SECTOR INVESTING FOR MAXIMUM PROFITS
We focus on Sector Investing Strategies using proprietary Money Flow, Momentum and Relative Volume indicators to select Stocks and ETFs. The portfolio can go long or short depending on market conditions. A small select group of 2x Index ETFs are also key parts of our portfolio mix.
Follow the Top 3 Sector Portfolio, with a return of +189% from the March low (3/23/20)
up 246% past 2 years and +264% past 4 years. All charts and data updated daily to keep you in touch.
Highest Total Return thru Sector ETFs in industries that disrupt, innovate and improve the way the world works. One example: ARKK - Ark Innovations ETF. Our #1 holding up 608% past 4 yrs as of 1/18/21. That's a 152% per year average return.
Top 3 Sector Portfolio - Total Return 2020 - Past 12 Months
Let's take a look at how our Top 3 Sector Portfolio has performed for past
12 months. Our significant outperformance over the SP500 shows just how
powerful sector investing can be.
The Top 3 Sector Portfolio is up 87% since 1/2/20. Helped immensely by the +193% return from ARKK, and the 99% gain in QLD. (Note that the gains for XLE Energy, and
KBE Banking etfs were purchased in November 2020 and their prices reflect that
(i.e. they are not priced from 1/2/20 as all the other holdings are). See our Top 3 Sector Portolio section for more information (Following the 'Breaking News" section).
#1 ARKK Ark Innovation +193%
#2 QLD Nasdaq 2x +99%
#3 SOCL Social Media +90%
#4 XBI Biotech +62%
#5 BOTZ Robotics +62%
The SP500 has risen 19% since 1/2/20. Top 3 Sector Portfolio outperforms by +68%.
Note how the Top 3 holdings have a higher percent of capital allocated (56% of the portfolio), which is a major component of our successful investing strategy.
Top 3 Sector Portfolio Asset Allocation and Performance since 1/2/20 (12 months):
ARKK NOW UP 605% FROM JANUARY 2017 - 4 YR RETURN
and up 319% from the 3/23/20 low
Artificial Intelligence powered ETF - AIEQ - All run via AI, no humans.
Top 10 holdings are strong disrupters:
Weekly Chart of AIEQ
Thursday 1/21/21 12:20 pm
Builders +1%, QLD .5%, Retail .5%, Social Media .3%, Sem's 1%,
Biotech -2%, Airlines -3%, Energy -3%, Banks -2%
MARKET SNAPSHOT THURSDAY 1/21/21 9:00 am
Futures Up Ahead of Jobless Claims; PayPal, Apple Get Analyst Boosts
Stocks were mixed on Thursday amid early earnings news and ahead of weekly unemployment numbers. ASML Holdings and Taiwan Semiconductor stirred up the chip sector. Paccar and Ford jumped on autonomous/electric vehicle news. Bitcoin slumped, but PayPal Holdings jumped toward a buy point. Apple traded high on the Dow Jones today, after an analyst hiked the stock's price target ahead of its first-quarter report. Nasdaq 100 futures led, gaining 0.5% with ASML Holdings (ASML) and Paccar (PCAR) leading in early trade. Dow Jones futures climbed 0.2%, and S&P 500 futures rose 0.25% above fair value. Small caps traded alongside the Nasdaq, with Russell 2000 futures up 0.5%.
Airlines traded at the bottom of the S&P 500. United Airlines led the declines, down 2% after undercutting analysts' fourth-quarter expectations and providing weak Q1 guidance.
Other earnings news was comparatively quiet, after the blowout session from Netflix (NFLX) on Wednesday. Kinder Morgan (KMI) rose 3%, and Keycorp (KEY) added 2% after earnings reports. Contract manufacturer Plexus (PLXS) gained 2.7% after a fiscal first-quarter earnings beat and a positive outlook from management.
Chip stocks were in motion, after posting a soft session on Wednesday. ASML Holdings punched up 4.7% to lead the Nasdaq after reporting a powerful fourth-quarter performance late Wednesday. New Street Research upgraded the stock's European shares to buy, from neutral. ASML stock has climbed in 10 of the past 11 weeks, and is up 37% since clearing a double-bottom base buy point at 401.25 in early November.
