Micro Quad 3 Baby!
O.k., it is Friday, and I am not expecting it to change today, so I am calling a Micor Quad 3 here:
Everything flagged is bullish trend here and you see not much quad 1-2 stuff bullish trend:
This model is now hedged with a 40% Short position on the Russel 2000:
Small cap value momentum does well enough in quad 3 in the hedged version, so as long the hedged version is not making a lower low, I ride it.
What works in a Quad 3 besides a hedged small cap value momentum book:
ETF Pair Trade: Long XLE, Short QQQ.
UUP should do o.k. (already bullish trend).
Value + Good earnings developments now + Momentum in all caps
No touch:
CANSLIM and higher beta breakout strategies, most CANSLIM traders I follow are in cash since 1-2 Weeks.
ARKK (long duration growth)
Defensives
TLT (long term bonds)
The way energy handled the bear market is impressive:
Truflation sees higher inflation coming:
https://truflation.com/blog/truflation-us-inflation-update-july-2023
“The past three months have seen a swift decline in the US inflation rate, from 4.9% in April to 3% in June, as the Federal Reserve’s aggressive monetary tightening continued to pay off. However, we expect CPI to begin edging higher again in July, moving further away from the Fed’s 2% target.”
“Given these indicators and the anticipated reversal in inflation, we do not expect interest rates to come down any time soon. Instead, the Central Bank will maintain its “wait-and-see” approach, and another rate hike in September remains on the table.”
Is this the stagflation / reflation trade Kuppy https://twitter.com/hkuppy and other “inflationists” are calling for? I have no idea. But I give them credit. If inflation stays higher and interest rates too, this could be a trade like from 2003-2007: Energy made 300%, TECH (QQQ) made 100%.
Let’s see. Week by Week.
All right, have a great weekend!
All the best and best regards.
Andreas
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