Despite the broad market downturn, all our portfolios are currently positioned to withstand the gyrations.
The S&P 500 rebounded 2.39% Friday while the Nasdaq jumped 3.82%. That kind of strong action clearly indicates that institutions such as hedge funds or mutual funds are scooping up shares.
The reason doesn’t matter, so it’s best not to try to explain the action away with theories such as short covering or an equity-buying spree in response to a (perhaps) peak in Treasury yields. It can be mentally entertaining to speculate or overthink these possibilities, but ultimately, it’s all about watching the charts.
The growth stocks that were the big pandemic-era leaders are still showing weakness, relative to other sectors such as commodities, particularly agriculture and energy.
Few stocks with strong fundamentals and technicals are rebounding off key levels of technical support, such as the 50-day moving average.
Despite that moment of rally late last week, it’s too soon to back up the truck and load up shares. For now, it’s best to continue treading carefully.
There are no portfolio trades for the moment, given the market’s indications that it still lacks direction, as stocks were trading lower Monday. That is a signal that despite last week’s mini-rallies, indexes may be ready to transition quickly from a decline to be hedged, to a bear market that can be exploited.
In the Undiscovered Portfolio, which is tailored toward exactly that type of bull-and-bear-market strategy, here are the current holdings. These remain in place for now:
| Undiscovered Portfolio | ||||
| 40% | Invesco Dow Jones Industrial Average Dividend ETF (DJD) | |||
| 30% | VanEck Morningstar International Moat ETF (BTAL) | |||
| 20% | Direxion Daily S&P 500 Bear 1X Shares (SPDN) | |||
| 10% | Invesco S&P SmallCap Energy ETF (PSCE) | |||
