Every Sunday, we analyze ETF's using Chaikin Analytics to assess market conditions for the trading week ahead.
The five indicators that define a bullish market posture and are best suited for Chaikin Analytics' 3 - 6 month time horizon for trading stocks have turned green, though the market at present is overbought. We'd look for a shallow 2 - 5 day pullback, supported by the Overbought/Oversold Oscillator, to enter VERY BULLISH Power Gauge rated stock trades..
The five indicators that define a bullish market posture and are best suited for Chaikin Analytics' 3 - 6 month time horizon for trading stocks have turned green, though the market at present is overbought. We'd look for a shallow 2 - 5 day pullback, supported by the Overbought/Oversold Oscillator, to enter VERY BULLISH Power Gauge rated stock trades..
Our portfolio has thinned in recent weeks as stock positions we put on earlier this year have hit trailing stop losses at (mostly) profitable levels (closed trades here). Rather than worry about the market running "too far too fast" and concerning ourselves with the inevitable pullback that's coming, we'll continue to put on positions according to our rules and manage risk by setting stops, diversifying portfolio positions across strong sectors and industry groups, and limiting our trading to a maximum of 15 - 20 positions that carry no greater than 10% drawdown risk in aggregate. Of the 7 positions remaining in our portfolio, stop losses are higher than our entry prices in 3 cases, with a dollar or less risk remaining on the other 4.
We are underinvested at present and plan on taking trades that make sense according to our rules. But we won't force things. Our investing rules may be the very thing that's limiting our risk and forewarning of a market pullback. These rules keep the emotions out of our trading and encourage us to attempt to be fully invested despite our fears of a market pullback.
Other observations from this week's market analysis:
International Equity Markets and Commodities are UNDER-PERFORMING the S&P. Emerging Markets and US Treasuries are out-performing US Stocks.
While US stocks appear to be the place to be, recent bond performance makes us cautious. Why would Big Money bid up an asset that offers very little probability of significant growth and no yield. What do institutional traders know?
Finally, here's the ETF porfolio. Our goal is simply to outpeform the benchmark All Countries World Index (ACWI) trading ETF's bullishly on Relative Strength Breakout and Buy signals. Our rules for entry and exit are here.
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