Daily Decision Trading Update for 12.5.16 - Adding Exposure


The Early Take on the Market:
It appears that stocks are following the traditional holiday pattern as the market tends to take a little break a few days before Christmas only to continue the year-end rally the following week. The current near-term weakness is likely tied to concerns about Italy's banks in general and Banca Monte dei Paschi di Siena SpA specifically. Reports indicate that the world's oldest bank has been unsuccessful in lining up a buyer of the stock offering intended to raise the €5 billion it needs by year end. The good news for the broad market is that the Italian parliament voted to boost public debt by €20 billion, which should be more than enough to rescue the embattled bank but not enough for a broader bailout of the banking system. On a more positive note, the latest revision to Q3 U.S. GDP came in at a 3.5% annual rate, which was higher than expectations (consensus was for the growth rate to come in at 3.3%) and the previously reported 3.2% rate. This represents the strong growth since the third quarter of 2014 and follows the second quarter's rather weak 1.4% rate. In addition, the consumer spending component of the report increased at a 3.0% rate, which was also better than the previous reading of 2.8%. In response to the mixed news this morning, stocks have opened slightly lower.

Turning to our portfolio, the CORE exposure model is now a bit below the recommended exposure (75% vs. 8%). Our plan is to use today's weakness to get our holdings in line with the model's reading.

We are holding the positions in the LEADERS model.

In the TRADING model, we decided to use yesterday's sloppy action to put a 30% trade on.

Note: The TRADING model is not designed to do "market timing," instead, it attempst to add value to the portfolio through low-risk trading opportunities.


Publishing Note: I am traveling the first half of the week and then the Holiday Season arrives shortly thereafter. During this time of year, I like to take a break from the keyboard and recharge the batteries. So for the next couple weeks, the morning report will be sporadic - but rest assured that we will send trade alerts whenever we make a move.

Here's wishing you and yours a Happy Holiday Season!

Have a great day!



Daily Decision Trading Service
Current Portfolio Summary
The CORE Model

Position
Target
Exposure
ETF
Symbol
% of
Model
Date
Purchased
Purchase
Price
Current
Rating
ProShares UltraPro S&P (3X) 75.0% UPRO 25% 12.1.16 $76.93 Buy
The LEADERS Model

Position
Target
Exposure
ETF
Symbol
% of
Model
Date
Purchased
Purchase
Price
Current
Rating
SPDR Financials ETF 33.3% XLF 33.3% 12.1.16 $22.89 Buy
SPDR Technology ETF 33.4% XLL 33.4% 12.1.16 $46.64 Buy
SPDR Industrials ETF 33.3% XLI 33.3% 12.1.16 $62.82 Buy
The TRADING Model

Position
Target
Exposure
ETF
Symbol
% of
Model
Date
Purchased
Purchase
Price
Current
Rating
ProShares Ultra S&P (2X) 30% SSO 15% 12.21.16 $77.98 Buy



Target Exposure Explained
This column is the goal percentage in terms of the overall exposure for the model. This is shown due to the fact that we utilize leveraged ETFs.


% of Model Explained
The number shown in this column represents the percentage of the the model this position represents.


Current Rating Explained
This is our rating for the day. The Current Rating tells you what action we would take if we did not currently hold the position. A "Buy" rating means we would be willing to purchase the position at current prices. A "Strong Buy" suggests this would be our first choice to buy. A "Hold" rating indicates we would not make new purchases at current levels. And a "Sell" rating indicates we will likely exit the position in the near-term.


Positions Can Change
Positions often change during the trading session. Remember that we will send a Trade Alert via SMS Text Message and/or Email BEFORE we ever make a move in the models.


About the Daily Decision Trading Service
Our easy-to-follow Daily Decision Trading Service is a modern, pro-level, multi-strategy, multi-manager approach that is made up of three models:

  • The CORE Model
  • The LEADERS Model
  • The TRADING Model

We start with THE CORE Model holdings. This risk-managed position is designed to provide the appropriate level of exposure to the U.S. stock market given the current risk/reward environment and makes up one-third of the overall DDTS portfolio. The goal of the CORE is to give us "the forest" and to stay in tune with the market's big, important moves. And when the bears come to call, the CORE is designed to take defensive measures by moving into capital preservation mode.

Next, we allocate one-third of the overall DDTS portfolio to THE LEADERS Model. This model focuses on the top sectors in the market. Because in short, when technology, biotech, the banks etc., start to heat up, we want to make sure we have an overweighted exposure to the market leaders.

And finally, one-third of the DDTS portfolio consists of THE TRADING Model. This model seeks trading opportunities based on swing-trading and mean-reversion strategies. These are designed to be short-term positions and the primary goal is simple: to add value via an opportunistic approach to trading!

When combined, the three models represent a modern, multi-strategy, risk-managed portfolio.

Cheers!
The Front Range Trading Team


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NOT INVESTMENT ADVICE. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. Investors should always consult an investment professional before making any investment.

Posted to Daily Decision Trading Se... on Dec 22, 2016 — 10:12 AM
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