Taiwan Semiconductor (TSM) topped both the IBD 50 and IBD Leaderboard lists in premarket trade. The stock rose 3.5% in early trade. Shares are in a profit-taking zone, up more than 20% since clearing a 107.94 three-weeks tight buy point earlier this month. The iShares PHLX Semiconductor ETF (SOXX) gained 0.8% in premarket trade.
Jobless Claims, Housing Starts, Philly Fed Index
A slew of early data has a good chance of moving the market today. Jobless claims totaled 900,000 for the week ended Jan. 16, the Labor Department reported Thursday. That was slightly less than the Dow Jones estimate of 925,000 and below the previous week’s downwardly revised total of 926,000.
December housing starts and building permits, and the Philadelphia Federal Reserve's January Manufacturing Business Outlook Survey are also due out at 8:30 a.m. ET. Dow Jones Today: Apple Price Target, Travelers Earnings
Microsoft (MSFT), Apple (AAPL) and Saleforce.com (CRM) were the top gainers among the Dow industrials on Wednesday. Apple stepped up to an early lead on Thursday, up 1.4% on the Dow Jones today after Morgan Stanley hoisted its price target on the stock to 152, from 144. The report projected above-consensus quarterly performance on both the revenue and earnings lines. Apple is due to report its fiscal first-quarter results next Wednesday.
Ahead of earnings, Apple stock presents a challenge to investors. Shares are holding above an alternative entry at 125.49. But Apple also dropped more than 7% after briefly clearing on Dec. 29 a standard buy point at 138.08. That drop triggered the automatic sell rule. The stock has now formed a handle with a new buy point at 138.89, supplanting the prior 138.08 entry. Insurance giant Travelers (TRV) also traded at the top of the Dow, up 1.7%, despite a mixed fourth-quarter report.
Bitcoin Slide Continues, PayPal Jumps On Upgrade
Bitcoin continued its pullback, trading almost 5% lower early Thursday near $32,700, according to CoinDesk. The leading cryptocurrency had hit highs above $41,500 on Jan. 8.
PayPal Holdings (PYPL), an IBD Leaderboard stock, gained 1.4% following a late-day upgrade on Wednesday. BTIG upgraded the stock to buy, from hold, and gave it a 300 price target. The note cited an accelerated shift to digital payments due to the coronavirus pandemic, and said the company's growth outlook improved sharply when it began handling cryptocurrencies in October.
PayPal stock has been toggling over and under an alternative buy point at 244.35, after a bounce off support at its 21-day exponential moving average. Paccar, Ford Get EV/Autonomous Vehicle Boosts
Heavy truck maker Paccar swung more than 5% higher in premarket action, topping the S&P 500. The maker of Kenworth, Peterbuilt and other leading truck brands jumped 4% on Wednesday, then retreated to finish with a factional gain. The company on Wednesday announced a partnership with Amazon.com-backed startup Aurora Innovation to develop a line of autonomous heavy trucks. Paccar said the project aimed to develop and test self-driving versions of certain Peterbilt and Kenworth truck models.
Paccar stock has shaped an 11-week flat base with a 95.92 buy point, according to IBD MarketSmith chart analysis. The stock carries a weak 23 Composite Rating from IBD. Ford Motor (F) climbed 3% Thursday. Ford owns a minority stake in electrical vehicle start-up Rivian. Rivian, which expects to release its first model later this year, took in $2.7 billion in fresh investment financing on Tuesday.
Ford shares cleared a flat base buy point at 9.60 on Jan. 12. Wednesday's 8.4% gain left the stock extended 13% above the buy point.
Among other EV makers, Tesla (TSLA) gained 0.4% in early trade. China-based Xpeng (XPEV) gained 2.6% early Thursday. The stock is narrowing the gap to a potential buy point at 74.59. But shares reversed sharply out of early gains on Wednesday, leaving the stock down 2.6%.
Stock Market Uptrend: Some Mixed Messages
The stock market's confirmed uptrend delivered a mixed message on Wednesday. Netflix helped revive the flagging FANG stock tech leaders, and the Nasdaq, S&P 500 and Dow industrials all rallied to record highs. The session's advance shook off three distribution days for the Nasdaq, one for the S&P 500. That left the overall market in a more upwardly mobile stance.
