Here are 4 big trades for the portfolio and 2 difficult rating changes
What a difference a week makes. Following last week’s losses, the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite are all set to continue their gains this week, posting five consecutive sessions of gains. Dovish comments from the Federal Reserve on Wednesday and the Labor Department’s blonde (not too hot, not too cold) jobs report on Friday pushed bond yields lower and supported stocks. The market was still oversold on Monday and Tuesday, taking on the effects of last week, according to the S&P 500 Short-Term Oscillator. But we can see the tide turning. After spending seven consecutive sessions in oversold territory, the oscillator turned neutral after Wednesday’s close and remained neutral heading into Friday’s session. Our trading and decisions on stock ratings are driven more by earnings, company-specific developments and portfolio management than any broad commentary on the market. We downgraded Ford Motor (F) to 2 on Tuesday, as the stock’s post-earnings sell-off wasn’t a sell-off we were interested in buying. Last week, Ford’s profit missed expectations due to lower sales and a $1.2 billion increase in warranty expenses. Also troubling: Ford’s rocky transition to electric vehicles and the impending rise in labor costs amid a six-week strike by the United Auto Workers union. We bought an additional 75 shares of GE HealthCare Technologies (GEHC) on Wednesday, a day after the medical device maker reported strong third-quarter results that included solid margin expansion. The stock soared more than 5% after the news broke and extended gains throughout the rest of the week. However, GEHC shares are still down significantly from their April highs so far, and even down from modest rebounds in June and July. We bought another 50 shares of Oracle (ORCL) stock as recent cloud industry commentary bodes well for the company. Oracle will report earnings next week. This is our second week of adding to our position in Oracle, having bought the stock on October 23rd after a sell-off following management’s speech at the company’s Artificial Intelligence Executive Forum event. We also downgraded Estée Lauder (EL) to 4 and removed our price target on the stock after a shockingly bad quarter. We knew things weren’t going to get better. However, the luxury beauty company’s caveat on forward guidance raises questions about management’s credibility. Estée Lauder’s new “Profit Recovery Plan” offers little comfort, as it’s not expected to take effect until the company’s 2025 and 2026 fiscal years. On Thursday, we exited our smallest position, Veralto (VLTO) – selling all the shares we received as water quality deteriorated. Spun out from club name Danaher (DHR) last month. Veralto is currently facing headwinds, including weakness in the Chinese market. In addition, the club name Dupont de Nemours (DD) also has a similar water business. Therefore, we intend to consolidate water quality risks and buy more DuPont shares as trading restrictions allow. But water isn’t why we own DuPont, whose electronics and industrial businesses are on the cusp of a recovery. The specialty chemicals giant produces materials and coatings for the industry. On Friday, we sold 250 shares of Foot Locker (FL) stock, taking a heavy loss to avoid a pullback from the stock’s nearly 40% gain over the past two months. You can’t just sell winners to make a profit. Sometimes you have to bite the bullet and sell losing stocks to reduce risk. That’s exactly what we did with Foot Locker, a stock that has been terrible. We will look to reallocate this cash into other positions that we believe have stronger fundamentals in the coming quarters. (Jim Cramer’s Charitable Trust is a long-term holding of F, GEHC, ORCL, EL, DHR, DD, FL. See here for a complete list of stocks.) As CNBC Investing Club with Jim As a Jim Cramer subscriber, you will receive trade alerts before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling stocks in his charitable trust portfolio. If Jim talked about a stock on CNBC TV, he would wait 72 hours after issuing a trade alert before executing the trade. The investment club information above is subject to our Terms and Conditions and Privacy Policy and our Disclaimer. No fiduciary duty or obligation shall exist or arise upon your receipt of any information relating to the Investment Club. No specific results or profits are guaranteed.
Traders work on the trading floor of the New York Stock Exchange (NYSE) on November 2, 2023.
Spencer Pratt | Getty Images
What a difference a week makes.
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