Welcome to our weekly portfolio update.
It’s been a quiet few weeks. Our last new trade was back in early May, but we have four trades on our radar for the next month, so keep paying attention to your inbox. (And this would be a great time to sign up for my free text-message alerts, which will remind you to check your inbox the moment a trade is issued. Click here to sign up.)
I’ll discuss some upcoming trades today that you can start to get excited about, along with a portfolio review.
But first, let’s recap last week.
A Quiet Week
In the portfolio update, I covered nearly all of our positions — but I inadvertently left off our inverse financials trade, ProShares UltraShort Financials (NYSE: SKF), as Thomas M. was kind enough to point out to me in an email.
So I included that position update in our weekly mailbag issue, which also hit on topics such as stop-losses and when it’s OK to enter a position late. Be sure to view that if you missed it Friday.
Now, for today’s update, I want to prepare you for the upcoming trades.
4 Trades in June and July
Our first trade should be the inverse materials sector trade. I’ve kept you updated, but it’s well past the time the prime season was supposed to begin. This is likely related to the newly elected President Trump. He’s been vigorous about expanding infrastructure projects and doing so with American-made goods, so that helps keep the materials sector afloat during its seasonally weak time.
Still, I wouldn’t count out the seasonality just yet.
I track the Materials Select Sector SPDR Fund to determine when it’s time to enter our inverse trade. We’re well past our calendar-based entry date of May 10, but the exit date is October 1. Over three months is more than enough time to benefit from the sector’s seasonal weakness, so I’m still looking to enter this trade soon.
The weakness we saw last week helped, but it’s coming after a nice surge higher for the sector.
I’m still watching a trend line that could act as support and could test prices around $53. If it can break below that, I’ll look to enter our position. Don’t worry, though: I’ll alert you as soon as that time comes.
After that, we have three new trades in the month of July.
Our bonus long gold and silver position starts July 9 and runs until November 29. We’re currently in a short-term inverse gold and silver prime season, and we’re down about 5% in both of those positions at the moment — but I think we’ll see a favorable move before we exit.
Next, the bonus inverse oil prime season starts on July 14 and lasts through January. That makes it our longest inverse prime season — and our most profitable. Oil has been tricky with the news that OPEC is attempting to cut production to raise prices, while other countries — including the U.S. — are still ramping up production at current prices. It’s a dilemma, and as we approach that entry date, I’ll give you more details about our approach to this prime season.
Our last trade in July is the inverse semiconductor prime season — from July 18 to October 10. The tech sector has taken a beating lately, but this, too, is coming after a quick run higher. It’s likely to slow its sell-off for the next week or two, and we’ll look to get into our inverse position before it takes another leg lower.
Market Weakness and Our Portfolio
As for our current portfolio, the overall weakness that hit the markets last week helped nudge our inverse trades in the right direction. Our ProShares UltraShort Financials position is down about 7% but recovering. ProShares UltraShort Oil and Gas (NYSE: DUG), part of our inverse energy prime season, is up about 4%. Our inverse oil and gold positions, while volatile, are holding steady.
Tenet Healthcare (NYSE: THC) had a good week, and it’s up about 6% over the past two weeks. The stock was up seven days in a row. Although it’s in need of a breather, that momentum should carry it higher this week. We’re currently down 10% with about a month left in the prime season.
Unfortunately, United States Natural Gas Fund (NYSE: UNG) has turned lower again. We were down 13% as of Friday. Its prime season officially ended yesterday, but I really want to see a bounce off these lows. I’ll keep it on a tight leash, meaning I won’t let it drop much from here before we cut our losses. I want to give it a few days to rebound from these lows, though.
Globalstar (NYSE: GSAT) has been quietly holding on to a 30% gain. We’re still waiting on some news in this stock. It popped higher after reports surfaced that it was in talks to put the company, or some of its assets, up for sale. However, nothing has materialized yet. That could be good or bad news: good because maybe the talks are still ongoing, or bad because it could mean Globalstar isn’t getting the traction it wanted in these talks. The telecommunications prime season lasts until July 23, so I’m hopeful we’ll get some news before then. I’ll keep you updated on any new developments.
That’s all for today.
I’ll likely be back at some point this week to manage our natural gas position and possibly go into our inverse materials position.
As always, I appreciate all the feedback and questions that you’ve sent in, and I encourage you to keep it flowing. Our discussions in the Friday mailbag have been robust because you’re engaged, and that’s the best way to get the most out of this service. You can reach me at firstname.lastname@example.org.
Chad Shoop, CMT
Editor, Automatic Profits Alert