SET Portfolio Update December 2013

December 3, 2013

Happy Holidays!

It’s hard to believe 2013 is nearly over.  It has flown by…

As we wind down the last few weeks of 2013, the stock market continues to push higher. The S&P 500 climbed to a new all-time high of 1,813 on Friday.

Amazingly, the large cap index is up more than 30% from this time last year!

The strength of the market can be seen on many levels.  Dividends paid by companies in the S&P 500 are on pace to grow 11% this year.  And massive stock buybacks are driving solid growth in earnings per share.

What’s more, unlike the last few years, global economic growth is poised to accelerate going forward.  At this point, a revival of growth in Europe, China, and Japan still isn’t fully accounted for in US stocks.

Given the increasingly optimistic outlook for global growth, it’s not surprising to see cyclical and technology stocks take the lead over the last week.  These stocks stand to benefit the most from faster economic growth.

Right now the US is ahead of most of the world on the business cycle.  Yet we’re a long way from economic growth peaking.

If you need another reason to be bullish about stocks, consider this…

According to paststat, since 1995, whenever the S&P 500 has a 30% year over year gain, it has been up 100% of the time over the next 12 months.  And the average gain has been 17.7%.

That’s nearly double the current consensus estimate for the S&P 500 next year.

Needless to say, I’d take a 17.7% gain for the S&P 500 over the next year in a heartbeat.

Now, onto the updates…

. . . . First Trust Consumer Staples AlphaDEX Fund (FXG) – Buy up to $36.00

FXG is the ETF we recommended in November.  It gives us exposure to consumer staples stocks that stand to benefit from economic growth.  You can buy FXG up to our $36 buy up to price if you haven’t already.

. . . . PowerShares Dynamic Leisure and Entertainment (PEJ) – Hold

After a fast start, PEJ’s gains have slowed over the last few weeks.  But this consumer discretionary fund should continue to roll higher as the economy adds more jobs and wages tick higher.  Continue holding.

. . . . PowerShares Dynamic Media Portfolio (PBS) – Hold

PBS hit a new high of $25.30 last week.  The media industry is being lifted higher by strong sales growth, growing advertising revenue, and increasing valuations for good content. Continue holding.

. . . . iShares Transportation ETF (IYT) – Hold

IYT reached a new high on Monday and is currently up 10% from where we recommended buying it in September.  And there’s still plenty of upside for IYT as global economic growth accelerates.  Continue holding…

. . . . First Trust Global Wind Energy (FAN) – Hold

FAN is hovering around $11 after a 50% surge to the upside from May through October. It’s not surprising to see FAN take a bit of breather at this point.  But I’m not expecting it to last long… the expansion of wind energy isn’t going away.  Continue holding…

. . . . First Trust NASDAQ ABA Community Bank Index Fund (QABA) – Hold

QABA has been on a roll lately.  Our community bank ETF is now up 10% to $35.37.  And it should continue to move higher as interest rates slowly rise and Net Interest Margins expand in the months ahead.  Continue holding…

. . . . Guggenheim S&P 500 Equal Weight Technology ETF (RYT) – Hold

RYT is up 14% since we recommended it in June.  It’s steadily moving higher in a solid uptrend.  It’s also getting a lift from the increased optimism for global economic growth next year.  Continue holding…

. . . . Health Care Select Sector SPDR (XLV) – Hold

XLV is loaded with companies that will benefit from the influx of new people with health insurance as the Affordable Healthcare Act kicks in at the beginning of 2014.  It won’t be long before it starts to close in on our $57.50 price target.  Continue holding…

. . . . Morgan Stanley Cushing MLP High Income Index ETN (MLPY) – Buy up to $18.50

MLPY has climbed back up to the highs for the year.  Our total gains on this high yielding ETF are now around 6%. Continue holding.

. . . . iShares Semiconductor ETF (SOXX) – Hold

SOXX is another ETF that hit a new high last week.  At a recent price of $69.30, it’s quickly closing in on our $70.00 price target.  This time a year is typically strong for semiconductor stocks.  So, be ready to capture your gains when SOXX crosses over $70.00.

. . . . iShares DJ US Home Construction Index Fund (ITB) – Buy up to $23.00

ITB has settled into a trading range after failing to break out above $23.50 for the third time in as many months.  However, the series of higher lows over the last three months is forming an ascending triangle chart pattern.  This is a bullish continuation pattern.  A breakout to the upside could be the springboard to get home builder stocks moving to the upside again.  Grab your shares up to $23.00.

Action To Take

• None at this time.

 

Category: SET Portfolio Updates