The Daily Decision Trading Update for 2.17.17 -- *** UPGRADE COMING NEXT WEEK! ***

*** NEW: UPGRADED LEVERAGE STRATEGY COMING NEXT WEEK ***
We are pleased to announce that will be implementing a "leverage trigger" for the CORE EXPOSURE model. When the indicators suggest the market is "in gear" and trending higher, the leverage trigger will effectively be switched to the "on" position. This means that when the leverage trigger is "on," the exposure level for the CORE model will be a percentage of 200% long (and when the leverage trigger is "off" the exposure will be a percentage of 100% long).

For example, if the exposure level is 55% and the leverage trigger was "on," the exposure for the day would be 110% long. The overall goal is to produce higher returns in our CORE EXPOSURE approach during positive market environments.


The Early Take on the Market:
The focal point in the markets this morning appears to be the potential for tax reform and some new developments in the French election. As far as the "Trump Bump" is concerned, there can be no denying that the current rally has run a long way in a very short period of time. For example, stocks have put in the equivalent of an above-average calendar-year return on the S&P 500 in a little over three months. In short, this is what an overbought condition looks like. So, with a long weekend ahead, traders may be reassessing both the probability and perhaps more importantly, the timing of the "massive" tax plan currently being hatched by the White House. The latest development here is yesterday's comment that health care must be dealt with before tax reform. As such, traders may decide to take a step back from the frenetic pace of buying seen over the past couple weeks. Across the pond, there is a new twist in the French election. According to Bloomberg, "Socialist Party presidential candidate Benoit Hamon said he's in talks with far-left candidate Jean-Luc Melenchon about the prospect of uniting the left by establishing a single candidacy for the election. Polls suggest that such a move could leave the run-off vote potentially between far-right Marine Le Pen and a strongly leftist candidate, neither of which would be viewed as a good outcome for markets." In response, French bonds are taking a hit. But in our opinion, while the movement toward political populism is likely to be felt across the continent in 2017, it is unlikely to reach any sort of "crisis" level for the stock market. The bottom line at this point is stocks are overbought and sentiment has reached an extreme, which are conditions that tend to lead to a garden-variety pullback.

Turning to our portfolio...

LEADERS Model: Basic Materials, Financials, Industrials, and Technology remain the top 4 sectors. And since we own them all, we will stand pat at this point.

CORE EXPOSURE Model: Our current exposure continues to be a bit below the recommended exposure for the model at 75% vs. 85% - but at this stage, we view this as a "close enough" situation. Next week, we will begin using our upgraded "levered" exposure system which will increase exposure during market rallies.

TRADING Model: We currently hold two "momentum breakout trades" in the materials sector and the emerging markets and are in search of other opportunities. However, we are so far unimpressed with the trade in the materials ETF and may be moving on soon.

How To Use the DDTS Models: The DDTS is designed to be a modern, multi-strategy, risk-managed portfolio. Thus, the overall portfolio is a combination of all 3 models. However, we trade the models independently to allow for the use of the models on a standalone basis. If we were to choose just one model to follow, it would be the LEADERS for growth orientation, the CORE for a more conservative, risk managed approach, and the TRADING model for an opportunistic "value-add" approach.

Note: The TRADING model attempts to add value to the portfolio through what are perceived to be low-risk trading opportunities and is not intended to be a "market timing" strategy.



Daily Decision Trading Service
Current Portfolio Summary
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 Buy
Technology Select Sector SPDR 33.4% XLK 33.4% 12.1.16 $46.64 Buy
Industrials Select Sector SPDR 33.3% XLI 33.3% 12.1.16 $62.82 Buy
The CORE EXPOSURE 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 $78.74 Buy
The TRADING Model

Position
Target
Exposure
ETF
Symbol
% of
Model
Date
Purchased
Purchase
Price
Current
Rating
Materials Select Sector SPDR 33.0% XLB 33.0% 1.24.17 $51.95 Hold
iShares Emerging Markets 20.0% EEM 20.0% 1.25.17 $37.43 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.

Wishing You All The Best in Your Investing Endeavors!

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 Feb 17, 2017 — 9:02 AM
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