Weekly Market and Portfolio Update
What We Bought, Sold, and Risk Outlook
Welcome back to Wealth Dome! In this week's blog post, we're diving into the recent changes in my stock portfolio, discussing what we bought, what we sold, and, most importantly, why we made those moves. As always, we’ll wrap up with a risk assessment for the coming week to help you navigate the market with confidence.
Market Overview
The stock market had a pretty volatile week, with the major indices giving us mixed signals:
S&P 500: Closed up 0.4%, recovering after a mid-week dip.
Nasdaq: While it ended the week down, Friday saw some gains, indicating a potential positive open on Monday.
Dow Jones: Up 1.11% for the week, showing strength despite broader market uncertainty.
Europe is an interesting case—Germany is officially in its second year of recession, yet their DAX is still up about 30% for the year. It’s surprising to see such a disparity, with the U.S. markets, featuring companies like Nvidia, Microsoft, and Tesla, lagging behind despite their strength.
Commodities: Oil and Gold
Oil: Oil is down and nearing its six-month low. WTI crude is hovering around $68. With the RSI (Relative Strength Index) heading toward the low 40s, possibly even the 30s, it could signal a buying opportunity soon. If it dips below 35 on the RSI, I’d recommend considering some exposure.
Gold: Gold is still within a strong uptrend, one I identified back in July. If you’re holding gold, this could be a great time to take some profits. The trend remains solid, but small profit-taking can help lock in gains.
Cryptocurrency: Bitcoin
Bitcoin had a strong week, but I foresee some risks ahead, especially with the upcoming U.S. presidential election. However, Bitcoin remains a long-term hold for me. If we see a pullback toward the 50-day moving average, it could be a smart opportunity to buy a bit more. Don’t panic-sell—Bitcoin’s future looks bright regardless of who takes the White House.
Earnings Recap
We had some interesting earnings reports last week. Here's a quick summary of companies that stood out:
UnitedHealth: Beat expectations but saw a pullback, which presented a buying opportunity.
ASML: They came in better than expected but guided lower, causing a price drop. I increased my position in ASML, as their unique moat in chip manufacturing equipment makes them a long-term winner.
Netflix & Blackstone: Both had strong earnings and saw double-digit percentage jumps, with Netflix surging 11% in a day.
Procter & Gamble: Beat expectations but still dropped—another example of market behavior being forward-looking.
American Express: Beat expectations but guided lower, presenting a mixed sentiment.
Portfolio Changes
Now, let’s discuss the changes in my portfolio for the week of October 14-18:
PepsiCo (PEP): Reduced my position to 0.73% of the portfolio. While it’s a solid company, I shifted funds to areas with more potential upside.
Progressive (PGR): Increased our position to 2.96%. This insurance company has a steady track record and continues to show growth potential.
Diamondback Energy (FANG): Closed the position entirely before their earnings report. The energy sector is volatile, and I saw better opportunities elsewhere.
ASML: Added more to ASML, bringing it to 5.15% of the portfolio. The stock pulled back after a slight miss in future bookings, but I believe in their long-term value.
UnitedHealth (UNH): Increased my position to 3.38%. UnitedHealth remains one of those rare companies you can hold for the long term, and it’s poised for a post-election rally.
BlackRock (BLK): Traded in and out before their earnings, locking in some quick gains.
Truist Financial (TFC): Bought before earnings as a trade. While it went against us initially, we doubled down after the price fell, positioning us well for a rebound.
Risk Assessment for the Upcoming Week
I’ve developed a proprietary risk calculator to assess market risk levels. As of now, we’re sitting at a 53.57% risk level, which I consider medium. Here are the key factors influencing this:
Election Risk: With three weeks to go before the U.S. presidential election, the markets are bracing for potential volatility. This is factored in as a high-risk event.
Market Position: The S&P is slightly below its all-time high, suggesting medium risk levels for now.
RSI: The RSI is sitting at 65, putting us in a high-risk zone. However, we haven’t crossed into extremely overbought territory just yet.
Commodities: Oil is low but not at an extreme. Gold remains in its trend, and bonds are stable. All these factors contribute to medium risk.
Earnings Season: With earnings largely behind us and no major economic news expected, the markets may remain relatively calm next week.
Final Thoughts: We’re not expecting a major market crash next week, so I recommend staying invested. Keep an eye on key levels in oil, Bitcoin, and high-quality stocks like ASML and UnitedHealth. Also, always be mindful of the broader macroeconomic environment and the impact of upcoming elections.
Thanks for reading! Don’t forget to subscribe to our Substack for real-time trade alerts, and check out our YouTube channel for more in-depth analysis and updates. Stay safe, stay informed, and I’ll see you next week!
Disclaimer: I am not a financial advisor and in no way am I signaling a sell, buy, or hold opinion on this stock or any other stock mentioned by me. I am just giving my personal opinion as a hobby trader, I have no certifications and I am not a financial analyst or a financial advisor, I also may be wrong about how I feel about the stock. I want you to do plenty more research on this and the stocks you are interested in because the stock market always holds a lot of risk that may pose different risks and overall be different for each investor and trader. Please do not make opinions based on this idea or any idea. Please be careful! this post is only for conversation.
With Regards,
Norbert BM - Portfolio Manager at Wealth Dome