However, the gain left the Nasdaq 6% above its 50-day moving average, hinting that the index might be due for some consolidation to allow its moving averages to catch up. The takeaway message for investors, is mind the market status: a confirmed uptrend. The market continues to give a greenlight to new or follow-on buys of leading stocks passing valid buy points. Pay close attention to sell signals, but don't get nervous and shaken out too easily. Even if the Nasdaq does pause for some consolidation, signals at this stage point only to a touchback to nearby support." -Investors.com 1/21/20
STOCK INDEXES YEAR TO DATE 2021:
Russell 2000 +9%
Nasdaq Comp +4%
Dow Jones +2%
S&P 500 +3%
STOCKS IN THE NEWS TODAY - 1/21/20
Travelers (TRV) – The insurance company reported quarterly earnings of $4.91 per share, well above the consensus estimate of $3.18 a share. Revenue matched Street forecasts. Travelers benefited from lower catastrophe claims, a record 8.4% jump in renewal premiums, and strong underwriting results. The shares gained 1.7% in premarket trading as of 7:40 a.m. ET.
Truist Financial (TFC) – The bank reported quarterly profit of $1.18 per share, beating the consensus estimate of 97 cents a share. Revenue also beat analysts’ forecasts, helped by record results in Truist’s investment banking and commercial real estate businesses.
KeyCorp (KEY) – KeyCorp reported better-than-expected profit and revenue for the fourth quarter, as the bank’s consumer mortgage and investment banking businesses helped drive strong growth in fees. The shares gained 1% in premarket trading as of 7:40 a.m. ET.
Baker Hughes (BKR) – The oilfield services company reported quarterly loss of 7 cents per share, compared to a consensus estimate of a 17 cents per share profit. Revenue exceeded analysts’ forecasts. The company said it was pleased with its 2020 performance considering the impact of the pandemic and industry downturn, and that it is well-positioned for the current environment.
United Airlines (UAL) – United reported quarterly loss of $7 per share, larger than the loss of $6.60 that analysts had been anticipating. Revenue was also below forecasts, as the airline continued to feel the impact of the Covid-19 pandemic. United said it was aiming to cut $2 billion in annual costs through 2023 as it tries to navigate a path to recovery. The shares lost 2% in premarket trading as of 7:40 a.m. ET.
SolarEdge Technologies (SEDG) – The solar equipment maker was rated “overweight” in new coverage at Morgan Stanley, which thinks SolarEdge is in a position to gain share in a fast-growing market. The stock gained 3% in premarket trading as of 7:40 a.m. ET.
Tesla (TSLA) – Tesla saw fourth-quarter registrations in California jump by nearly 63% during the fourth quarter, thanks in part to the success of its Model Y crossover. California is Tesla’s largest U.S. market.
Kinder Morgan (KMI) – Kinder Morgan beat estimates by 3 cents a share, with quarterly earnings of 27 cents per share. The pipeline operator’s revenue also came in above Wall Street forecasts. Its results got a boost from increased natural gas shipping activity, but the company expressed concern over the rapid increase in shale-related spending following a rebound in U.S. oil prices. The shares gained 3% in premarket trading as of 7:40 a.m. ET.
Alcoa (AA) – Alcoa reported quarterly profit of 26 cents per share, compared to a consensus estimate of 11 cents a share. The aluminum producer’s revenue also topped forecasts, but the company added it could see a drop in current-quarter performance should conditions in its end markets not improve. The shares lost 2% in premarket trading as of 7:40 a.m. ET.
Discover Financial (DFS) – Discover earned $2.59 per share for the fourth quarter, 17 cents a share above estimates. The financial services company’s revenue also came in above estimates. It expects modestly positive loan growth this year, but also sees an increase in credit losses during the second half of this year.
Baidu (BIDU) – The China-based search engine company plans to file for a secondary listing in Hong Kong after the Chinese New Year, according to sources who spoke to China’s Tencent News service.
PayPal (PYPL) – The payments company was upgraded to “buy” from “neutral” at BTIG, which said PayPal will continue to see benefits from the shift toward digital payments.
