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General Market Commentary
In Chart #1 (AlphaDow), add up the numbers in the boxes. A BULLISH state first occurs when the count reaches 5 out of 5. A BEARISH state occurs when any 3 of the 5 turn negative. You can use this as a %27regime filter%27 to signal when the odds are in your favor of going long stocks or as a system to go long SPY vs. a move to cash/bonds (SHY/AGG).
We also offer paint by numbers systems for bonds and gold. A diversified portfolio is offered below our commentary. As always, consult your own advisor and due your own due diligence. Feel free to send questions using the feedback button.
The Call For The Week of May 18th:
A large dose of hope caused a big rally in U.S. equities and it was healthy in all respects. Breadth was strong (8:1 advancers to decliners and 9:1 up volume to down volume). Oil broke above a key level while GOLD held steady. Conservative investors should continue to focus on preservation of capital.
Summary: Our "Sleep Well At Night" (SWAN) Portfolio uses a carefully measured suite of systems for stocks, bonds and gold.
Chart #1. 0% long SPY (30% SHY or cash) [or if you are Canadian use Chart #2. 0% HXT.TO].
Chart #3. 0% long TLT (20% SHY -- AlphaBond)
Chart #4. 0% long GLD (20% in SHY or cash --AlphaGold).
Chart #5. 0% long SPY (30% SHY or cash -- New Dow Theory (FWB) )
Each position is managed by a unique system, namely 1. and 2. AlphaDow, 3. AlphaBond, 4. AlphaGold, 5. FWB - New Dow Theory respectively.
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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