The Time Is Now to Exit Our Inverse ETFs and Add to These 2 Positions
We are making this decision following the weaker-than-expected April jobs report.
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* We are closing out the portfolio’s inverse ETF positions, funneling those dollars into more shares of Applied Materials and Labcorp.
| Symbol | Transaction Type | #Shares Traded | Recent Price ($) | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
SH | Sell | 3,310 | 12.25 | 0 | 0 |
PSQ | Sell | 814 | 45.10 | 0 | 0 |
AMAT | Buy | 185 | 202.50 | 460 | 2.2 |
LH | Buy | 200 | 200.25 | 460 | 2.2 |
After you receive this Alert, we will make the following trades:
-- Sell 3,310 shares of the ProShares Short S&P500 ETF SH at or near $12.25. This trade will close out the portfolio’s position in SH shares, which returned -15%.
-- Sell 814 shares of the ProShares Short QQQ ETF PSQ at or near $45.10. This trade will close out the portfolio’s position in PSQ shares, which returned -33%.
-- Buy 185 shares of Applied Materials AMAT at or near $202.50. Following the trade, AMAT shares will account for roughly 2.2% of the portfolio.
-- Buy 200 shares of Labcorp LH at or near $200.25. Following the trade, LH shares will account for roughly 2.2% of the portfolio.
The time has come to exit the portfolio’s inverse ETF positions that were among our best performers in April. We are making this decision following the weaker-than-expected April Employment Report that showed slower job growth and sequentially softer wage gains.
Following Wednesday’s Fed policy meeting and presser, market expectations pushed rate-cut timing even further out, but if we see more data as we did in this morning’s Employment Report pointing to a slower-growing economy and inflation data back on an improving path, we will start to see the market re-think the timing of rate cuts yet again. Our thinking and timing of this decision also reflect where we are in the current earnings season, with few major S&P 500 or Nasdaq Composite constituents left to report their quarterly results.
We are using the proceeds from these two exits to add to our holdings in Applied Materials and Labcorp. Because of rising chip demand and the benefit of CHIPS Act funding as well as other chip re-shoring efforts outside of the U.S., we’ve been wanting to bulk up our exposure to AMAT and this will be a step in that direction. As for Labcorp, the shares are trading around our cost basis, and we continue to like the long-term growth prospects.
Following these trades, our cash position will be relatively unchanged at just over 14% of the portfolio. We plan to opportunistically but prudently put more cash to work via our portfolio shopping list.
At the time of publication, TheStreet Pro Portfolio was long SH, PSQ, AMAT and LH.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
