Top Names, 9/26/2024

Plus a note about 4 trades benefiting from China's extraordinary stimulus.

Sep 27, 2024

In the bustling atmosphere of the New York Stock Exchange, we find two distinct anthropomorphic characters at the heart of the trading floor's energy and activity. One is a bull, standing tall and clothed in an elegant, sharp suit that speaks to its bullish outlook and unyielding confidence in the market's potential. Its horns are polished, blending seamlessly into its professional attire, symbolizing strength and optimism. Beside the bull, a bear presents a stark contrast, embodying caution and a readiness for market downturns. This bear, also dressed in a refined suit, reflects a strategic and careful approach to trading, with its fur subtly peeking out from its clothing, hinting at its inherent nature. Together, they engage in stock trading, analyzing screens filled with fluctuating market data, discussing strategies, and making calls. The scene captures their dynamic relationship against the backdrop of the NYSE, with traders bustling around, screens blinking with live updates, and the air filled with the essence of high-stakes financial decisions.

China Update

This week, China announced some enormous stimulus measures to prop up its economy and stock market. We currently have four open trades that could benefit from this. You can read about them in this ZeroHedge post, Betting On China As It Brings Out The Big Guns.

Let’s recap our core strategy and then move on to our top ten names.

Our Core Strategy

Our core strategy is to buy equal dollar amounts of the Portfolio Armor web app’s top ten names, put trailing stops of 10%-20% on them, and replace them with names from the current week’s top ten when we get stopped out of a position.

A Top Names Performance Update

Before we get to this week’s top ten names, let’s look at the final, 6-month performance of our top ten names from March 20th, 2024.

Top Names, 3/21/2024

Portfolio Armor

March 23, 2024

Note: Our end-of-day options data provider was still having issues with their server on Friday, so below I have posted our system’s top names as of Thursday’s close (hence the date in the title). I’ll update this post with Friday’s top ten names as soon as I have them, for those looking to place trades on Monday with the most current list.

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Our top names from March 20th were up, on average, 9.25%, over the next six months, versus up 9.87% for the SPDR S&P 500 Trust (SPY 0.00%↑).

So far, we have 6-month returns for 65 weekly top names cohorts since we started this Substack at the end of December, 2022.

And as you can see above, our top names have averaged returns of 19.49% over the next six months, versus SPY’s average of 12.58%. You can see an interactive version of the table above here, where you can click on each date and see a chart showing each of the holdings that week.

If You Are Concerned About Downside Risk

As a reminder, you can download our iPhone hedging app by clicking on the image below.

This Week’s Top Names

Below are Portfolio Armor’s current top ten names as of Thursday’s close.

Screen capture via Portfolio Armor on 9/26/2024.

If you’re starting our core strategy now, you’ll want to buy equal dollar amounts of each at or near these prices, if possible, on Friday, and then enter trailing stops of 10% to 20% on each of them. As you get stopped out of positions, you’ll add new ones from the then-current top ten names.

In my case, I am already running this strategy, and didn’t get stopped out of any positions since last week, so I won’t be buying any of these names on Friday.

If you’re not buying round lots of each of these positions, it won’t be cost effective to hedge them individually, but you can hedge market risk by buying optimal puts on an index ETF such as the SPDR S&P 500 Trust (SPY 0.33%↑).