Here's Our Plan as More Portfolio Names Enter Oversold Territory
It’s becoming harder to see a catalyst to drive a sustained market rebound in the near term
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
We are updating the relative strength index (RSI) levels for the Pro Portfolio, and many have moved into the oversold category. This includes American Express AXP, Bank of America BAC, Morgan Stanley MS, and Marvell MRVL, Amazon AMZN, Vulcan Materials VMC and ServiceNow NOW. Absent a company-specific or market catalyst, shares like these can remain oversold.
In this morning's opening comments, we noted the S&P 500 and the Nasdaq Composite have moved into oversold territory, as well. But, here too, with more tariffs on the horizon and more questions about earnings per share growth prospects for the S&P 500, uncertainty is likely to remain and have folks bracing for questionable March-ending quarter guidance. Comments from several airlines, Oracle ORCL, and others are fanning those flames.
It raises the question of if we get a market bounce near term, how sustainable might it be? First off, let’s consider the 200-day moving average for the S&P 500 near 5,736 is now a likely source of resistance for the market. While that is more than 2% higher than the current level, it means we will need to see a catalyst for the market to push through that level on a sustained basis. The same follows with resistance between 5,950-5,966, which are the 100-day and 50-day moving averages, respectively.
We're now looking out for the upcoming February consumer price index, producer price report, retail sales figures, housing starts report, and the Fed’s next policy meeting. Will the market rebound from here, as that data is digested? It’s hard to find a catalyst that would push the market past its 200-day moving average on a sustained basis. So, if we see a market rebound, we would look to lighten up on the Portfolio’s Mastercard MA exposure. Recognizing this, barring any unforeseen catalyst, we may opt to raise even more cash on a market bounce.
With Trump targeting April 2 for those reciprocal tariffs and the prospect of Trump tax cuts coming mid-to-late Q2 2025, it raises more questions about the looming March-ending quarter earnings season and June-ending quarter guidance. That suggests we could see the market move sideways for a bit. That will give us more time to freshen up the Bullpen and pick our spots. As we get ready to do that, we will remove Bright Horizons Family Solutions BFAM from the Bullpen and do the same DR Horton DHI shares.
In terms of where we would be interested in putting capital to work when the market finds a firm bottom, we are likely to lead with existing positions and Bullpen candidates that are oversold and whose Moving Average Convergence Divergence indicator lines have flattened or are poised to turn up. When we make our move, we will proceed carefully given forthcoming reciprocal Trump tariffs and potential ones on the European Union.
And let’s remember folks that much like stock prices, RSI levels are fluid so we will want to revisit them regularly.
Positions in the Portfolio Whose RSI is below 30 (Oversold)
Amazon AMZN – 26.98 from 28.36 on March 3
American Express AXP – 21.51 from 30.40
Bank of America BAC – 26.44 from 35.13
Marvell MRVL – 25.39 from 35.47
Morgan Stanley MS – 25.08 from 31.69
ServiceNow NOW – 19.72. from 28.60
Vulcan Materials VMC – 24.03 from 23.49
Positions in the Portfolio With RSI Near 30
Alphabet GOOGL – 32.88 from 34.51on March 3
Applied Materials AMAT – 34.39 from 33.11
Costco COST – 31.38 from 53.58
Meta Platforms META – 30.80 from 36.06
Microsoft MSFT – 32.87 from 31.14
United Rentals URI – 31.74 from 25.06
VanEck Uranium & Nuclear ETF NLR – 30.03 from 31.07
RSI Levels for Other Portfolio Positions
Apple AAPL – 37.74 from 49.48 on March 3
Axon Enterprise AXON – 39.63 from 36.40
Dutch Bros BROS – 34.40 from 49.94
Eaton ETN– 36.12 from 28.38
Elastic ESTC – 34.64 from 46.07
First Trust Nasdaq Cybersecurity ETF CIBR – 35.63 from 39.93
Labcorp LH – 43.52 from 68.10
Lockheed Martin LMT – 66.31 from 54.36
Mastercard MA – 37.34 from 49.62
Nvidia NVDA – 34.27 from 38.30
Qualcomm QCOM – 41.05 from 33.78
Universal Display OLED – 55.00 from 48.33
Waste Management WM – 53.50 from 66.16
The Bullpen
Broadcom AVGO – 41.14
Builders FirstSource BLDR – 36.09
Cisco CSCO – 44.59
Netflix NFLX – 30.34
Palantir PLTR – 38.14
Welltower WELL – 49.34
The Pro Portfolio is long AMZN, AXP, BAC, MRVL, MS, NOW, VMC, GOOGL, AMAT, COST, META, MSFT, URI, NLR, AAPL, AXON, BROS, ETN, ESTC, CIBR, LH, LMT, MA, NVDA, QCOM, OLED, WM
