StockTradersAlmanac.com Alert – Trim Non-Performers & Hold Winners

Stock Trader's Almanac
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Prior to Dow Jones Industrial Average’s November 10th close it had been just 87 calendar days without a new all-time DJIA high. DJIA’s previous record high close was on August 15, 2016. Historically, this is a relatively brief period of time as DJIA went 3,583 days from January 11, 1973 until November 3, 1982 without a new all-time high. Even that dry spell palls in comparison to the 9,212 day stretch (25+ years) following DJIA’s peak on September 3, 1929. Historically, new all-time highs have been bullish and generally result in additional new highs. When new DJIA record highs begin to arrive less frequently, then it may be time for caution and/or concern. Generally, the longer DJIA goes without a new record high close, the worse its performance has been historically.

We thinned out the 951 previous all-time highs to include just those that came at the end of a streak of new highs based upon the number of calendar days before DJIA reached the next new all-time high close. Three groups were created, 30-, 60- and greater than 90-days till the next new all-time high. In this case the longer DJIA went without a new all-time high, the greater the average loss was.

Prior to Dow Jones Industrial Average’s November 10th close it had been just 87 calendar days without a new all-time DJIA high. DJIA’s previous record high close was on August 15, 2016. Historically, this is a relatively brief period of time as DJIA went 3,583 days from January 11, 1973 until November 3, 1982 without a new all-time high. Even that dry spell palls in comparison to the 9,212 day stretch (25+ years) following DJIA’s peak on September 3, 1929. Historically, new all-time highs have been bullish and generally result in additional new highs. When new DJIA record highs begin to arrive less frequently, then it may be time for caution and/or concern. Generally, the longer DJIA goes without a new record high close, the worse its performance has been historically. We thinned out the 951 previous all-time highs to include just those that came at the end of a streak of new highs based upon the number of calendar days before DJIA reached the next new all-time high close. Three groups were created, 30-, 60- and greater than 90-days till the next new all-time high. In this case the longer DJIA went without a new all-time high, the greater the average loss was. [DJIA % Performance Before & After New All-Time High since 11/23/1954] Portfolio Updates In the three weeks since last update, S&P 500 was up 3.0% while Russell 2000 gained 4.8% as of yesterday’s close. The Almanac Investor Stock Portfolio’s blend of cash and long positions resulted in a respectable 2.7% overall gain over the same time period. Large-cap stocks in our portfolio performed best, advancing 4.3%. Mid-caps were second best climbing 3.5% while Small-caps lagged (largest cash position), up just 2.1%. Although we missed a few opportunities from the Mid-September Stock Basket, the majority was added to the Stock Portfolio and has been performing well since Election Day. The ten positions from this basket are collectively averaging a 21.6% gain as of yesterday’s close. IES Holdings (IESC) is the best, up 47.4%. The worst is Corelogic Inc (CLGX), down 5.9%. Because CLGX has not participated in the current rally, we are going to close this position out before it get any worse. Sell CLGX. Sabra Healthcare REIT (SBRA) is the second worst performing position in the portfolio, up just 5.5%. In hindsight, this position was entered early as it traded below $20 per share just ahead of Election Day. However, unlike CLGX, SBRA has rallied recently and is now more than 20% higher from its early November lows. We will continue to Hold SBRA. Aside from previously mentioned positions, all other positions are on Hold. We will allow the winners to run. As a reminder, should LDL trade above $65.80 or UNH trade above $164.08, half of the position can be sold as per standard policy of selling half on a double. Please refer to the updated portfolio table below for Current Advice about each specific position. Due to recent gains, please note that many stop losses have been updated. [Almanac Investor Stock Portfolio – December 7, 2016 Closes] Disclosure Note: At press time, officers of the Hirsch Organization, or accounts they control held positions in ANET, BUSE, CCS, IESC, MHO, PFBC, SBRA and SCMP.

Portfolio Updates

In the three weeks since last update, S&P 500 was up 3.0% while Russell 2000 gained 4.8% as of yesterday’s close. The Almanac Investor Stock Portfolio’s blend of cash and long positions resulted in a respectable 2.7% overall gain over the same time period. Large-cap stocks in our portfolio performed best, advancing 4.3%. Mid-caps were second best climbing 3.5% while Small-caps lagged (largest cash position), up just 2.1%.

Although we missed a few opportunities from the Mid-September Stock Basket, the majority was added to the Stock Portfolio and has been performing well since Election Day. The ten positions from this basket are collectively averaging a 21.6% gain as of yesterday’s close. IES Holdings (IESC) is the best, up 47.4%. The worst isCorelogic Inc (CLGX), down 5.9%. Because CLGX has not participated in the current rally, we are going to close this position out before it gets any worse. Sell CLGX.

Action: SELL CLGX

Sabra Healthcare REIT (SBRA) is the second worst performing position in the portfolio, up just 5.5%. In hindsight, this position was entered early as it traded below $20 per share just ahead of Election Day. However, unlike CLGX, SBRA has rallied recently and is now more than 20% higher from its early November lows. We will continue to Hold SBRA.

Aside from previously mentioned positions, all other positions are on Hold. We will allow the winners to run. As a reminder, should LDL trade above $65.80 or UNH trade above $164.08, half of the position can be sold as per standard policy of selling half on a double.

Please refer to the updated portfolio table below for Current Advice about each specific position. Due to recent gains, please note that many stop losses have been updated.

[Almanac Investor Stock Portfolio – December 7, 2016 Closes]
[Almanac Investor Stock Portfolio – December 7, 2016 Closes]

Disclosure Note: At press time, officers of the Hirsch Organization, or accounts they control held positions in ANET, BUSE, CCS, IESC, MHO, PFBC, SBRA and SCMP.

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