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Home Portfolio Allocation Archive for category "Long / Short Position" (Page 2)
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Here We Go Again

My market risk indicator is warning again this week. That means a mid term volatility hedge on all the portfolios or going to cash. Below are the current portfolio allocations. Long / Cash portfolio: 100% cash Long / Short Hedged portfolio: 50% long and 50% hedged with mid term volatility (an ETF/ETN like VXZ) Volatility Hedged portfolio: 50% long and 50% hedged with mid term volatility. My core market risk indicators are also dropping fairly quickly.

 
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Market Risk Warning Clears

My market risk indicator finally cleared its warning that was issued on 2/9/2018. We didn’t get the further downside that I expected (based on the odds), but our longs performed well enough that it blunted the loss from the volatility hedge (which held up relatively well due to a volatile month). My portfolio suffered a .6% loss. I feel it’s money well spent to sleep well at night when the market is in question. Most of my core market health indicators have strengthened since the last update. However, my core measures of risk still haven’t recovered. This measure is longer term in nature than my market risk indicator so it tends to take longer to clear. With everything added up the portfolio allocations are now as follows. Long / Cash portfolio: 80% long and 20% cash Long / Short portfolio: 90% long high beta stocks and 10% short the S&P 500 Index (or use an ETF like SH) Volatility Hedged portfolio: 100% long

 
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Market Risk Warning

I mentioned on Monday that my market risk indicator was warning. It still hasn’t cleared and it doesn’t look like it has a chance to clear by the end of the day. As a result, I’m calling a warning signal. Market risk warnings come in two varieties. Ones that last for only a week or two (a false signal) and ones that last for several months (a significant correction or bear market). This signal has the odds tilted to more downside because the Bullish Percent Index (BPSPX) is below 60. When it is below 60 and my market risk indicator is warns the odds increase substantially (3 times more likely) that we’ve still got at least another 10% drop from here before we make an ultimate low. This isn’t a prediction, merely stating the odds based on history. This signal changes the portfolio allocations as follows: Long / Cash portfolio: 100% cash Long / Short portfolio: 50% long high beta stocks and 50% long midterm volatility (an ETF/ETN like VXZ or VIXM) Volatility

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All Green Again

Over the last week, I saw broad based strength in my core market health indicator categories. My measures of market quality moved back into positive territory. This means that all of the portfolio allocations are now 100% long.

 
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Consolidation Likely

Last week, I mentioned that it might be time for some consolidation. This week, it appears more likely. My measures of market quality have dipped below zero and my measures of market trend are dropping pretty fast. This indicates that we should get some sideways to down movement over the next several weeks. I suspect that the market has at least one more good rally in it, but we’ll need a pause before it happens. The consolidation will most likely be due to rotation out of mega cap stocks into smaller stocks as a “sell the news” event when/if the tax plan passes. With market quality falling below zero the core portfolio allocations change as follows: Long / Cash portfolio: 80% long and 20% cash Long / Short portfolio: 90% long high beta stocks and 10% short the S&P 500 index Volatility Hedged portfolio: 100% long (since 11/11/2016)

 
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This Should Be It

Over the past week, my core market health indicators mostly improved. Most significant is that my measures of market strength have now moved above zero. This changes the core portfolio allocations as follows: Long / Cash portfolio: 100% long Long / Short portfolio: 100% long high beta stocks Volatility Hedged portfolio: 100% long since 11/11/2016   Another thing of note is that we’ve been seeing broad based buying of the stocks in the S&P 500 Index (SPX) again. If the ratio between the SPX Equal Weighted Index (SPXEW) and SPX can get back above its 20 week moving average it will be a very healthy sign. Since the first of the year, investors have favored mega cap stocks. We want to see the smaller stocks in SPX rallying faster than the mega caps as it will indicate broad based buying and increased tolerance for risk. Add to that, SPX looks like it’s now got a clear break above 2500 and we’ve got the recipe for a rally.   Conclusion It looks

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Weakness Without Much Fear

Over the past week, most of my core market health indicators fell. Most notably, my measures of market strength went negative. This changes the core portfolio allocations (below). Another thing that was interesting this week is that the fear everyone is talking about isn’t showing up in my Market Risk Indicator yet. The most sensitive components of that indicator think the saber rattling this week is a non-event event. That’s not to say a negative risk reaction won’t materialize, but until it does we have to operate under the assumption that this event will quickly fade as a market moving issue. The new portfolio allocations are as follows: Long / Short Hedged portfolio: 90% long high beta stocks and 10% short the S&P 500 Index (or use the ETF with symbol SH) Long / Cash portfolio: 80% long and 20% cash Volatility Hedged portfolio: 100% long (Since 11/11/2016) One thing you can keep an eye on is the bullish percent index (BPSPX). It is still a good distance above my

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All Green

Over the past week, my core measures of the economy joined the other categories and finally got into positive territory. This changes the core portfolio allocations to the the following. Long / Cash portfolio: 100% long Long / Short portfolio: 100% long high beta stocks Volatility Hedged portfolio: 100% long (since 11/11/2016)

 
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Ready to Launch

Over the past week, most of my core market health indicators rose dramatically. It appears that market internals are preparing for a move higher. As I mentioned last week, it looks like the current dip is merely rotation before a move to all time highs rather than the making of a long term top. The measures of market quality and strength moved into positive territory this week. That changes the core portfolio allocations as follows: Long / Short hedged portfolio: 90% long high beta stocks and 10% short the S&P 500 Index (or use the ETF with symbol SH) Long / Cash portfolio: 80% long and 20% short Volatility Hedged portfolio: 100% long since 11/11/2016

 
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Trying to Break Higher

Over the past week, my core market health indicators mostly moved higher. With the exception of market risk, they’re compressing around the zero line. This usually happens near inflection points where the market breaks hard one way or the other. Market risk isn’t showing up so that gives the edge to the bulls. The current dip looks much more like a rotation before a rally than a long term top being made.   My measures of market trend moved into positive territory this week. As a result, the portfolio allocations have changed as noted below. As always, use your own risk tolerance to structure your portfolio. Long / Cash portfolio: 40% long and 60% cash Long / Short portfolio: 70% long high beta stocks and 30% short the S&P 500 Index (or use the ETF with symbol SH) Volatility Hedged portfolio: 100% long (since 11/11/2016)  

 
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