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Here are 4 big trades for the portfolio and 2 difficult rating changes
What a difference a week makes. Following last week’s stumbles, the Dow Jones Industrial Average , the S & P 500 and the Nasdaq Composite are all tracking to go wire-to-wire this week, with five-straight days of gains. Dovish rhetoric from the Federal Reserve on Wednesday and a Goldilocks (not too hot, not too cold) jobs report from the U.S. Labor Department on Friday pulled bond yields lower, which supported stocks. On Monday and Tuesday, the market had a hangover from last week and was still oversold, according to the S & P 500 Short Range Oscillator . But we could see the tide was turning. After seven straight sessions in oversold territory, the Oscillator flipped to neutral after the close Wednesday and remained there heading into Friday’s session. Our trades and decisions on stock ratings were driven more by earnings, company-specific developments and portfolio management rather than any broad commentary on the market. Tuesday We downgraded Ford Motor (F) to a 2 rating because the post-earnings decline in the stock was not a selloff that we were interested in buying . Last week, Ford delivered an earnings miss due to lower volumes and a $1.2 billion increase in warranty expenses. Also troubling: Ford’s bumpy transition to electric vehicles and impending higher labor costs that the United Auto Workers union extracted during its six-week strike. Wednesday We bought 75 more shares of GE HealthCare Technologies (GEHC), the day after the medical equipment maker reported strong third-quarter results , including solid margin expansion. The stock soared more than 5% on the news, adding to those gains throughout the rest of the week. However, GEHC shares are still down significantly from April’s year-to-date high and down big even from mini-rallies in June and July. We bought 50 more shares of Oracle (ORCL) because recent cloud-industry commentary bodes well for the company. Oracle reports earnings next week. This was the second week in which we added to our Oracle position, buying up shares on Oct. 23 after an unwarranted selloff following management’s remarks at the company’s AI Executive Forum event. We also downgraded Estee Lauder (EL) to a 4 rating and removed our price target on the stock after a shockingly bad quarter. We knew things were not going to be good. However, the luxury beauty company’s warning on forward guidance called into question management’s credibility. Estee Lauder’s new “Profit Recovery Plan” provided little comfort because it’s not expected to kick in until the company’s fiscal years 2025 and 2026. Thursday We exited our smallest position, Veralto (VLTO) — selling all the shares we received when the water quality was spun off last month from Club name Danaher (DHR). Veralto is currently experiencing headwinds, including weakness in China. Moreover, Club name DuPont de Nemours (DD) has a similar water business. So, we intend to consolidate the water-quality risk and buy more DuPont when our trading restrictions allow. But water is not why we own DuPont, whose electronics and industrial business is on the cusp of a recovery. The specialty chemicals giant makes materials and coatings for the industry. Friday We sold 250 shares of Foot Locker (FL), taking a tough loss to avoid giving back a nearly 40% recovery in the stock over the past two months. You can’t only sell winners for a profit. Sometimes you have to bite the bullet and sell losers to mitigate risk. That’s exactly what we did with Foot Locker, which has been a terrible stock. We’ll look to reallocate this cash into other positions that we think have stronger fundamental setups in the quarters ahead. (Jim Cramer’s Charitable Trust is long F, GEHC, ORCL, EL, DHR, DD, FL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Traders work on the floor of the New York Stock Exchange (NYSE) on November 02, 2023 in New York City.
Spencer Platt | Getty Images
What a difference a week makes.
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