SET Portfolio Update November 2013

| November 5, 2013

November 5, 2013

Dear Sector ETF Trader Reader,

As we head into the final months of the year, remember to take time away from the everyday grind of work and your investments to spend time with friends and family.

After all, what is all of your hard work for if you don’t take a moment to enjoy the fruits of your labors?  And the holiday season is the perfect time to make sure you have the balance in your life to make it all worthwhile.

I’m sure you’ve noticed all of our ETFs are currently up from where we recommended buying them.  The latest rally has pushed many of our ETFs above our buy-up-to price and the Guggenheim Timber ETF (CUT) recently hit our $25.50 price target.

So far this year, the S&P 500 is up 26%. Historically the 4th quarter has been a strong time of year for stocks.  So I’m expecting to see our ETFs finish the year strong.

Interestingly, nearly every sector or industry has been hot at one time or another during the year.  And all sectors have posted solid gains this year.

There isn’t a single sector ETF that’s down this year… just varying levels of over- or under-performance relative to the S&P 500.

The latest economic data has been mixed.

Last week the ADP employment was weaker than expected, jobless claims came in higher than expected, and car sales fell short of expectations.

However, those negative reports were offset by better than expected Chicago PMI and Global ISM reports.  Needless to say, the strength in the manufacturing sector was surprising given the fact that we we’re dealing with the uncertainty of the government shutdown and the debt ceiling at the time.

The chart of the S&P 500 reveals that the S&P 500 is at resistance of the upward trending price channel.  So I wouldn’t be surprised to see a short term pullback before another leg higher to finish the year.

Now onto the updates…

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

It didn’t take long for PEJ to move above our $32.75 buy up to price.  The strong performance of stocks like Chipotle Mexican Grill (CMG) and Starbucks (SBUX) are giving PEJ a nice boost.  Continue holding.

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

PBS was one the top performing ETFs in the third quarter.  And it has started the 4th quarter off with a strong rally that pushed the shares above our $23.75 buy up to price. PBS is now up more than 6% in less than two months since we recommended buying it in mid-September.  Continue holding…

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

IYT took off on the strong Chicago PMI and Global ISM reports.  This cyclical ETF benefits from a strong economy.  And these reports are a clear indication economic growth is on the upswing.  IYT is now up 8.2% from where we recommended it and above our $120 buy price.  Continue holding…

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

FAN continues to soar as the tailwind from offshore wind development pushes it to new highs.  Our wind energy ETF is now up 15% and just off the recent highs.  The amazing potential from harnessing wind energy will require a big investment.  But with the commitment to green energy, utilities and governments are willing to spend the money. That’s good news for FAN. Continue holding…

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

QABA broke out to new highs as net interest margins (NIM) expanded from historically low levels. As expected, the improvement in NIM has led to community bank stocks outperforming larger banks. The break out to the upside sent shares of QABA above our $32.75 buy up to price.  Continue holding…

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

RYT hit a new high of $72.01 on October 22nd.  Since then, a number of missed quarterly earnings estimates across the tech world have slowed RYT’s advance to a crawl.  But it’s nothing to get too excited about.  The bottom line is improvement in global economic data is bullish for technology stocks.  And they should continue to perform well going forward. Continue holding…

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

XLV continues to be one of the year’s best performing ETFs.  It’s now up 8% since we recommended it in May.  Healthcare stocks are getting a boost from better than expected earnings from big pharmaceutical companies, as well as the recent announcement of a free trade zone in Shanghai, China where hospital deregulation is expected to be a boon for medical equipment makers.  All signs point to more upside in XLV.  Continue holding…

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

MLPY spun off a 34.9 cent per share dividend on October 9th.  That brings the total dividends to 69 cents per share.  We’re on pace to collect a 7.8% dividend yield on MLPY this year. Continue holding…

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

SOXX is moving steadily higher in a nice uptrend.  We’re now up 20% on this trade.  And it should make a run at our $70 price target in the next month.  Continue holding…

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

ITB looks to be on the verge of a breakout.  Here’s why… After an epic rally throughout 2012 and the first few months of 2013, homebuilder stocks were overbought.  The choppy sideways action we’ve seen over the last six months has been a consolidation of those previous gains.  ITB found support at the 20-month moving average and looks to be on the verge of resuming the long term uptrend.  Grab your shares of ITB up to $23.00.

. . . . Guggenheim Timber ETF (CUT) – Sold

CUT hit our $25.50 price target on October 18th. That’s our cue to capture profits.Congratulations to everyone who captured the 28.2% gain on the sale of CUT.

Action To Take

  • Move from Buy to Hold:  PEJ, PBS, IYT, FAN, QABA
  • Sold CUT for a 28.2% gain


Category: SET Portfolio Updates

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