SET Portfolio Update January 2016

Happy New Year!

And hopefully it is a better year than a forgettable 2015 for US stocks.  As you can see, the S&P 500 finished the year with a modest loss.

Sector performance was mixed in 2015.

Four sectors finished with gains for the year… consumer cyclical, staples, healthcare, and technology.  The other five sectors finished with losses, led by the 21.9% drop in energy stocks.

But we saw once again the strong performance of a few mega-cap stocks are the force that is keeping the S&P 500 positive for the year.  The vast majority of stocks have seen their stock price move lower this year.

The market continues to be led by a few mega-cap stocks while the vast majority of stocks are down or stuck in a rut.

Investors are focused on the Fed that continues to signal they will raise rates to pump the brakes on an improving US economy and the threat of inflation.

The strengthening US Dollar continues to be a major headwind for commodity prices, emerging markets, and companies that do a lot of business overseas.

What’s more, China continues to be a thorn in the side of the global economy.  Slowing economic activity and stock market turmoil could send China down the tubes if the government doesn’t continue to be a buyer of last resort.

Now, onto the updates…

. . . . First Trust Dow Jones Internet Index Fund $FDN – Buy

FDN has sold off in the early days of 2016 as investors focus on the risk of a meltdown of the Chinese stock market.  If these fears prove to be unfounded, this could turn out to be a great buying opportunity.  Buy FDN up to $78.00. The price target is $90.00.

. . . . Market Vectors Retail ETF $RTH – Hold

RTH is up 4.2% after a nice dividend payment at the end of 2015.  The price target is $90.00.  Continue holding.

. . . . Vanguard Energy ETF $VDE – Buy

VDE is back near the 52-week low as oil prices fell below $35.  That’s the lowest price since 2008 during the depths of the financial crisis.  I believe that oil prices will rebound in 2016 and lift energy ETFs.  Buy up to $97.50.  The price target is $110.00.

. . . . Utilities Select Sector SPDR $XLU – Hold

XLU is trading for $43.19 and paid a nice dividend at the end of 2015.  Utilities stocks are a good place to be with all of the uncertainty and fear in the market.  Continue holding.  The price target is $50.00.

. . . . PureFunds ISE Cyber Security $HACK – Buy

HACK has fallen back near the lows as stocks have gotten off to a rocky start in 2016.  The fundamentals and growth are there… now, if investor sentiment can rebound, we should see HACK rebound as well.  Buy HACK up to $32.00. The price target is $50.00.

. . . . ALPS Medical Breakthroughs $SBIO – Buy

SBIO continues to be volatile… especially as market volatility has increased in the first days of 2016.  Nevertheless, these developmental stage biotech stocks have tremendous upside when investors are willing to take on risk.  Buy SBIO up to $45.00.  The price target is $80.00.

. . . . US Global Jets ETF $JETS – Hold

JETS was caught up in the stock market route to begin 2016.  This should only be temporary as revenues continue to grow and expenses should fall with lower fuels costs… that’s a formula for higher stock prices.  Continue holding.  The price target is $30.00.

. . . . iShares Medical Devices ETF $IHI – Hold

IHI is poised for a strong performance in 2016.  But it couldn’t avoid the market-wide selloff in the first few days of the year.  Continue holding.  The price target is $140.00.

Action to Take

• None at this time.

Category: SET Portfolio Updates