The Daily Decision for 5.12.17 - Trades Being Added


The Early Take on the Market:
My take on this fine Friday morning is that two economic reports, the ongoing FBI drama (which may or may not turn into something meaningful for traders - so far, it appears not), and the near-term lines in the sand may be the drivers to the market action in the near-term. On the economic front, we got reports on the state of the consumer via the Retail Sales numbers and the state of inflation from the monthly CPI stats. Retail Sales for April rose by 0.4%, which was a tenth light compared to consensus expectations. However, the March numbers were revised higher, sales have increased in three of the first four months of the year, and retail sales totals are up 4.5% over the year-ago numbers. As such, one can argue that the consumer is feeling pretty good about things. On the topic of inflation, after a decline of -0.3% in March, the CPI rebounded to a gain 0.2% in April - in line with economist estimates. On a year-over-year basis, the headline CPI is up 2.2%, which is down from March's reading of 2.4% and February's 2.7% (which had been the highest print since February 2012). Note, that although the Fed prefers to look at PCE as their preferred measure of inflation, the annual CPI reading is above the Fed's target of 2.0% and supports Yellen's current rate increase plans. The takeaway this morning is that consumer spending remains healthy and that inflation has reached the Fed's target zone. As such, today's data continues to argue in favor of a June rate hike. Looking at the stock market, the near-term lines in the sand are now quite obvious on the charts.

Turning to our portfolio...

LEADERS Model: The LEADERS Model currently holds Technology, Consumer Discretionary, and Materials and we continue to be pleased with the outperformance of the model versus the S&P 500 (the LEADERS is up 9.2% ytd vs. 6.9% for S&P 500).

CORE EXPOSURE Model: This morning, the CORE model's exposure remains above the model's recommended level at 50% vs. 20%. However, we continue to take a "do nothing, absolutely nothing, until there is something to do" approach and will be closely monitoring the lines in the sand at 2405 and 2380.

TRADING Model: We decided to use recent pullbacks in the Eurozone and Dividend Growers space to add to positions in FVD and EZU yesterday. We're also looking at emerging markets, the Q's, and healthcare opportunities.

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: We trade the 3 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
Consumer Discretionary Select Sector SPDR 33.3% XLY 33.3% 4.3.17 $87.57 Buy
Technology Select Sector SPDR 33.4% XLK 33.4% 12.1.16 $46.64 Buy
Materials Select Sector SPDR 33.3% XLB 33.3% 3.17.16 $52.38 Buy
The CORE EXPOSURE Model

Position
Target
Exposure
ETF
Symbol
% of
Model
Date
Purchased
Purchase
Price
Current
Rating
ProShares UltraPro S&P (3X) 50% UPRO 16.67% 12.1.16 $80.79 Buy
The TRADING Model

Position
Target
Exposure
ETF
Symbol
% of
Model
Date
Purchased
Purchase
Price
Current
Rating
United States Oil Fund 20% USO 20% 4.25.17 $10.23 Buy
iShares Eurozone ETF 20% EZU 20% 5.11.17 $40.25 Buy
First Trust Value Line Dividend Fund 20% FVD 20% 5.11.17 $28.88 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 May 12, 2017 — 9:05 AM
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