The Daily Decision Trading Update for 1.9.17 - Making Decisions


The Early Take on the Market:
Good Monday morning and welcome back to the game. So far at least, stocks appear to be following the script for the start to a new calendar year. The age-old Wall Street adages tell us, "As the first week of January goes, so goes the month" and "As January goes, so goes the year." And while these trading cliches have largely been debunked, it is still fun to play along. Looking at the market from a more objective perspective, I remain concerned that the DJIA has not joined its S&P and NASDAQ brethren at all-time highs. In addition, it is worth noting that stocks are overbought from all three time-frame perspectives, sentiment has become extreme, and our major market models are starting to weaken. And with our cycle composite calling for a downtick in prices this week, it would not at all be surprising to see stocks pull back a bit in the neart-term. The question, of course, is if such a pullback would be a "dip" worth buying? While I would lean toward a "yes" here, we manage money based on discipline, not hunches. As such, we will attempt to stay in line with our model readings as much as possible in the early part of the year.

Turning to our portfolio, the CORE exposure model remains a smidge below the model's target exposure (60% vs. 80%). Our plan is to watch the near-term action closely and get in line with the model's exposure reading if an opportunity presents itself.

Since it is Monday, we will be reviewing the holding in the LEADERS model this afternoon. Currently, we are pleased with our decision not to "chase the hot dots" in the market and hold our Tech, Industrial, and Financial sector positions. However, Energy has worked its way into the top spots recently and we will be making a decision on this shortly.

In the TRADING model, we continue to hold a mean reversion trade in the beaten down/unloved consumer staples sector via a 20% position in XLP. So far, this has been an uninspiring trade and we are watching it closely. In addition, it is worth noting that our near-term trading model is calling for a modest short-position in the overall market. As such, we may not be far from a trade in this model/portion of the portfolio.

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.

Portfolio Note: The DDTS Portfolio is intended to consist of all 3 models - we trade the models independently to make things easier to follow.

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) 60.0% UPRO 20% 12.1.16 $76.93 Hold
The LEADERS Model

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

Position
Target
Exposure
ETF
Symbol
% of
Model
Date
Purchased
Purchase
Price
Current
Rating
Consumer Staples Select SPDR 20% XLP 20% 12.27.16 $52.10 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


Daily Decision Links:

Daily Decision Resource Page

Interactive Performance Details


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 Jan 09, 2017 — 9:01 AM
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