The Daily Decision for 8.29.16
The Early Take on the Market:
Stocks are waffling in the early going as traders continue to digest the recent fedspeak and adjust expectations. Futures markets now put the odds of a September rate hike at 42% and the odds of a rate hike by the end of the year are now better than 2-to-1. The question of the day is if this represents a real change to the overall expectations. If so, then the dollar will likely continue to rally, which could be a problem for stocks. And with the seasonality now becoming overtly negative for the next month or so, our models tell us to play the game more cautiously.
Please note that Marketfy experienced technical difficulties with the website on Friday as our morning report never went out and we were unable to implement our trades in the afternoon. Note that we will pull the trigger on reducing exposure in our models this morning.
Have a great Day!
The Daily Decision Model:
About: The Main Model is a professional, disciplined approach to managing the risk of the U.S. stock market. One decision. Once a day. Done.
Current Daily Decision Position:
81% Long (27% UPRO - ProShares UltraPro S&P 500)
Today's Early Model Reading*: 80.75% Long (26.92% UPRO - ProShares UltraPro S&P 500)
*Today's Model Reading represents the "early read" of our models. Please note that model readings often change during the trading session and we will always send a trade alert when we are making changes to positions.
New to the Daily Decisions?
Our current "New Member Rating" is:
Hold
Additional Daily Decision Trading Models/Systems:
In an effort to provide additional research and trading guidance for a wide variety of members, the daily readings of 5 additional trading systems are provided.
How To Use: To clarify, the Main Model is the primary model for the Daily Decision service. However, members can use any or all of the systems below to customize their approach or to focus on a specific style of trading or time-frame.
The Timing Models (Short/Intermediate-Term):
About: Shorter-term "timing models" designed to stay on the correct side of the market's trends. The positions of these models are updated in real-time via trade alerts and the Marketfy trading system.
Today's Positions:
DD Hybrid Model: 60% Long (20% UPRO - ProShares UltraPro S&P 500)
DD Aggressive Model: 90% Long (30% UPRO - ProShares UltraPro S&P 500)
The Mean Reversion Model (Short-Term):
About: Designed for shorter-term traders, this model indicates when conditions are ripe for the market to "go the other way" from the current trend.
Today's Position:
0% Long (0% SPXU - ProShares UltraPro SHORT S&P 500)
The Graduated Exposure System (Intermediate-Term):
About: Designed to keep overall exposure to market risk in line with the intermediate-term"state of the market environment.
Today's Position:
45% Long (15% UPRO - ProShares UltraPro S&P 500)
The "Desert Island" System (Long-Term):
About: A long-term system designed to tell us which team is in control of the game. The primary objective of this model is to avoid high risk, bear market environments.
Today's Position:
100% Long (33.34% UPRO - ProShares UltraPro S&P 500)
Current Market Environment Model Reading:
The Market Environment Model is designed to indicate the current "state of the market" in terms of technical health and the market's internal strength. To clarify, this is NOT a trading system. We use the model to help us identify the proper trading strategy to use in a given environment.
Daily Decision Performance:
Below is a summary of the live and backtested returns of strategies provided in the Daily Decisions service.
Before we ever invest our hard earned capital in a market strategy, we believe it is important to thoroughly test the system in different market environments. While all system tests have flaws, the idea is that a backtest can provide us with (1) proof of concept and (2) an indication of what we might be able to expect from the system in different market environments. And from a longer-term standpoint, we are pleased with the way the systems perform in most market environments.
| The Daily Decision Systems Performance Results (Updated Weekly on Mondays) | ||||||||
Period |
The Daily Decision Model(1) |
DD Timing Hybrid Model(2) |
DD Timing Aggressive Model(2) |
Graduated Exposure Model(3) |
Desert Island Model(3) |
S&P 500 Index | ||
| 1997 | +42.85% | +46.08% | +97.09% | +43.36% | +40.39% | +31.01% | ||
| 1998 | +51.12% | +85.70% | +170.47% | +41.31% | +38.08% | +26.67% | ||
| 1999 | +17.91% | +32.36% | +70.39% | +8.22% | +17.35% | +19.53% | ||
| 2000 | +6.51% | +30.93% | +63.29% | -5.92% | +2.13% | -10.14% | ||
| 2001 | +21.74% | +30.64% | +64.94% | +14.02% | +22.93% | -13.04% | ||
| 2002 | +13.87% | +21.52% | +40.48% | +14.45% | +8.59% | -23.37% | ||
| 2003 | +48.80% | +56.23% | +104.53% | +28.30% | +62.09% | +26.38% | ||
| 2004 | +15.40% | +11.81% | +26.86% | +9.20% | +23.08% | +8.99% | ||
| 2005 | +5.74% | +5.71% | +7.26% | +3.62% | +7.62% | +3.00% | ||
| 2006 | +18.89% | +26.10% | +47.43% | +5.55% | +26.05% | +13.62% | ||
| 2007 | +15.67% | +23.91% | +46.63% | +3.30% | +21.35% | +3.53% | ||
| 2008 | +50.06% | +44.62% | +92.78% | +15.29% | +21.35% | -38.49% | ||
| 2009 | +66.50% | +204.78% | +161.00% | +47.77% | +70.84% | +23.45% | ||
| 2010 | +30.37% | +33.43% | +61.20% | +26.32% | +27.32% | +12.78% | ||
| 2011 | +20.47% | -7.42% | -26.80% | +3.38% | +21.45% | -0.00% | ||
| 2012 | +27.83% | +8.14% | +16.47% | +20.33% | +29.58% | +13.41% | ||
| 2013 | +36.38% | +27.27% | +44.34% | +37.28% | +38.45% | +29.60% | ||
| 2014 | +11.19% | +3.54% | -1.14% | +7.43% | +16.83% | +11.93% | ||
| 2015 | -4.79% | -12.70% | -16.00% | -3.04% | -1.37% | -0.73% | ||
| 2016 | +2.11% | +2.81% | +3.21% | +2.36% | +1.46% | +6.12% | ||
| Compound Average Annual Return: (1997 - 2015) | +24.68% Per Year |
+27.62% Per Year |
+50.25% Per Year |
+15.83% Per Year |
+30.20% Per Year |
+5.45% Per Year | ||
| (1) The Daily Decision Model (aka the "Main Model") Components: 40% Desert Island System, 35% Graduated Exposure System, 25% DD Hybrid Trading System. Live Returns from December 2015 forward, backtested results prior | ||||||||
| (2) Live Returns from January 2009 forward, backtested results prior | ||||||||
| (3) Live Returns from January 2015 forward, backtested results prior | ||||||||
Have a great day!
David D. Moenning
Founder, StateoftheMarkets.com
President, Heritage Capital Research
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Daily Decision Links:
Market Environment Model Explained
Daily Decision Model Portfolios Explained
Interactive Performance Details
Backtested Performance Information
Introduction to the Graduated Exposure System
Backtested Performance of Graduated Exposure System
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