Now that I’ve provided my short strategy, and disclosed that my bias at the moment is to be net short, it’s probably time to share my long strategy. Here’s where I like utilizing a “system”; some type of algorithmic approach that doesn’t share any bias or emotional baggage which limits us mere humans in so many of our endeavors.
My system is simply an agglomeration of numerous technical metrics using a weighted point system for each. I’d like to add fundamental metrics to it one day, but what the hell – I’ve been busy. The system ranks each sector and stock in the S&P 100, and uses intermarket analysis to compare each sector and stock to each other sector and stock within the index. It’s proprietary and one day I’ll publish my website and make truckloads of money similar to Le Fly.
Until then, here’s the sector rankings:
- Information Technology
- Consumer Discretionary
- Financials
- Telecommunications
- Industrials
- Materials
- Consumer Staples
- Energy
- Health Care
- Utilities
Nothing surprising there, but what I like to do is then evaluate the top ranked companies in each of the top 5 ranked sectors:
- Information Technology: MSFT, GOOG, FB, ACN
- Consumer Discretionary: AMZN, HD, DIS
- Financials: V, BK, JPM
- Telecommunications: None
- Industrials: GE, RTN, LMT, BA
Now I try to fit the current market “narrative” into what makes sense for the above sectors and companies to continue to outperform. That being said, Financials and Industrials stick out. The current narrative is that the Fed is going to raise rates; that will continue to provide a lift for the Financials. Industrials are an easy choice given the power and political might of the military industrial complex, and the war escalations in light of recent events.
Check out the long term chart for Visa (V):
Visa looks destined for $100. That’s a good one for the long term portfolio in my opinion.
In regards to Industrials, each of the companies listed above have done well, but I favor Boeing’s (BA) chart, see below:
Here’s the Trade:
If equities close above the recent highs of approx. 2067 (SPX), my short bias is probably wrong. I will then trim the short positions that aren’t working, and go long Visa and Boeing to hedge my overall portfolio for a probable melt-up into either Fed Day (Dec. 16), or the end of the year.
As I type this post, we are at 2066 and change (SPX), I will employ this strategy if we close with any strength today.
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Interesting. Thx.