Sector ETF Performance Today
Builders +1.8%, QLD 1.2%, Social Media 1%, Sem's 1%, Retail .9%
Biotech -2%, Airlines -2%, Energy -1.7%, ARKK -1.3%, Biotech -1.3%
Select Stock* Performance Intraday
Ford +8.5%, SNAP 4%, ASML 3.7%, AAPL 2.8%, UNH 2.8%
UAL -5.5%, XOM -2.2%, SQ -2%, REGN -2%, BMY -2%
*This list of "Select Stocks" represents key companies in each sector we track. They are meant to be bellwether sector indicators. Rather than show a ton of stocks just to cover all the favorites, this keeps the list to a minimum, allowing easier observation of unusual volume in each sector.
KEY STOCK INDEXES SP500, Nasdaq, Russell
SP500 - SPY Chart: up 72% from the March low to a new high at 383
NASDAQ 100 - QQQ Chart: Rising 93% from March low.
RUSSELL 2000 SMALL CAP INDEX - IWM
Rising 114% from the March low, biggest 9 month gain in its history.
Getting very overheated.
HOT CHARTS TODAY
Green line: 21 Day Moving Average
Orange: 50 DMA
Pink: 100 DMA
Blue: 150 DMA
Red: 200 DMA
Horizontal Blue Lines = Critical Support or Resistance
NETFLIX pops 15% on Wednesday 1/20/21 after earnings:
ALIBABA - After a 32% drop, strong rebound:
ROKU shooting up 467% from March low:
ARKK - ARK Innovation etf rose 325% from March low:
IGT - Intern Game Tech rising fast, along with PENN and DKNG - huge moves
Maxar Tech - Satellite Tech rocketing 481% from March 2020.
TESLA - Best stock we track, up a staggering 1,093%
from 3/23/20 low:
Best and Worst Of All Sector ETFs Performance
(past 12 months)
ARKK is still the king of ETFs we track. Up 188% from 1/2/20, +310% past 2 years, and up 628% past 4 years. It has also seen massive inflows in the past 3 months, often outpacing the SPY volume on a daily basis (SPY is world's largest ETF).
#1 ARKK +190%
#2 Cloud WCLD +118%
#3 QLD +103%,
#4 Soc Media SOCL +94%,
#5 Semi's SMH +72%
#6 Robotics BOTZ +62%
SPY is up 19% since 1/2/20. The QQQ +53%.
Worst: Energy -27%, Airlines -28%, Defense -15% - same 3 laggards all year long.
SELECT STOCK PERFORMANCE FOR 2020 (from 1/2/20)
#1 Tesla +918% #2 PENN 324%, #3 SQ 259%, #4 SNAP 220%,
#5 Roku 228%,
Worst: UAL -52%, Wells F -40%, BA -36%, XOM -30%
Sector Performance From The 3/23/20 Pandemic Low
Let's take a look at how all Index and Sector ETFs have done since the March Pandemic low on 3/23/20. This is how we measure current performance in
the Top 3 Sector Portfolio,
NOTE: We like to use significant pivot lows (not a calendar) to evaluate true performance, as those kind of Armageddon sell downs tend to level all sectors and stocks to ground zero. March 23, 2020 was the Pandemic low, and the point from which we are measuring our Top 3 Sector Portfolio's current total return.
#1 ARKK +317%
#2 QLD +244%
#3 Cloud +177%,
#4 Retail +171%,
#5 Social Media 167%
SP500 +72% QQQ +91%
BREAKING NEWS LINKS
TOP 3 SECTOR PORTFOLIO UPDATE
As we enter 2021, we are quite impressed by the strength of the stock market
in the first weeks of January. Emboldened by the promise of significant
infrastructure and stimulus bills that should be approved by a Democratic
senate, as well as the vaccine program (slow, but will soon accelerate),
investors are looking across the Covid valley to the future where our economy
will recover, bringing new jobs and an outburst of pent-up consumer spending.
The Top 3 Sector Portfolio is now up 80% in the past 12 months,
with ARKK up 185% from 1/2/20, QLD +95% and and Social Media etf SOCL
rising 89%. Those kinds of gains are impressive, but we need to make sure
we realize profits before the inevitable 'healthy' correction that we
expect to occur in late January/early February.
We will utilize a trailing stop strategy based on our exclusive proprietary indicators to select sell stops to lock in gains. If you have followed our Sell Stops in the Top 3 Sector Portfolio section below, those stops are adjusted each day so you can enter them into your brokerage account, or used as a reference point if you prefer to
stay glued to your monitor all day. As always, use your own analysis and research to determine when to sell. But most investors don't know when to take a profit, and this will force you to do it.
