SET Portfolio Update January 2015

It’s time to kick off another year of strong performance for the Sector ETF Trader.

I can hardly believe we’ve been doing this for six years now!

The S&P 500 rallied to a new high of 2,093 on December 29th before the Santa Claus rally unexpectedly petered out during the last few days of 2014.

And the pullback has continued into the first few days of 2015.  The widespread pullback has taken a toll on every sector.  But energy, industrials, and financials have seen the biggest drop over the last week.

Healthcare and consumer stocks have fared better but even those have fallen back from their recent highs.

The 50% drop in oil prices over the last six months is still the biggest story for the financial markets.  Amazingly, WTIC crude oil prices are quickly moving toward $50 per barrel after trading for more than $100 per barrel in June.

And there’s little hope of oil prices seeing a significant recovery until the next OPEC meeting… and they don’t meet again until June.

The way I see it, the energy sector looks oversold.  There’s clearly value to be had, but without a catalyst to turn investor sentiment, things will likely get worse before they get better.

Now, onto the updates…

. . . . Market Vectors Gaming ETF (BJK) – Buy

BJK is the latest addition to our portfolio.  This consumer driven industry is poised to have a strong 2015 after dealing with a host of unforeseen issues in 2014.  This oversold and unloved industry could be the top performing industry in 2015 if oil prices stay low and gambling in Macau picks up again.  Buy BJK below $41.00.  The price target is $55.00.

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

SMH has been hit hard by the selloff over the last few weeks.  But the outlook for the industry is still as strong as ever.  Buy SMH below $55.00.  The price target is $71.00.

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

RTH reached a peak gain of 14.9% at the end of 2014.  The ETF has pulled back some over the last week but is still on track to have a great 2015.  The lower cost of gas at the pump, as well as a strong stock market and robust job market, should continue to fuel strong growth in consumer spending.  The price target for RTH is $75.00.

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

QTEC reached a new high of $44.84 before the marketwide pullback sent the shares lower over the last week.  Nevertheless, technology stocks should continue to lead the market higher in 2015.  The price target for QTEC is $50.00.

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

There’s no doubt that healthcare stocks had a great year in 2014.  And the trends that helped fuel the 12% gain in FXH haven’t abated.  My target for FXH is $65.00.

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

SOCL is another ETF that has tremendous upside in 2015.  But we’ll need to see some of the leading stocks in the sector take on a leadership role to get investors bullish on these stocks again.  Buy SOCL up to $20.00.

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

XLF is also in position to have a strong year.  Financial stocks aren’t overvalued by any stretch of the imagination.  The sector could begin to return more capital to investors this year after struggling through regulatory reforms for the last several years.  My price target for XLF is $29.00.  Continue holding for bigger gains.

. . . . Guggenheim Solar (TAN) – Hold

After an up and down year in 2014, the question on many investors minds is – can solar stocks regain their bullish momentum?  In short, yes.  But the industry is facing headwinds from falling oil prices.  Cheap oil makes solar power a relatively more expensive option.  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 their bullish momentum back.  After a difficult year for consumer discretionary stocks, the conditions are right for consumer stocks to surge higher in 2015. My price target for PEJ is $41.00.  My price target for PBS is $30.00.  Continue holding.

Action To Take

• None at this time.

 

Category: SET Portfolio Updates