SET Portfolio Update January 2014

January 7, 2014

Happy New Year!

Over the last year, we recommended 15 ETFs.  We currently have 11 open positions that are all showing solid gains…. Eight of them are up double digits.

We also sold 13 ETFs last year.  12 out of the 13 ETFs we sold last year for profit.  The average gain was 15.3% and the typical hold time was about six months.

2013 was an interesting year.  Every sector finished with a gain for the year.  And just about every sector went through a period where it was the hottest sector.

This made sector rotation a powerful tool to boost returns.  Obviously we didn’t catch all of these transitions, nobody can get them all.

But we did capture a chunk of profits from recommendations of technology ETFs likeiShares PHLX SOX Semiconductor Sector (SOXX) and First Trust Dow Jones Internet Index (FDN).

Another big winner came from the Guggenheim Timber ETF (CUT).  CUT tracks an index of timber stocks that have benefited from the resurgence of home building and the increased demand for lumber.

We’ve also used ETFs to profit from the upswing in industries like biotechnology and alternative energy.  I love using ETFs on riskier industries where individual stocks are exposed to risks at the company level but the industry has bullish momentum.

The result?

It was a great year for Sector ETF Trader.

There’s no denying a sector rotation strategy with ETFs is a simple way to juice up your investment returns.  And the outlook for 2014 is even better…

The bottom line is stocks aren’t likely to repeat the 30% or more gains we saw from the S&P 500 in 2013.  But by using a sector rotation strategy to keep your money in the hottest sectors and industries, you can beat the market.

Now, onto the updates…

. . . . Guggenheim Solar (TAN) – Buy up to $40.00

TAN is off to a fast start.  We’re up nearly 15% since December 17th.  Our entry point on the pullback to support of the uptrend looks like a great call.  Solar could be the big winner of 2014 so make sure you grab your shares before it crosses over $40.00.

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

FXG is climbing steadily higher in an upward trending price channel.  The exposure to consumer staples stocks that stand to benefit from economic growth should drive FXG higher in 2014.  You can buy FXG up to our $36 buy up to price if you haven’t already.

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

PEJ climbed to a new high of $34.29 on December 31st.  It has pulled back a little since then but remains in a solid uptrend.  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 shot up to new highs over the last few weeks.  It’s currently trading for $26.30. That’s a total return with dividends of 15.3%.  The media industry continues to be lifted higher by strong sales growth, growing advertising revenue, and increasing valuations for good content.  Continue holding.

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

IYT recently hit a new high of $132.14 before pulling back to $127.97.  The pullback in this economically sensitive industry was triggered by some mixed economic data over the last week.  The good news is any weakness is likely to be short lived.  What’s more, IYT is still in a strong uptrend.  Continue holding…

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

FAN has bounced back nicely over the last month after slumping from mid-October through early December.  In fact, FAN broke out to a new high and we’re now up more than 20%. This alternative energy ETF still has plenty of upside.  Continue holding…

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

QABA is in a solid uptrend. It hit a new high of $37.18 before pulling back to $35.49.  We’re currently up about 11.5%.  There’s little doubt interest rates should continue to climb higher this year and community banks should benefit from wider Net Interest Margins in the months ahead.  Continue holding…

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

RYT finished 2013 on the upswing.  At a current price of $75.84, we’re now up 18.7% since June.  If all goes as planned, we could see RYT making a push for our $80.00 price target by the end of the 1st quarter.  Continue holding.

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

XLV’s advance slowed as 2013 came to an end.  It will be interesting to see how profits in the sector respond to the influx of newly insured people.  Needless to say, I’m expecting it to give them a nice lift.  Continue holding…

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

MLPY broke out to a new high of $18.75 to finish the year on a strong note.  The rally pushed MLPY above our $18.50 buy price.  Clearly, the resurgence of oil and gas production in the US has been a boon for energy infrastructure.  The next dividend payment will be paid in the next week or so.  Continue holding.

. . . . iShares DJ US Home Construction Index Fund (ITB) – Hold

ITB has climbed to $24.21 – its highest price in months.  It’s now above our $23 buy price so I’m moving it to a hold.  All eyes are on homebuilders as we move toward the spring selling season.  And the conditions are ripe for a strong 2014 for homebuilders.  Continue holding.

Action To Take

• Move ITB and MLPY to hold.

 

Category: SET Portfolio Updates