With the stock markets moving this fast, a sudden downturn can take you by surprise.
Be prepared for rapid action by setting stop loss orders "good til cancelled" in advance. You will sleep better at night.
As noted previously, Stock indexes are at all time highs, margin leverage is the highest in decades, and investor sentiment is off the charts. Add in an accommodative Fed, stimulus checks for $1,400, the economy re-opening, massive
infrastructure spending plans, and it just can't get much better.
Which is why we continue to be very cautious. You should be too. See our
"Sell Stop" section below for more information.
TOP 3 SECTOR PORTFOLIO LATEST CHANGES
As of 1/21/21, the Top 3 Sector Portfolio is up 197% from the 3/23/20
March low. The SP500 is up 72% same time frame.
Our #1 holding is ARKK, up 326% since the March lows, #2 QLD up 234%,
#3 is Social Media SOCL +164%.
The Top 3 Sector portfolio is beating the SP500 benchmark by 125% from the
from the March lows. It's up 246% in the past 2 years and +264% past 4 yrs.
New action in Top 3 Sector Portfolio:
In the Top 3 Sector Portfolio, we bought the Energy etf XLE on 11/23/20. We bought the banking etf KBE on 11/6/20 .
New action in Top 7 Stock Portfolio:
In the Top 7 Stock Portfolio, we bought a position in Apple on 9/21/20.
On 9/28/20 we added Lam Research to the portfolio. We bought a 1/2
position in Alibaba on 12/30/20 at 235.24.
QLD - S. 1/3 @ 116.24
SOCL - S. 1/3 @ 64.28
XLE - S. 1/3 @ 40.81
FDN - S. 1/3 @ 215.37
XBI - S. 1/3 @ 146.35
ARKK - S. 1/3 @ 140.35
BOTZ - S. 1/3 @ 34.53
IGV - S. 1/3 @ 349.22
KBE - S. 1/3 @ 43.72
IVW - S. 1/3 @ 63.61
VIG - S. 1/3 @ 138.27
** Note that our reported Gains/Losses are based on when we began tracking
(and when we purchased) the Top 3 Sector Portfolio from the 12/24/18 Xmas Eve low.
Performance: We are now tracking the Top 3 Sector Portfolio performance from
the 3/23/20 March low, in order to show the most recent activity in the last 9 months.
The long term (2 year) portfolio performance from the 12/24/18 low is published immediately after the charts section below. We use both time periods
to select sectors that are displaying the highest momentum in each time frame.
TOP 3 SECTOR PORTFOLIO
Gain from 3/23/20 low to 1/21/21 (past 10 months)
ETF SECTOR PRICE 3/23/20 % Gain
Index Allocation 31%
QLD (26%) Nasdaq 2x 36.54 234%
IVW (5%) SP500 Growth 144.56 81%
Index Subtotal: 218%
Sector Allocation 63%
ARKK Ark Innovation (18%) 34.78 B 3/18/20 326%
SOCL Social Media (12%) 25.19 164%
BOTZ Robotics (10%) 15.47 130%
XBI Biotech (4%) 68.57 125%
FDN Internet ( 7%) 111.72 99%
IGV Software (8%) 190.47 89%
KBE Banking (2%) 34.08 B. 11/6/20 34%
XLE Energy 1/2 position (2%) 37.13 B. 11/23/20 18%
Sector Subtotal: 191%
Dividend Stock Allocation 6%
VIG Divid Apprec 2% Div* 89.24 59%
Dividend Stock Subtotal: 59%
International Subtotal: 0%
TOTAL RETURN: +197% SP500 +72%
from 3/23/20 low Beating SP500 benchmark by 125%
TOP 7 STOCK PORTFOLIO
From 3/23/20 Low as of 1/21/21 (Past 10 months)
Stock Company Price on 3/23/20 % Gain
AMZN Amazon 1902.83 +70%
SBUX Starbucks 56.55 80%
MA Mastercard 203.30 65%
MSFT Microsoft 135.98 65%
BLK BlackRock 327.43 124%
AAPL Apple 104.66 (B. 9/21/20) 26%
LRCX Lam Research 331.52 (B. 9/28/20) 69%
BABA Alibaba 235.24 (B. 12/30/20) 13%
Total Return +81% SP500 +72%
from 3/23/20 Low Beating SP500 by 9%
TOP 7 STOCK PORTFOLIO UPDATE
In the Top 7 Stock Portfolio, we bought a position in Apple on 9/21/20.
