It's a strange week when money flows into both our high-risk Aggressive portfolio and traditionally safety-oriented Healthcare, High Yield and REIT stocks, but we don't mind at all.
The S&P 500 is down 0.40% in the last two days. Our stocks are up 0.80%. While we'd love to take credit for the gap, it's really just a matter of posture. Many of our recommendations are either relatively small and volatile Technology companies or on the defensive side, without a lot of exposure to the mass of stocks that crowd the middle.
We just aren't in a lot of the Consumer stocks, Materials, Energy, Financials or Industrials that become a drag when investors can't decide to retreat from risk or embrace faster-growing but more speculative companies. As a result, we're getting a subtle nudge from our defensive Healthcare and REIT portfolios, both up 0.55% so far this week, along with most of our Technology recommendations turning upward as well. It doesn't happen often, but it's great when it does.
And it's even better to see that sentiment is divided but not evenly balanced. The week started with only a few Tech stocks like Roku (ROKU: $103, up 5% this week) and Twilio (TWLO: $145, up 4%) in the scoring zone. Now they're joined by Shopify (SHOP: $322, up 3%), Twitter (TWTR: $38, up 4%), Anaplan (PLAN: $55, up 4%), Okta (OKTA: $134, up 5%) and so on. These aren't tentative moves from investors looking to rotate into smaller and more obscure corners of the market. Investors are actively chasing these stocks because they think this is where the best opportunities are.
If anything, we're seeing more rotation than fear in the Healthcare and Real Estate groups, which are up on the whole but haven't really shown us any truly standout performance this week. We appreciate the upside but really love the fact that the "flight to safety" impulse is weaker than the conviction that go-go stocks that have already come a long way have even more room to fly. Behind the scenes, the bulls are taking the upper hand.
Corporate news supports this scenario. Giant companies like Apple (AAPL: $201, down 1%) are recovering their momentum after a weak start to the week thanks to buzz around big revenue gains for the App Store ($3.85 billion estimated last quarter, which translates into 17.5% year-over-year growth). We're even hearing that iPhone sales are likely to improve this fall as management tinkers with price points in order to keep more people in the company's lucrative Services ecosystem. A win on hardware as well as in the App Store would be great. We're cautiously optimistic.
It's also good to see Square (SQ: $78, up 5%) get the love we've always said it deserves. Raymond James took its "underperform" off the stock, admitting that Square is a dangerous short selling prospect after falling from $83 to $60 in recent months. At this point earnings targets are low and the stock is in position to reclaim last year's $101 peak. We can't wait.