SET Portfolio Update September 2014

September 2, 2014

I hope you had a great summer.

It’s time for the kids to go back to school and for football season to add some drama to our lives.  Because the recent stock market action has been anything but dramatic.

For the most part, the S&P 500 has marched steadily higher despite some geopolitical drama over the summer. And that’s just fine with me!

We’ve seen strength out of several different sectors and industries within those sectors throughout the summer.  Lately the financial sector has taken on more of a leadership role.

That’s a good sign for the health of the bull market.  There are many investors who firmly believe a bull market can’t last unless financial stocks are participating in the rally.

Over the last quarter, financials, health care, and technology stocks have been the top performing sectors.  So investors should have no fears about this rally fading due to the lack of participation by financials.

What’s more, US economic data is still in the Goldilocks range… it’s not too hot and not too cold.

Just last week we saw good news like an upward revision to 2nd quarter GDP to an annualized rate of 4.2% as companies invested in their businesses faster than expected and consumer confidence jumped to its highest level in seven years!

But that news was tempered by slower than expected new home sales, a drop in consumer spending, weaker than expected income growth, and tame inflation data.

In short, that’s a sustainable trajectory for the US economy and one that should continue to lift revenues and earnings as well as create jobs and fuel economic growth.

The bull market for US stocks is showing no signs of coming to an end anytime soon…

Now, onto the updates…

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

FXH has moved past our $56.00 buy up to price in short order.  This healthcare ETF is poised to benefit from some of the biggest macroeconomic trends, as well as bullish investor sentiment toward the sector.  Continue holding.

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

SOCL shot back above our $20.00 buy up to price a while back and has held steady at its current price over the last few weeks.  This momentum ETF is back in style thanks to strong quarters from social media companies like Facebook (FB) and Twitter(TWTR). Continue holding for the next leg higher.

. . . . Guggenheim Shipping ETF (SEA) – Buy up to $23.25

SEA had a quick selloff in July followed by an even faster rebound in August.  What’s next now that it’s back near its recent highs?  Based on the long-term uptrend SEA has been in over the last few years, a breakout to upside is a good bet.  From there, a quick run back to $25 before running into a bit of resistance.  And ultimately, it should push back toward $30.00 per share over the long run.  Grab your shares up to $23.25.

. . . . iShares MSCI Global Metals & Mining Producers (PICK) – Hold

PICK is in a good position to benefit from the uptick in economic growth in emerging markets like China and India.  But until we see the economic data reflect these improvements, then PICK will be volatile.  But over the months ahead, I expect big things from metals and mining stocks.  Continue holding.

. . . . Market Vectors Unconventional Oil & Gas ETF (FRAK) – Hold

FRAK has been in strong uptrend over the last two years.  And the best days are still ahead for unconventional oil & gas stocks.  The rising production and new technologies promise to unlock even more oil and gas that was once uneconomical to extract.  This is one boom you don’t want to miss out on.  Continue holding.

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

After a sluggish start to the year, financials are finally taking on more of a leadership role lately.  The recent momentum is due in large part to rising profits in the second quarter. One thing that helped the banks was loan growth.  Banks make money by lending money… needless to say it helps when the core business is growing instead of looking for ways to make more money from your existing customers.  Continue holding.

. . . . Guggenheim Solar (TAN) – Hold

Summer may be over but the fun in the sun isn’t coming to an end for TAN.  The fact is that demand for solar power is growing.  Panel installations are growing rapidly and supply can’t keep up with the demand.  What’s more, the cost is falling, financing is readily available, and governments are still providing incentives.  These fundamentals are undeniably bullish.  Continue holding.

. . . . First Trust Consumer Staples AlphaDEX Fund (FXG) – Hold

FXG has been in a bullish long-term uptrend.  This smart-beta ETF is my favorite way to play the stodgy old consumer staples sector.  Continue holding.

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

Consumer discretionary ETFs, like PEJ and PBS, are coming back.  The strong economic data regarding job growth and consumer sentiment bodes well for consumer stocks.  These indicators typically turn up ahead of consumer spending.  If that holds true, the strong uptick we saw in 2nd quarter consumer spending should continue on into the third quarter.  Continue holding.

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

MLPY pushed past $20.00 per share last week.  We’re now up 26% on this trade including the $1.70 in dividends we’ve collected over the last 16 months.  If MLPY hits $21.00, it’s time to take our profit.

Action To Take

• Move FXH and FRAK to Hold.

 

Category: SET Portfolio Updates