It would seem this week is all about the Fed. It's fully expected that the Fed will cut .25 bps at the conclusion of the July policy meeting, what we are watching is the tone and indication of further cuts and how aggressive the Fed may or may not be moving forward. That said, our Macro-Monday analysis left us mostly bullish. The SPY remains up and above both moving average with on oscillator rolling up and improving moneyflow. The Bull/Bear ratio of the SPY is just below 2.0, in a sweet-spot between 1.50 - 2.50. ( chart below) The breadth of the SPY sectors is improving, with XLF remaining strongest. Meanwhile our RS analysis shows U.S. outperforming rest of world. Click on image below for all of our Macro-Monday stats.
Here are the buy and sell orders we placed Friday according to the rules of our ETF plan
Here's our portfolio holdings and unrealized gains and losses for each position.
Finally, our trading video from Friday
After today's tour of the pre-market action, we turned to managing our simulated ETF portfolio. None of our current U.S. holding were forced into liquidation, most established higher intermediate lows as well. Tomorrow we will look for new opportunities to add to our U.S. sector holdings.
While more bullish than bearish, our Macro-Monday analysis did flush out some mixed signals. We also managed our " buy the dip" simulated portfolio, using the TDA Market Forecast tool alongside Chaikin Analytics. Our performance in this simulated portfolio has been decent, with winners out numbering losers. As we approach earnings we are forced to close trades that don't meet all of our rules for holding through the announcement. Watch our video to see exactly what our criteria for holding through earnings is.
Relative Strength WEdnesday
Relative Strength Wednesday shines a light on a some mixed signals in the market. We have developed a scoring system that combines the fundamental ratings of the Chaikin Analytics app as well as technical and relative strength indicators to produce a deep weekly look at what is driving the market. Interesting that discretionary and staples land in the top 3 spots. Communications, which is a blend of new tech like FB and GOOG paired with high yield like VZ and T. Financials, despite their outstanding fundamental rating, are showing weakness on the technical side. Watch our Relative Strength Wednesday video to see our complete analysis.
Market conditions for most of 2019 are about as bullish as we've seen in the approximately six years we've been trading with Chaikin Analytics.
Our experience with extended market runs teaches us that Chaikin Power Bar ratios reaching over 2.5 warrant some caution, as the combination of positive technicals and fundamentals starts to peak across the broadest array of large cap stocks. Notice that ratios tend to hang out between 2 and 2.5, as stocks grind higher for a few weeks/months before reversing. Once the power bar differential on SPY gets above 3, we have approached in intermediate market top.
In addition to our regular look at pre-market activity, today we add to our U.S. level 1 & level 2 simulated ETF holdings. In order to add to our portfolio we were forced to make some tough decisions and forced liquidations. Our goal is to hold the best of the best, when we are out of available capital we have to eliminate the weakest holding to make room for stronger.
I love this new capability because in one click I now have access to a checklist of all the key factors that determine my entry into a stock, along with the Chaikin Analytics preferred entry timing (oscillator oversold but curling up) Right above the checklist, the EPS date is visible. Just to the left, I can check the industry group to make sure the tade keeps my portfolio diversified. While the stock pictured above fell 2% intra-day when I screen grabbed this stock, the checklist itself is pre-market along with all the Chaikin data (which is updated early in the morning every trading day).
Today we managed our ETF portfolio. We made one liquidation based on a Relative Strength breakdown of XLB. Tomorrow, we will add new positions, following the strongest sectors based on recent 3 - 6 month performance.