The following commentary is an excerpt from the Weekly Roundup to Trifecta Stocks subscribers originally sent on March 10. Click here to learn more about this dynamic portfolio and market information service.
While the stock market tried to rally this morning off of a very solid February jobs report that likely paves the way for the Fed to nudge interest rates higher next week, the S&P 500, Dow Jones Industrial Average and Russell 2000 all ticked lower for the week. That was good news for our three inverse ETF positions, while our technology-led names Facebook (FB) , Alphabet (GOOGL) , Applied Materials (AMAT) and close second cousin AT&T (T) all moved higher. Not every position in the Trifecta portfolio rose this week, but there were a number of favorable data points across the board, which we discuss in the respective company sections below.
Looking at the overall market, March to date, the majority of the major stock indices have traded off modestly after climbing consistently higher over the last several months. We chalk this up to the growing realization that the domestic economy is improving, but not quite catching fire as many had expected it would following the presidential election. Our view has been that it would take time for President Trump's policies to be unveiled, haggled over and passed, and we are seeing those signs. With the growing likelihood that tax reform won't get passed until later this year, we suspect the optimism that has been powering the market is coming face to face with near-term economic realities.
This week, even the usually upbeat Atlanta Fed's GDPNow forecasting tool fell to 1.2% for the current quarter from more than 3% in January. Granted, that was before the February employment report, and we, too, will be waiting for the next update that lands on March 15. Our position remains that the domestic economy probably won't see much affect from Trump's policies until late this year, with a more pronounced impact in 2018.
From our perspective, we'd like to see the market trade sideways for a while at best, and there could be further weakness should earnings expectations for the current quarter and all of 2017 get dialed back. We've already started to see some of that happen, and suspect more of it as economists and analysts update their models. Candidly, we would welcome the opportunity to scale into recently added positions, such as Universal Display (OLED) , Applied Materials (AMAT) and Dycom Industries (DY) at better prices. All three have favorable multi-year tailwinds pushing their respective businesses forward, and are the kinds of names we want to own more of.
We have ample cash to opportunistically add to existing positions and/or enter into new ones. From fundamental and technical perspectives, there are a few names that we are circling and when the time is right we'll be sure to act.
Next week brings a busy economic calendar that includes both inflation metrics for February as well as the February retail sales report. All of these will land ahead of the Fed's likely announcement Wednesday afternoon that it will hike interest rates. Soon after that we'll get the latest housing starts picture and then another look at the industrial economy courtesy of the February industrial production report as well as the March reading on the Empire Manufacturing and Philly Fed indices.
As the velocity of earnings reports subsides, there are also several conference occurring next week, including the JPMorgan 2017 Aviation, Transportation & Industrials Conference, Semicon China, Barclays Global Healthcare Conference, Barclays Emerging Payments Forum and the Bank of America Merrill Lynch 2017 Consumer and Retail Technology Conference.