade issues” become more apparent.
• Stop loss for the whole position is set at $195.

ABT – Abbott Laboratories

• ABT has finally take a breather and is consolidating its recent advance.
• On a short-term sell signal we are watching support closely and have moved stops up.
• We have taken profits previously, so we can be patient in adding to our position.
• Stop is moved up to $180.

CHCT – Community HealthCare

• CHCT has been a big winner since we added it to the portfolio to take advantage of falling yields.
• CHCT is very overbought and on a “buy signal” which is beginning to weaken a bit.
• A correction that holds support would finally give us an opportunity to add to our holdings.
• Stop loss is moved up to $37

COST – Costco Wholesale Corp.

• After almost getting stopped out, COST has turned into one of our best performers. The new location in China has to close early due to demand, so we are optimistic about further gains.
• However, we need a pullback to support to work off the extreme overbought condition.
• After taking profits we can give COST a little more room, so a pullback to the $250-260 range would provide a better entry point.
• Stop loss is set at $340

GDX – VanEck Vectors Gold Miners

• Both GDX and IAU look identical.
• A near vertical spike has taken these holdings to extreme overbought and extended conditions.
• We need a decent pullback, or consolidation, to add to holdings at this juncture. A rally in the market should give us that opportunity as it will pull Gold and Rates back to support.
• Looking for an entry point between $26-28 to add to holdings.
• Stop-loss set at $25

JNJ – Johnson and Johnson

• JNJ has been under pressure as of late due to legal woes which will pass sooner than later.
• The stock is on a deeply oversold sell signal, so it will likely take little to get the stock moving higher soon. Fundamentals remain very solid.
• The position continues to hold important support and we will look to add to the position once things become more clear.
• Stop loss is moved up to $122.50

MDLZ – Mondelez International

• MDLZ recently pulled back and consolidated to its very sharp uptrend line.
• However, the stock remains extremely overbought and has triggered a short-term sell signal at a high level.
• After having taken profits, there is little for us to do but wait for this correction to complete and give us an opportunity to add back to our position accordingly.
• Stop-loss is set at $51

PEP – Pepsico, Inc.

• Staples stocks continue to shine in this rally due to the dividend yields and the perceived safety against economic recession. All of these holdings are exceedingly overbought.
• Currently on a sell signal, PEP has broken out to all-time highs which will reverse that signal very shortly. PEP remains extremely overbought.
• We previously took profits in the position, so we are holding our remaining position for now but moving our stop up slightly.
• Stop-loss is set at $122.50

V – Visa Inc.

• Despite concerns over economic woes, spenders keep on swiping their credit cards.
• V is currently close to triggering a sell signal, and is extremely overbought. After having taken profits we will look for a correction to add to our holdings.
• Stop loss is moved up to $160.00

WELL – WellTower, Inc.

• As with CHCT, WELL has performed well since we added it to the portfolio.
• Currently very overbought and on an elevated “Buy” signal we need some corrective action to add to our holdings. Patience will be required at this juncture.
• Stop loss is moved up to $80