The Daily Decision Trading Update for 3.3.17 - Fed in Focus


The Early Take on the Market:
The Fed's next move remains the focal point in the markets on this fine Friday morning. With what Bloomberg called a "cacophony" of Fedspeak this week and both Yellen and Fischer stepping to the microphone today, the issue of when the FOMC will hike rates again is still center ring. Given the recent comments and what can only be deemed capitulation by some hitherto uber-dovish Fed officials (Fed Governor Lael Brainard and NY Fed's Dudley), the futures are now pricing in an 80-90% probability of a rate hike at the March 15 Fed meeting. And make no mistake about it; today's speeches will either confirm this view or put uncertainty back into the mix.

On the stock market front, I caught a pretty strong whiff of program selling yesterday afternoon - something we haven't seen for some time, actually! And given the massive gap on the charts, we would not be surprised to see the bears take a shot, right here, right now. However, we don't expect to see our furry friends succeed to any great degree (we think filling the gap and testing support at 2350 is the likely outcome of the bear assault) and anything more than a "pause that refreshes" would be surprising. The bottom line is the dip buyers will likely emerge again after a couple down days - so be watching for that. At this point, the song remains the same - buy the dips.

Turning to our portfolio...

LEADERS Model: The LEADERS model currently hold the top 3 rated sectors of the stock market: Financials, Health Care, and Technology.

CORE EXPOSURE Model: The CORE model's exposure remains leveraged long and is below the recommended exposure level - but less-so this morning at 110% vs. 120%. We will be watching the near-term pullback closely to determine whether to prep for a meaningful decline or buy the dip.

TRADING Model: We currently hold two trading positions in emerging markets via EEM and the semiconductors space via XSD. We are now officially concerned by the action in both and may have to cut the trades soon. Remember, you can try anything in this business, as long as you have discipline on the sell side when things don't go as planned.

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.



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.



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
Health Care Select Sector SPDR 33.3% XLV 33.3% 2.27.16 $75.05 Buy
The CORE EXPOSURE Model

Position
Target
Exposure
ETF
Symbol
% of
Model
Date
Purchased
Purchase
Price
Current
Rating
ProShares UltraPro S&P (3X) 110% UPRO 37% 12.1.16 $80.79 Buy
The TRADING Model

Position
Target
Exposure
ETF
Symbol
% of
Model
Date
Purchased
Purchase
Price
Current
Rating
SPDR Semiconductor ETF 20.0% XSD 20.0% 2.27.17 $60.84 Hold
iShares Emerging Markets 20.0% EEM 20.0% 1.25.17 $37.43 Hold



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 Decisions Service on Mar 03, 2017 — 9:03 AM
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