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February 19, 2025

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This Is How I Crush The Benchmark S&P 500 In Any Market

5 Mins Read

It was another mildly bullish week as our major indices climbed very close to new, fresh all-time highs. We also saw a return to growth stocks as we approached breakout levels, which is a good signal as far as rally sustainability goes. Despite this, there remain reasons to be cautious and I’ll point out a couple of those reasons below.

Negative Divergences

The S&P 500 ($SPX) and NASDAQ 100 ($NDX) both seem to be losing bullish price momentum on their respective weekly charts, which can be seen below:

$SPX

$NDX

The price momentum on both indices is slowing and eerily similar to late 2021, just before the cyclical bear market of 2022. Let me be clear that I do NOT believe we’re heading into a cyclical bear market. I don’t see that extent of potential weakness ahead. I do see increased risks of a 5-10% drop, however, and that’s why I’m cautious.

Is This Current Rally Truly Sustainable?

Sometimes a little common sense and perspective goes a very long way. Over the last 75 years, the S&P 500 has averaged gaining 9% per year. So when you go through short-term periods that show gains well in excess of that 9% average, you should at least be thinking there’s the risk that the S&P 500 will fall back and “reversion to the mean”, which is a mathematical concept that describes the tendency of extreme results to move closer to the average. We’ve seen a tremendous rally since the summer correction of 2023. Let’s look at the last 68 weeks (since the correction low in late-October 2023) of return on both the S&P 500 and NASDAQ 100 and compare it to the history of 68-week rates of change (ROC) to gain a sense of this current rally and its sustainability:

$SPX

$NDX

You can look at these two charts and make your own judgement and draw your own conclusions, but, outside of the late-1990s, 68-week ROCs above 50% on the S&P 500 and 60% on the NASDAQ 100 suggest a short-term pullback is more likely, not guaranteed.

Now The Good News

While bullish price action and momentum may seem to be slowing, the long-term monthly PPO on both of these indices is definitely on the rise, which, in my view, limits any short-term downside to the 20-month EMA. I’ll just show the S&P 500 monthly chart, but this will highlight the likelihood that any future selling, if it occurs (no guarantee), holds 20-month EMA support:

$SPX

This chart takes us back 25 years to the turn of the century. The yellow areas highlight poor (below zero) or declining PPOs. During these periods, I’d ignore 20-month EMA support and be cautious. However, the blank periods highlight a rising monthly PPO, during which we rarely see price fall below the rising 20-month EMA. This is where we currently stand. Most pullbacks over the last 25 years, when the monthly PPO is above zero and rising, have fallen short of actual 20-month EMA tests. In other words, we should view a 20-month EMA test as a “worst case” scenario.

The next market decline should be viewed as an OUTSTANDING opportunity to enter this secular bull market.

Stick With Strength

Since we began rolling out our Portfolios quarterly, we’ve had to overcome cyclical bear markets in Q4 2018 (trade war), March 2020 (pandemic), and the first 9-10 months of 2022 (rising inflation and rising interest rates), and a 3-month correction during the summer of 2023. We’ve remained fully invested and have CRUSHED the S&P 500. In fact, below is a graph that highlights our Model Portfolio performance since its inception in November 2018 (in the middle of the trade war!) through the end of January 2025:

We’ve demonstrated the best way to beat the S&P 500, which is to invest in leading relative strength stocks. It’s the only proven method that’s worked for us at EarningsBeats.com. We “draft” our 10 favorite relative strength stocks in various sectors and industry groups and hold them for one entire earnings cycle, then rinse and repeat. Our last quarter’s “draft” picks have annihilated the S&P 500, +15.15% vs. 3.34%.

You can check out our Model Portfolio holdings for the last 3 months below:

8 of our 10 Model Portfolio stocks outperformed the S&P 500, a few by a very wide margin. Owning relative strength stocks like PLTR, CLS, and TPR will completely carry a portfolio and lead to outstanding returns.

Our “quarterly” results are calculated over the following periods:

  • February 19 – May 19
  • May 19 – August 19
  • August 19 – November 19
  • November 19 – February 19

The reason we calculate our quarterly returns using the above time periods is that we select our stocks each quarter on February 19, May 19, August 19, and November 19. By the time we reach these dates, most key market-moving companies have reported their quarterly results and fundamental data like earnings is factored into our portfolio selections just as much as technical considerations. That fundamental/technical combination is one factor that separates us from others and we do this because my background is public accounting. I don’t stray far from my core beliefs. I believe management’s execution of their business strategies/plan and beating revenue and EPS estimates is a huge component of its stock’s upside potential.

On Monday, February 17th, we’re holding our next DRAFT. We will be announcing the 10-equal weighted stocks in each of our portfolios designed to beat the S&P 500 over the next 3-month period. You’re quite welcome to join us. It might change your way of investing and improve your results immediately. CLICK HERE for more information and to register!

Happy trading!

