SET Portfolio Update December 2014

| December 2, 2014

December 2, 2014

It’s hard to believe that we’re in the home stretch of 2014.

The S&P 500 is up 12.9% year-to-date. The market has held true to my prediction that stocks would enjoy a strong year after the 30% gains in 2013.

One thing’s for sure, this year has been very different than 2013. We’ve seen sector leadership change hands several times throughout the year.

This has led to some great successes in some trades. We closed 5 trades for gains of 20% or more. The most recent was the First Trust Consumer Staples AlphaDEX Fund (FXG) for a gain of 21.8%.

But thanks to the sluggish global economy and a 30% drop in oil prices, we also missed on some ETFs like the Market Vectors Unconventional Oil & Gas ETF (FRAK).

The good news is the use of stop losses has allowed the losses to be much smaller than any gains we have realized this year. It has clearly been another successful year for us.

Right now, the drop in oil prices has led to distinct winners and losers.

The winners are anyone that consumes oil. The industrials, transportation stocks, and consumer stocks have been soaring due to the drop in oil prices.

The losers are anyone that is tied to energy. We’ve seen oil and gas producers, oil tankers, energy infrastructure, and even renewable energy stocks take a hit as oil prices have fallen.

And it’s not just individual sectors feeling the impact of falling oil prices. It’s also impacting entire countries.

Countries in Europe and Asia that import lots of oil should see the drop in oil prices help boost their economies. And on the other hand, countries in South America, the Middle East, and Russia that are dependent on oil exports are hurting.

Here’s the bottom line…

The 30% drop in oil prices is clearly creating winners and losers. And our portfolio of ETFs is in a good position to excel in the current market conditions.

Now, onto the updates…

. . . . Market Vectors Semiconductor ETF (SMH) – Buy

SMH is our most recent recommendation. Demand for new technology is driving a strong cycle for semiconductor companies. Buy SMH below $55.00. The price target is $71.00.

. . . . Market Vectors Retail ETF (RTH) – Buy

RTH is off to a great start. Our retail ETF is up 11%. Retail stocks are clearly benefiting from expectations for a strong holiday shopping season driven by lower unemployment and cheaper energy costs. The price target for RTH is $75.00.

. . . . First Trust NASDAQ-100 Technology Sector Index Fund (QTEC) – Hold

QTEC continues to surge higher. It reached a high of $44.66 for a gain of 8.1%. Large cap tech stocks should continue to benefit from the current market conditions. The price target for QTEC is $50.00.

. . . . First Trust Health Care Alpha Dex Fund (FXH) – Hold

FXH recently made a new high of $60.66. Health care is another sector that continues to show strong growth. It is one sector that’s in favor with investors right now. It should continue moving higher from here. My target for FXH is $65.00.

. . . . Global X Social Media Index ETF (SOCL) – Buy

SOCL has been range bound over the last several months. The latest earnings season did nothing to alleviate investors concerns about growing costs and expenses. The current price of many social media stocks doesn’t appreciate their growth potential. I think SOCL could be a big winner in 2015. Buy SOCL up to $20.00.

. . . . Financial Select Sector SPDR (XLF) – Hold

XLF reached a new high of $24.51 last week. We’re now up 14.5% on this trade. It’s good to see financial stocks moving higher in the recent uptick for the market. Leadership from the financial sector is usually a big boost for the overall market. My price target for XLF is $29.00. Continue holding for bigger gains.

. . . . Guggenheim Solar (TAN) – Hold

Falling oil prices and weaker than expected forecasts for many solar companies have sent TAN reeling. Needless to say, the bullish optimism that sent TAN soaring higher during the early part of the year is a distant memory. But there’s no doubt the sector is oversold and has great long-term potential. If oil prices can stabilize, we should see investor sentiment toward energy stocks improve. Continue holding…

. . . . PowerShares Dynamic Leisure and Entertainment (PEJ) – Hold
. . . . PowerShares Dynamic Media Portfolio (PBS) – Hold

PEJ and PBS have surged to their highest level in months. Falling oil prices are clearly driving investors into consumer stocks. These ETFs should finish the year on a strong note. My price target for PEJ is $41.00. My price target for PBS is $30.00. Continue holding.

. . . . Morgan Stanley Cushing MLP High Income Index ETN (MLPY) – Hold

MLPY has been negatively affected by the drop in oil prices. But here’s the thing… MLPs don’t make money on the price of oil. They make it on the volume of oil that passes through their infrastructure. And even with the drop in oil prices, US oil production is expected to grow. That’s good news for the MLP business. My price target for MLPY is $21.00. Continue holding.

Action To Take

  • None at this time.


Category: SET Portfolio Updates

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