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General Market Commentary
Add up the numbers in the boxes in each indicator pane. For example, in Chart #1 (AlphaDow) a BULLISH state first occurs when the count reaches 5 out of 5. A BEARISH state occurs when 3 of the 5 turn negative. Can be used as a 'regime filter' to signal when the odds are in your favour of going long your favourite stocks or as a system to go long SPY or move to cash/bonds (SHY/AGG).
The Call For The Week of Jan 21st:
The rally off the December low may be nearing an end. Volume and buying pressure suggest that enthusiasm is waning as the averages move higher. Risk exists for a pullback near the December lows as part of a re-test bottoming sequence. Keep some powder dry.
Systematic Model Portfolio with corresponding Chart #'s:
Chart #1. 0% SPY (20% waiting in SHY)
Chart #2. 0% HXT.TO (for Canadians)
Chart #3. 0% TLT (AlphaBond)
Chart #4. 0% GLD (AlphaGold)
Chart #5. 0% IWO (ValueMentum -- 20% waiting in SHY)
Chart #6. 15% AGG (Dual Momentum)
Chart #7. 0% SPY (Fabian Wealth Builder -- 15% waiting in SHY)
Each position is managed by a unique system, namely 1. and 2. AlphaDow, 3. AlphaBond, 4. AlphaGold, 5. ValueMentum and 6. Dual Momentum 7. FWB respectively.
Our main system turned BULLISH on the U.S. stock market in May of 2015 and BEARISH June 29th, 2018.
Bullish when 5 out of 5 are true (+1) for each condition:
1. $SPX is above 65wk MA
2. Advance/Decline Line is trending up (buying power)
3. $TRAN is trending up (Dow Theory confirmation)
4. Utility Average MA rises (interest rate sensitive Utilities lead)
5. Bonds are trending up (interest rates are low)
Average holding period 392.3 days. 0.58 round trip trades per year. Longest drawdown duration 50 months vs. 73 for buy & hold.
64% winning trades since 1980. Beats buy and hold with less volatility (0.53 MAR Ratio).
Past performance is no guarantee of future results. This is not investment advice, but is for educational purposes only. Consult your investment advisor for additional information regarding suitability, fees, expenses and short term trading costs.
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