Our investment strategy might change slightly if the current 3 day pullback (-2.5%) deteriorates any further on Tuesday. It’s important to note, the markets have gained more than 17.5% since the October 13 pivot low. Therefore, we might lock in those profits and add hedges if weakness persists.
Summary
Futures this morning are oscillating from green to red and back, currently higher (ES+5.50).
Since October 13, the markets continue a bullish trend, with higher highs and higher lows. Price action moved below the 9ema and 200d, but remain above the 21d and 50d moving averages. In addition, the current pullback below the 200d just means the bullish trend is under a little pressure.
This 3 day fade requires monitoring.
Bullish Trend Under Mild Pressure
- 17.7% gain in seven (7) weeks.
- 2.5% loss since last Thursday, 3 days.
- If price action dips on Tuesday we plan to reduce exposure.
- Furthermore, we plan to hedge with QID, SPXU, and DOG.
- If the markets bounce, we are looking for a break back above the 200d moving average.
Investment Strategy
Our Current Investment Strategy is mixed.
Since the January highs, we’ve gradually reduced exposure to higher risk growth stocks and ETFs. In addition, we used hedges extensively. SPY puts when VIX was low, QID on QQQ weakness, and SPXU when the S&P500 shows signs of retreating.
After two tests of the 200d moving average since August, we are keen to see the SPX retake this key metric. Until we see a confirmed uptrend we will continue to adjust our portfolio positioning. For example, over the past few weeks yields have faded and bond investments (AGG, LQD, IEF, TLT) have turned higher. Exposure to these investment assets are prudent.
Our portfolio(s) are 25% invested at the present time. The rest is in cash.
- #1 – Passive Strategies – 5%
- #2 – Growth Investing – 5%
- #3 – Value Investing – 5%
- #4 – Dividend Growth Investing – SPHD and BDJ – 5%
- #5 – Indexing – SPX IWM QQQ – 5%
Rhetoric for an impending recession looms, so we will remain persistent in our cautious stance.
This is not investment advise. Contact an registered investment advisor (FINRA) in that regard.
View this commentary as educational and how we are positioned at present.
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Happy Trading,
Vinny
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