Analysis: FIVE JPM

After you receive this Alert, we will be selling 50 shares of Five Below (FIVE) at roughly $126.26. Following the trade, FIVE will represent 0.95% of the portfolio.

We will be trimming our position in Five Below, realizing a gain of approximately 26% in the process. The basis behind this decision is to lock in a big gain in a stock that has run while the S&P Oscillator flashes an overbought reading. When the indicator becomes overbought, we refer to our principal of "bulls make money, bears make money, pigs get slaughtered," and raise a bit of cash so that we can be ready to buy on a market dip. We also see that the stock failed to hold the entirety of its post-earnings +8% surge, and our current price point still represents our highest sale price to date.

Even though we are reducing the size of our position this afternoon, we are still firm believers in Five Below's impressive growth outlook, driven by a unique and highly profitable regional to national expansion story. We acknowledge how our remaining position will be small, but we will still have exposure to future potential gains.

Lastly, first-quarter earnings season is quickly approaching, with JPMorgan (JPM) and a few other banks set to report this Friday. The additional cash raised from this trim will go directly into the war-chest of a cash position we have gradually built up as the market has run higher. We think earnings season in general may prove to be better than expected because sentiment for an earnings recession has lowered expectations, and we want to be plenty flexible and opportunistic to buy if a high-quality stock comes in.