Weekend Strategy Review April 14, 2019
Posted by OMS at April 14th, 2019
The markets rallied hard on Friday. The really was the Big Move predicted by the small change in the A-D oscillator.
The Dow gained 269 points on Friday, closing at 26,412. It was up 13 points for the week. The NASDAQ gained 37 points on Friday and was up 45 points on the week.
The markets have now broken out of their Wave 4 consolidation patterns and appear to be developing a major Ending Diagonal pattern for Wave 5 up. that will eventually take them to higher levels. The Dow should reach the 27,000 level with 27,500 possible. Students should realize that the rise to 27,000+ will NOT likely be straight up. This is because IF the Dow is headed toward 27,000+, it will more than likely do it in a series of up-down-up moves that will form the Ending Diagonal. Students should also realize that Ending Diagonals are termination patterns that usually mark the end of a significant move. This is NOT an immediate concern as the indicators and Lists are far too Bullish to be worried about a Bear Market for now. On the other hand, we know that Ending Diagonal Patterns can truncate at any time, so the Dow does not have to go to 27,000. This is why students should pay attention to the market timing signals on the cockpit.
My strategy for trading the current market is simple. Basically, I plan remain Bullish until the indicators change. That’s it. However, because I believe the current pattern will end at higher levels, I will be looking opportunities to buy additional shares when the market pulls back, like it did this week, and sell those shares when the market becomes overbought. In other words, I will hold a basic position until the indicators turn negative and trade a smaller position based on the 2-period RSI. This is my basic Rifle Trading Strategy.
There were NO CHANGES to the market timing indicators after yesterday’s session. The Dow, NASDAQ, SPX, and Russell 2K remain on Buy Signals.
The Sector Ratio increased to 24-0 positive after yesterday’s session. The Strong List was led by Real Estate, Semiconductors, Technology, Transportation and Cap Goods. There were NO weak sectors. As I’ve been saying, the fact that the Sector Ratio remains so strong supports the Bullish case for higher prices.
Model Portfolio: There were NO Changes to the Model Portfolio after yesterday’s session. The Model continues to hold a full position in DDM (538 shares), a full position (370 shares) in UWM, the positive ETF for the Russell 2K, and a half position (635 shares) in UCO, the ETF for Crude Oil. The remainder of the theoretical $100,000 Model Portfolio remains in cash ($36,861).
The Model Portfolio has gained $4,582 since inception, even though the conditions that the Model was designed to take advantage of (a trending market) have not occurred to date. BTW, the IRR for the Model based on $100K to date is 4.54 percent which translates to a 42.24 percent annualized IRR. However, because the amount invested has never exceeded 63,139 (no gold position), the IRR based on that number is about 7 percent vs. 4.54 percent. The 4.54 percent return was produced with a Treynor ratio of 42.49 percent. The Treynor ratio is used to measure the risk-adjusted return of a portfolio. The higher the number the better. A ratio of 42.49 is pretty good! :>)
The Model still does not hold a position in gold as it continues to wait for the timing indicators to generate a Buy Signal. Be patient.
The Model Portfolio is being shown for educational purposed only. The Buy/Sell actions in the Model Portfolio are made based on technical indicators that can and do change frequently and should NOT be considered as recommendations for trading an actual portfolio. Any gain or loss in the Model Portfolio should not be used to predict future performance of the Model.
That’s what I’m doing,
Marcia and I got back from our cruise late yesterday. We had a great time on Celebrity’s Reflection as it visited a number of Caribbean islands including the country of Columbia. I must tell you that I really liked the ‘vacation schedule’ where I only published Comments on Tuesday and Thursday, and the WSR on the weekend, with updates to the Model as appropriate. The reduced schedule gave me more time to focus on the markets, patterns, indicators, and the Model. I think I’m going to adopt the reduced schedule as my regular schedule starting later this summer once we have enough time to fully evaluate the Model. I would appreciate your input on this.
Market Signals for
|DOW||POS||01 Apr 2019|
|NASDAQ||POS||13 Mar 2019|
|GOLD||NEU||09 Apr 2019|
|U.S. DOLLAR||NEG||11 Apr 2019|
|BONDS||NEU||01 Apr 2019|
|CRUDE OIL||POS||26 Mar 2019|
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All of the commentary expressed in this site and any attachments are opinions of the author, subject to change, and provided for educational purposes only. Nothing in this commentary or any attachments should be considered as trading advice. Trading any financial instrument is RISKY and may result in loss of capital including loss of principal. Past performance is not indicative of future results. Always understand the RISK before you trade.