On 9/28/20 we added Lam Research to the portfolio, since that time,
it's up over 40% from purchase.
AAPL - B. 1/3 position on 9/21 @ 104.66 (we have added to both AAPL and LRCX)
LRCX - B. 1/2 position on 9/28/20 @ 331.52
BABA - B. 1/2 position on 12/30/20 @ 235.24
MA - S. 1/3 @ 338.02 on 1/14/21 (Gain: +94%)
AMZN - S. 1/3 @ 3109.37
SBUX - S. 1/3 @ 100.22
MA - S. 1/3 @ 338.25 Triggered on 1/14/21 @ 338.02
MA - S. 1/3 @ 324.08
MSFT - S. 1/3 @ 214.15
BLK - S. 1/3 @ 712.13
AAPL - S. 1/3 @ 126.45
LRCX - S. 1/3 @ 538.23
BABA - S. 1/2 @ 252.71
TOP 3 SECTOR PORTFOLIO - HISTORIC PERFORMANCE
Let's look at 3 time periods for performance of our Top 3 Sector Portfolio.
Each period begins with a significant low in the market, so that it's a level playing field. The first is short term - 9 months since 3/23/20 pandemic low. Second is
past 2 years, and 3rd time period is previous 4 years.
Note how ARKK, QLD, IGV, SOCL, FDN and XBI stayed consistently in the Top 6-7 for
every time period. Robotics etf BOTZ also had very strong returns.
Short Term -Last 9 months - 3/23/20 to 1/18/21
Total Return: +189% SP500 +71% # 1 ARKK +309%
Last 2 years - 12/24/18 low to 1/18/21
Total Return: +229% SP500 +57% #1 ARKK +301%
Last 4 years - 1/3/17 low to 1/18/21
Total Return: +247% SP500 +81%. #1 ARKK +608%
LONG TERM TOP 3 SECTOR PORTFOLIO PERFORMANCE - 2 YEAR RETURN
Here's how Top 3 Sector portfolio has done longer term
from the 12/24/18 low, approximately 2 years:
TOP 3 SECTOR PORTFOLIO From 12/24/18 low
Gain from 12/24/18 low to 1/18/21 (2 years)
ETF SECTOR PRICE 12/24/18 % Gain
Index Allocation 34%
QLD (28%) Nasdaq 2x 29.18 289%
IVW (6%) SP500 Growth 140.58 77%
Index Subtotal: 274%
ARKK Ark Innovation 35.34 299%
XBI Biotech 65.42 68%
FDN Internet 107.21 99%
SOCL Social Media 26.60 140%
BOTZ Robotics 16.33 99%
IGV Software 214.22 115%
Sector Subtotal: +227%
Dividend Stock 9%
VIG Divid Apprec 2% Div* 90.55 55%
Dividend Stock Subtotal: 55%
International Subtotal: 0%
TOTAL RETURN: +229% SP500 +57%
from 12/24/18 low Beating SP500 by 172%
TOP 7 STOCK PORTFOLIO 2 YEAR RETURN *
From 12/24/18 Low as of 1/18/21
Stock Company Price on 12/24/18 % Gain
AMZN Amazon 1343.96 + 131%
SBUX Starbucks 60.56 69%
MA Mastercard 174.65 85%
MSFT Microsoft 94.13 126%
BLK Blackrock 436.33 67%
Total Return +143% SP500 +57%
from 12/24/18 Low Beating SP500 by 86%
*Note: We are excluding our current stocks AAPL and LRCX as they were
purchased in Sept 2020, and not reflective of this time period (12/24/18 to 1/11/21)
ALL ETFs & STOCKS
IN TOP 3 SECTOR & TOP 7 STOCK PORTFOLIO
Please find below charts on all ETFs and Stocks currently in our Top 3 Sector and Top 7 Stock Portfolios.
