After months of defensive sector utility funds moving up to populate the majority of the top fund rankings, within a couple of weeks, these sector funds have dropped completely out of the rankings. As of last night, Utilities were still in the top three. After today’s trading, it is ranked 7th.
The top 5 funds are now all pursuing a similar theme. I think you’ll be able to discern what it is…
- FSPHX (Health Care)
- FPHAX (Pharmaceuticals)
- FBIOX (Biotechnology)
- FDFAX (Consumer Staples)
- FSPCX (Insurance)
Any guesses as to why the top 5 is almost all following a similar theme?
The system is currently long FSUTX (Utilities, but will be rotated out of and into FSPHX tomorrow); FBMPX (Multimedia, but will be rotated out of and into FPHAX tomorrow); FBIOX, which will be held since it is still in the top 3.
The system is up 14.5% YTD, compared to $SPY, which is up 14.8% YTD.
So yo don’t mind buying into high of the year ( FSPHX, FPHAX) ? No waiting to pull back ? Thanks Wood !
Nope, don’t mind buying the high of the year at all. That is how momentum systems work. You are likely to be buying those that are going up and selling those that are not going up as much.
Have you considered modifying your volatility indicator based on the direction of overall market. It seems to me that when the market is in a uptrend volatility is probably a good thing but in a sideways it might not have the same risk to reward ratio. In a down market hopefully your use of the 50 day sma should protect you from large drawdowns.
hank, this system actually punishes volatility. You might have already known that about it. I do like the idea of adapting to volatility but the real-time, live results of the last couple of years have been good enough that I don’t want to change anything. I try to err on the side of simple.
Like your posts on this Wood.
My ETF screen locked in on XLY at Apr month end for a May trade. My Utes are lagging as per your system but still up nicely from cost. I rotate at month end.
Thanks Jimmy. I think Utes will bounce soon.