SET Portfolio Update July 2015

I took my family white water rafting down the Colorado River near Glenwood Springs, Colorado over the Fourth of July weekend.  It was the first time my wife and I had taken our three boys rafting.

Thankfully, we had a great guide that told us about all of the interesting stuff along the way.  But more importantly, he steered us through the rough waters and instructed us when we needed to paddle forward, backward, or just sit back and let the river do the work.

His knowledge of the river, physical conditioning, and the technical understanding of how to manipulate our raft turned a potentially dangerous situation into an exciting and worthwhile adventure for my family.

It’s amazing how much power and intensity the water carries as it flows down the mountain.  It reminds me of the financial markets…

No individual person or raft can change the direction of the river or the financial markets.  But a good guide can put you in the right situation to avoid danger and make your investing efforts worthwhile.

There’s no doubt that the financial markets hit some white water when the Prime Minister of Greece surprised the markets with a referendum vote.  Anything but cash was crushed in the final days of June.

Not surprisingly, the latest AAII Investor Sentiment Survey shows an increase in bearish sentiment.  According to AAII, the number of bearish investors shot up 13.4% last week to 35.1%.

I don’t see investor sentiment changing until Greece and the FOMC decisions become more certain.  In other words, there’s no reason for the S&P 500 to rip higher in the short term.

Until then, we’ll likely see more of the same lackluster performance and lack of bullish or bearish conviction.

Now, onto the updates…

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

JETS jumped out to a gain of 5.5% shortly after our recommendation.  However, it has fallen back following news that the Department Of Justice is investigating airlines for collusion on airfares.  The airlines use of fees has hurt public opinion.  But I don’t think they’ve done anything wrong here.  Buy JETS up to $23.00.  The price target is $30.00.

. . . . Vanguard Industrials ETF $VIS – Sell

VIS continues to tempt us with its potential.  But the global selloff has taken a toll on industrial stocks.  The selloff sent VIS below our $104.00 stop loss.  That’s our cue to sell VIS.

. . . . Materials Select Sector SPDR $XLB – Buy

XLB should be doing better than it has been with low energy prices.  Unfortunately, mining companies are being weighed down by low prices for coal, gold, and aluminum.  Grab your shares below $51.50 if you haven’t already done so.  The price target is $62.50.

. . . . PowerShares S&P SmallCap Consumer Discretionary Portfolio $PSCD  – Buy

PSCD recently reached a new high of $56.06.  Since then, it has fallen back below my $55.00 buy up to price.  I like the potential for PSCD in the weeks ahead.  The price target is $66.50.

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

IHI is poised to tap into increased healthcare spending in emerging markets.  These areas offer the most upside for strong growth.  The price target is $140.00.

. . . . Market Vectors Gaming ETF $BJK – Buy

BJK is forming a nice bottom.  We have tremendous upside as casino and gaming stocks come out of this rut in the future. Buy BJK below $41.00.  The price target is $55.00.

. . . . Market Vectors Semiconductor ETF $SMH – Hold

SMH has taken a big hit over the last month.  The month started off with a big uptick thanks to some big M&A deals.  But the post-announcement euphoria didn’t last long.  Since then, new fears of weak PC sales and uncertainty about Q2 earnings has knocked the wind out SMH’s sales.  I think the selloff has been overdone; I’m expecting Q2 earnings to exceed expectations and spark a nice rally in the weeks ahead.  The price target is $71.00.

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

QTEC followed SMH lower for many of the same reasons.  Large cap tech stocks have certainly felt the sting of bearish sentiment recently.  Continue holding.  Our price target is $50.00.

. . . . Global X Social Media Index ETF $SOCL – Hold

SOCL is riding a wave of bullish momentum.  This ETF is up 15% year-to-date.  It broke out to new high in April, and after a pullback to support of the uptrend, is on the verge of making another new high.  SOCL is above our $20.00 buy up to price.  Our price target is $23.00.

. . . . Financial Select Sector SPDR $XLF – Hold

XLF is one of the top performing sectors thanks to the strong performance of bank stocks.  What’s more, we could be on the verge of a burst of M&A activity in the insurance industry.  We should see XLF break out above $25 as the market calms down after the Greek situation is resolved.  My price target is $29.00.

Action to Take

• VIS hit stop loss at $104.00.

Category: SET Portfolio Updates