ETFs: QLD, ARKK, XBI, BOTZ, KBE, XLE, SOCL, FDN, IGV, VIG, IVW,
Stocks: AMAZON STARBUCKS MASTERCARD MICROSOFT BLACKROCK
APPLE LAM RESEARCH ALIBABA
Green line: 21 Day Moving Avg
Orange: 50 DMA
Purple: 100 DMA
Blue: 150 DMA
Red: 200 DMA
Blue horizontal lines represent support or resistance, can also be used for suggested sell stops. Click on each chart to enlarge.
ALL ETFS IN Top 3 Sector Portfolio:
2x Nasdaq etf - QLD - Up 222% from March low at the high, pulling back to 21 DMA (green line)
ARKK - Ark Innovation, rose 325% from 3/23/20, our #1 holding in
Top 3 Sector Portfolio:
XBI BIOTECH etf: rocketing up 140% from 3/23/20, just
an amazing run, way ahead of the IBB only up 65%.
ROBOTICS ETF - BOTZ UP 132% from March low:
Banking ETF - KBE rising 96% from March low, nice:
Energy ETF - XLE - blasting up 63% in last 5 weeks:
SOCL Social Media etf - One of our best holdings.
Up 164% from 3/23/20,
Internet ETF - FDN - The "FANG" stocks, nicely up 104% from March low.
Software ETF - IGV up 100% from March 2020:
SP500 Growth ETF - IVW, rising 79% past 9 months,
pulling back to 21 DMA:
VIG - VANGUARD DIVIDEND APPRECIATION ETF
Rising 61% from 3/23/20
STOCKS IN TOP 7 STOCK PORTFOLIO
Featuring: AMAZON STARBUCKS MASTERCARD MICROSOFT BLACKROCK
APPLE LAM RESEARCH
Blue Lines (horizontal) are support lines
Amazon ran up 112% from March to 9/2/20.
But has basically gone nowhere for past 5 months.
Starbucks roaring up 91% from the March low:
Mastercard ran up 79% from March 2020 through the high,
rebounding 18% off that 10/29 low
Microsoft up 66% from 3/23/20, but now closed below 100 DMA
(yellow flag). Watch the 208 are for support.
Blackrock blasting up 140% off the 3/23/20 low:
Apple pops 155% in the past 9 months - closed below 21 DMA ( green line). If it drops below 123 - may fall further
- we bought this recently in our Top 7 Stock Portfolio,
it's up 192% from the 3/23/20 low.
Alibaba - Fell 32% from October 2020. We bought it on 12/30/20
off the lows.
Top 3 Sector Portfolio Strategy
Our investment strategy is unique. In the Top 3 Sector Portfolio, we invest solely in ETFs, both long and short, with an emphasis on Sectors, as they always outperform indexes.
We will also use 2x ETFs, focusing on 6 key indexes only (SSO, QLD, UWM, TWM, QID, SDS) as warranted by market conditions. We do not short sectors.
In addition to the "Top 3 Sector ETF Portfolio," we also feature an all-stock portfolio entitled "Top 7 Stock Portfolio," utilizing the same criteria for selection of stocks as the Top 3 Sector ETF Portfolio.
WHAT DOES "TOP 3 SECTOR" MEAN?
The term 'Top 3 Sector Portfolio' comes from a phenomenon we call the
"Top 3 Effect," where the top 3 sectors that emerge first from a pivot low, tend to outperform for longer time frames in the future.
After a flush out low, the best ETFs will continue to outperform 2, 3 or 6 months later.
Here's an example of this effect:
The first time period is from the 12/24/18 Christmas Eve market bottom to 8/24/20, roughly 1 1/2 years. The 12/24/18 low is a perfect low, as ALL sectors were levelled by the correction. Ground Zero so to speak. What rises first?
The second period is the past 5 months from the much discussed Covid 19 3/23/20 low to today, 8/24/20.
Past 1.5 years (from 12/24/28 to 8/24/20:
Past 5 months (from 3/23/20 to 8/24/20):
Let's look at the first Table (from 12/24/18)
Best 3 ETFs past 1.5 years:
#1 QLD (2x QQQ) +226%
#2 ARKK +154%
#3 ITB (Builders) +98%
When you look at Table 2 - (past 5 months) we see:
Best 3 ETFs past 5 months:
#1 QLD (2x QQQ) +163%
#2 ARKK +158%
#3 ITB (Builders) +134%
Note the QLD, ARKK (Ark Innovation) and ITB (Builders) are in the top 3 for both time frames.