Tom

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In World news

Brazil’s former President Jair Bolsonaro charged in connection with alleged coup plot

3 Mins Read

Brazil’s former President Jair Bolsonaro has been charged in connection with an alleged coup plot to overturn the results of the 2022 election and keep his opponent from taking power, according to documents filed by prosecutors Tuesday evening.

Bolsonaro was among 34 people facing charges including those of armed criminal organization, attempted violent abolition of the democratic rule of law, coup d’état, and damage qualified by violence.

Prosecutors allege that the plot began in 2021, with an effort to undermine public trust in electronic voting machines.

In 2022, Bolsonaro allegedly met with ambassadors and diplomatic representatives to discuss the accusations of voting fraud “in an attempt to prepare the international community for disrespecting the popular will in the presidential elections,” a statement from the Attorney General’s Office read.

Despite finding no evidence of election fraud, the defendants allegedly continued their campaign to discredit the electoral system, prosecutors said.

They also allege that Bolsonaro approved a plan to carry out the coup, which they say included the death of the elected President Luiz Inácio Lula da Silva and his vice president.

Prosecutors said the last attempt to overturn the election happened on January 8, 2023, when defendants allegedly encouraged groups of Bolsonaro supporters to mobilize in Brasília, where they stormed and vandalized the three seats of government.

In November, Bolsonaro and 36 others were indicted as part of an investigation into the alleged coup plot.

The charges, brought before the Supreme Court in Brasília, could set the stage for a high-profile trial. If the charges are formally accepted by the Supreme Court, those charged will formally become defendants.

To prevent the case from influencing Brazil’s 2026 presidential elections, Supreme Court justices are pushing to conclude the trial before the end of 2025, but it is unlikely the court will announce its decision on whether to take on the case or schedule preliminary hearings before early March.

In the 844-page November indictment, federal police accused Bolsonaro of having “full knowledge” of the alleged coup plan to prevent Lula from taking office, adding that the former president “planned, acted in, and led directly and effectively” the plan.

Bolsonaro denies involvement, telling the Brazilian magazine Veja he “never agreed to any plan.”

In 2023, Bolsonaro was banned from public office for eight years after a separate investigation into alleged abuse of power found him guilty of spreading misinformation about the integrity of the Brazilian election apparatus to foreign governments.

This is a developing story and will be updated.

This post appeared first on cnn.com

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In Business

As Joann Fabrics and JCPenney announce store closings, here’s what’s driving the pattern

3 Mins Read

The new year for brick-and-mortar retailers is picking up right where 2024 left off, as a slew of stalwart brands are set to shutter dozens of store locations amid shifting consumer patterns.

The latest crop of closures are being led by fabrics and crafts retailer Joann, which said this week it was shuttering 500 locations in 49 states as part of a second go-around in Chapter 11 bankruptcy reorganization.

“This was a very difficult decision to make, given the major impact we know it will have on our team members, our customers and all of the communities we serve,’ the company said in a statement. ‘A careful analysis of store performance and future strategic fit for the company determined which stores should remain operating as usual at this time. Right-sizing our store footprint is a critical part of our efforts to ensure the best path forward for Joann.”

Joann first filed for bankruptcy protection last March to address a heavy debt load, shrinking revenues and what it described as an “uncertain consumer environment.” It announced another Chapter 11 filing last month, this time with the goal of finding an entity to acquire all of its assets.

‘The last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step,’ it said in a release accompanying its latest filing.

Meanwhile, JCPenney separately said this week it was closing a handful of stores, with an initial batch of eight to go under depending on “expiring lease agreements” and “market changes.” 

“While we do not have plans to significantly reduce our store count, we expect a handful of JCPenney stores to close by mid-year,” the company said in a statement.

JCPenney emerged from bankruptcy in 2020; last month, it announced it was merging with the group that operates other retail brands, including Aéropostale and Brooks Brothers.

In the first nine months of its current fiscal year, JCPenney’s adjusted earnings tumbled nearly 64% to $66 million.

Those results reflect an overall physical retail environment that continues to deteriorate. According to Coresight Research, as many as 15,000 retail locations could close this year, nearly doubling the count for 2024, which were already the most since 2020, the first year of the Covid-19 pandemic.

“Inflation and a growing preference among consumers to shop online to find the cheapest deals took a toll on brick-and-mortar retailers in 2024,” Coresight Research CEO Deborah Weinswig said in a release last month. “Last year we saw the highest number of closures since the pandemic. Retailers that were unable to adapt supply chains and implement technology to cut costs were significantly impacted, and we continue to see a trend of consumers opting for the path of least resistance.’

She said customers are running out of patience for stores that are ‘constantly disorganized, out of stock, and that deliver poor customer service.’

‘We have seen Shein and Temu capture market share as consumers choose to shop online to save time, money, and avoid frustration,’ she said.

In the first weeks of 2025, Coresight was already tracking about 30% fewer openings and more than triple the number of closures compared with the same period last year.

Other closures announced late last year or planned for 2025 include Party City, Big Lots, Kohl’s and Macy’s.

This post appeared first on NBC NEWS

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