The week started off poorly with a Goldman downgrade of Citigroup. Things went further downhill from there. Lowe's, Target and Freddie Mac added to negative tone. We got a little positive blip in October housing starts but the housing market remains far underwater. The Fed released the minutes from their last FOMC meeting and surprised investors by revealing the decision to lower rates was "close". They also provided an economic forecast for 2008 that predicted slower growth due to continued financial market turmoil.
All in all, this week was pretty much like the last few weeks: volatile and in the end, depressing for investors.
Against this backdrop, there has been a higher level of trading in the TradeRadar portfolio and the holdings have changed quite a bit. There were a number of disappointments delivered by TradeRadar stock picks, stops were hit and we have ended up with a more bearish set of investments. Let's look at what happened to these stocks, why we sold or bought and what has happened since. The following comments cover the last month or so of portfolio activity.
Stocks or ETFs we sold --
Starbucks (SBUX) - This was a pick based on a TradeRadar BUY signal. We hit our stop and sold with a 6% loss well before the latest earnings report drove the stock down even further. As Starbucks often does, they put up decent numbers in terms of same store sales and profitability but for the first time they announced that there were fewer transactions per store. Investors took this to mean growth in the US was maxed out and dumped the stock. The stock is no longer in the BUY zone. Thank goodness for the stop we set at $26.
Qualcomm (QCOM) - stopped out during a market downdraft back on October 19 for a loss of a few per cent. The stock had been on a losing streak in terms of of its legal woes. Since that time, QCOM has fallen sharply and rebounded sharply. It has had a few legal opinions go in its favor and recent earnings were robust with decent forward guidance provided by management. Still, as of this week, it is pretty much at the same level where we sold it.
Cisco Systems (CSCO) - Cisco delivered another excellent earnings report but indicated sales to US corporations were "lumpy." This comment precipitated a sell-off in tech stocks and initiated the first leg down of our current market downturn. We hit a stop and ended with a double-digit profit. Great company - hate to see it leave the portfolio. This is one to keep an eye on.
China Automotive (CAAS) - here is another stock pick based on the TradeRadar BUY signal. Here again, year-over-year earnings were great but looking at the sequential numbers, investors worried growth was slowing instead of picking up.