Point being, that the Top 3 that emerged in the longer 1.5 year time frame, tend to continue that out performance as we see in the shorter time frame.
We will also allocate more capital to the Top 3 ETFs - concentrating resources on the best performing assets which greatly improves our returns.
The top 3-6 will vary a bit, but the first ones off that flush-out low, tend to be the ones still on top 6 months later, and 12 months later, etc.
We have observed this effect over the course of nearly 20 years of trading, giving more credence to the power of the "Top 3 Sector Strategy."
The momentum strategy has been documented by two recent research studies, where stocks that outperformed by a wide margin over a 5 month and 12 month period also delivered a much greater gain longer term. The MTUM Momentum ETF follows a similar strategy.
Here are 3 links to the research done on 3, 6 and 12 month momentum studies:
SHORT OR LONG - WE TAKE ADVANTAGE OF THE TREND
The beauty of this strategy is that we make money in both Bull and Bear markets, as we can switch to short ETFs when a positive trend is ending, whereas nearly all mutual funds are long only - giving them a definite disadvantage when markets decline.
Since Sectors always outperform indexes, we have a larger portfolio allocation to this area (57%).
For instance, as seen above in Table 2 (from the 3/23/20 low), ARKK is up 158%,
ITB (Builders) is up 134%, while the SP500 is up 52%.
Yes, sectors always outperform indexes. When you note that 92% of all managed funds have not beaten the SP500 index in the last 15 years, it's even more impressive.
In normal market conditions, we allocate as follows:
2 Index ETFs (QLD and IVW)
5 Sector ETFs (This may vary between 4-6 due to mkt conditions)
2 Dividend Stock ETFs (only VIG currently)
2 International ETFs (Currently none)
As of 8/24/20, our portfolio allocation is currently:
Dividend Stock: 9%
This portfolio strategy is aggressive, and is recommended for experienced investors, especially since we employ the 2x ETFs, as well as Inverse ETFs.
THE POWER OF DIVIDENDS
Dividend Yield ETFs are also critical to outperforming the benchmarks.
Investors today are desperate for yield.
We utilize domestic and international dividend stock ETFs (although currently we are in domestic only).
Currently we have VIG for our Dividend Yield allocation. VIG - Dividend Appreciation etf is up 34% the past 3 months, with a dividend of 2%.
Dividends are taxed at only 15%, (for those with incomes less than $250,000/year). Interest income would be in the 22% to 24% in the same earning bracket.
The power of re-invested dividends for total return is simply amazing.
From January 1990 to today (8/24/20), the SP500 is up 767%. Not too bad for a 30 year return.
But wait, add in dividends reinvested, and that SP500 return rises to
an astonishing +1,494% !
Dividends should ALWAYS be reinvested. Always.
Here's a list of Dividend Stock ETFs, as well as some Domestic and
international bond funds that measures performance from the 3/23/20
low to 8/24/20.
Note that our VIG - Vang Dividend Appreciation is up 43% in past 5 months,
with a dividend of 1.74%.
Top 10 Holdings of Top 3 Sector Portfolio ETFs
The Top 10 holdings in Sector ETFs can vary considerably when it comes
to concentration. Some are heavily top weighted, such as Social Media SOCL with over 65% of stocks in top 10, versus XBI Biotech which only has 20% of the ETF in its top 10 stocks.
The QQQ has 57% of its stocks in the top 10 - that concentration helps to explain its outperformance. But a whopping 48% of the QQQ is only 5 stocks: AAPL, MSFT, GOOGL, AMZN and Facebook.
Nasdaq 100 etf - QQQ Top 10: 57% Internet FDN: Top 10: 48%
Social Media SOCL: 10: 65% Software etf - IGV - 10: 57%
Robotics etf - BOTZ Top 10: 60% ARKK Ark Innov. - Top 10: 57%
Biotech XBI: Vang. Div Apprec. etf: VIG
Top 10: 20% Top 10: 32%
SP500 Growth etf - IVW - Top 10 - 39%
NUALOLO VALLEY, KAUAI
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