Still Quad 3, do not get too bearish though!
I call it constructive Quad 3 ;-)
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Some housekeeping: All posts are free for now. I you want to support me, subscribe as paying subscriber (THANK YOU!!!).
This stuff (Quads and related strategies) needs more out of sample time, in a year or three or so I might close the blog for nonpaying subscribers (not sure yet), but no hurry now.
I decided against to market small cap value momentum strategies, they simply do not scale, and I need the liquidity for myself ;-).
If you want to trade small cap value momentum stuff, I recommend portfolio123.com.
Start with the following model and develop from there.
Hedged version (25% TWM in it!)
Instead, I will add ETF Portfolios with a mix of major stocks that fit to the quad calls of this blog.
If you want to trade breakout stocks, I recommend ttps://twitter.com/howtoswingtrade (their tape reading is great, if you got them, you can unsubscribe me :-)).
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I am writing this blog before market open.
Futures are up around 0.4%.
Still Quad 3 (I expect no change today!).
But: Quad 4 is absolutely nowhere to be seen and the SPY just had a 7-8% drawdown. That is o.k. constructive (therefore the “*” at the 3 in above shot).
TLT, GLD, XLU, XLP got hit very hard in that pullback, they do not show relative strength, so no danger of Quad 4!
And: this is a pure interest rates scare —>
And as you can see above, the market is showing some strength here, we have higher interest rates now, than at the bottom last year.
The above portfolio has Quad2 and Quad 3 exposures, which is a reasonable choice at this jucture (all equally weighted!) —>
Strategies:
CANSLIM: mostly cash, some traders try pilot longs
5% tactical SVIX position for high risk takers here ;-)
No touch (do not long it!): GLD, TLT, XLU, XLP
Mix of Quad 2 and 3 ETF Exposures are fine (see above)
Small cap value momentum with a hedge (short IWM) is fine too (hedged small cap value momentum = Quad 3!!!).
Again, week by week, quads can change fast, so we stay flexible.
All right, have a great weekend!
All the best and best regards.
Andreas
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