Q2 2024
June 28, 2024
The position in POWL has violated its stop-loss, so we need to cut it. We will replace its exposure with the SPDR S&P Regional Banking ETF.
The overall asset class allocation of our portfolio will not change.
The following orders will be executed at today’s close:
SELL 2% POWL (Close Position)
BUY 2% KRE (Initiate 2% position)
In total, our equity exposure will not suffer any changes, remaining slightly overweight, at 63%, same as last week.
June 11, 2024
Today's trading had the explicit purpose of removing under-performing positions from our portfolio, and according to ou latest analysis, that includes positions which are heavily correlated with small and mid caps (IWM & MDY).
However, we do not want to reduce equity allocation within the portfolio, so we need to re-distribute the capital within positions that we already own. Finally, we will add a starter position in Diamondback Energy Inc (FANG), benefiting from the recent pullback.
The following orders have been executed (the Trade Alert was issued yesterday).
Closing:
Adding:
BUY 1% QCOM (Add 1% to existing Position)
BUY 1% GOOG (Add 1% to existing Position)
BUY 1% AMAT (Add 1% to existing Position)
BUY 1% CL (Add 1% to existing Position)
BUY 1% VRTX (Add 1% to existing Position)
New Position:
BUY 3% FANG (Initiate 3% Position)
In total, our equity exposure will not suffer any changes, remaining slightly overweight, at 63%, same as last week.
June 6, 2024
With a resilient market pushing higher, we need to cautiously increase equity exposure toward our target. We’ve already increased treasury allocations yesterday via adding 6% to TLT, and today we are performing some more portfolio actions. Below, you’ll see an example of our rebalancing mantra: “Buy what works and sell what does not. Only losers add to losers.”
First of all, we need to close positions which are not working (similar to pruning a garden and removing the weeds). In our case, one of these positions is Snap-on Inc. (SNA).
Then, we’ll add 2% exposure to XOM (on the dip) and META (on a level breakout). Both of these stocks have been working for us, generating positive returns. We are initiating a position in Millennium Alpha position POWL, also on a -20% dip. And to round up our exposure increase, we like Alpha’s VRTX pick as well, and think that upside is considerable on the stock. Our target for VRTX is $545.
To sum up, we are executing the following orders at today’s close:
SELL 100% SNA (Close Position)
BUY 2% XOM (Add 2% to Position)
BUY 2% META (Add 2% to Position)
BUY 2% POWL (Initiate a 2% Position)
BUY 2% VRTX (Initiate a 2% Position)
June 5, 2024
We are following Nostromo's lead and buying the breakout in treasuries, by adding 6% TLT to our existing position. Given the deteriorating economic data and good risk-reward for bonds, coupled with a short term BUY signal, this addition makes sense.
Executing the following orders at today's close:
BUY 6% TLT (Add 6% to Position)
May 22, 2024
In the Sigma Portfolio, we’ve been holding a rather large placeholder position in the guise of IWM (iShares Russell 2000 ETF). This position has the highest correlation with Consumer Discretionary (XLY), so it needs to be reduced. Instead, we have used the Millennium Alpha Ranking System to screen for 2 stocks which fit the correlation requirements and also have great fundamentals and appreciation potential: MPLX LP (MPLX) and Colgate-Palmolive Company (CL).
We are executing the following orders at today’s close:
SELL 50% IWM (Reduce position to 4% of NAV)
BUY 2% MPLX (Initiate a 2% position)
BUY 2% CL (Initiate a 2% position)
May 8, 2024
With plenty of dry powder to deploy, our first move will be to swap short term bonds (SHY) for longer term ones (TLT). This will keep our overall bonds exposure identical, but lengthen the maturity of the treasury portfolio.
We would like to take profits in both BPOP and Value Stocks (IVE), as both of these rather defensive positions have done their job in our portfolio and saved us from more meaningful declines. Instead, we would like to add to Momentum / Tech / QQQ exposure, using a couple of picks from today’s Millennium Alpha rebalance. We will also add to the position in PANW as well as URI, SNA and MCO. Our overall equity risk exposure will go from 50% last week to 60% today.
We will also add a starter commodity position in UNG and attempt to benefit from an unusual technical risk-reward setup. Commodities exposure will go from 2% to 4% in the overall portfolio.
At today’s close, we will execute the following orders:
BUY 6% TLT (Add 6% to Position)
SELL 100% SHY (Close Position)
SELL 100% BPOP (Close Position)
SELL 100% IVE (Close Position)
BUY 2% UNG (Initiate 2% Position)
BUY 2% PANW (Add 2% to Position)
BUY 3% QCOM (Initiate 3% Position)
BUY 3% GOOG (Initiate 3% Position)
BUY 3% AMAT (Initiate 3% Position)
BUY 4% META (Initiate 4% Position)
BUY 2% URI (Add 2% to Position)
BUY 2% SNA (Add 2% to Position)
BUY 2% MCO (Add 2% to Position)
April 29, 2024
We are following up today's Weekly Preview missive by opening a couple of starter positions and raising our allocation more in line with our target.
Importantly, two of these companies have dipped recently and reached some attractive risk-reward levels.
None of them are too correlated with the market or with risk-on factors like QQQ and MTUM. But our previous stance was too defensive for the current environment, and way below our model's exposure.
Executing the following orders at today's close:
BUY 2% URI (Initiate 2% Position)
BUY 2% MCO (Initiate 2% Position)
BUY 2% SNA (Initiate 2% Position)
In total, our equity risk allocation will be raised from 44% now to 50% after the close.
April 17, 2024
We’ve run our portfolio on the defensive side for a while and it has paid off. Our bonds allocation is still large, but 9% of that is made up of short term treasuries and corporates. We are reluctant to close TLT out just yet, since it has not yet violated its technical stop and is highly oversold.
GPN, on the other hand, is a position that has not worked and needs to be closed out. Instead, we will pick up Palo Alto Networks (PANW), a top ranking cybersecurity stock. We will also increase allocation to an energy position which has worked recently (though not spectacularly) - Dorian LPG (LPG). Overall, the equity risk allocation in the portfolio will remain unchanged.
We are executing the following orders at today’s close:
SELL 100% GPN (Close Position)
BUY 3% PANW (Initiate 3% Position)
BUY 1% LPG (Add 1% to existing Position)
April 10, 2024
For now, we are almost content with our positioning. The sole adjustment of the day will be the close of our position in Foreign Developed Markets ETF (EFA), on account of a stop-level violation.
We are executing the following orders at today’s close:
SELL 100% EFA (Close Position)
April 9, 2024
In Monday's Weekly Preview we wrote about SPY's break of the 20-DMA:
By itself, this one-day break is not enough to get us to start selling in a hurry. Since there have been a couple of occasions where SPY bounced after closing below the 20-DMA, we also need to get “confirmation” now. Usually, a clear trend / level break is confirmed either when a rejection occurs from that level, or when the break is maintained for several sessions.
As today's session draws to a close, it looks like we are getting the confirmation we were looking for. It's time to sell out of those positions which are not working.
Executing the following order at today's close:
In total, our equity risk allocation will drop from 52% now to 47% after the close.
April 5, 2024
With a neutral landscape for equities in the short term (and far too little reward longer term), we are not in a hurry to make any major changes to our stocks portfolio. In order to reduce exposure on the latest technical break, we also need more confirmation, which we don’t currently have. SPY needs to either re-capture its 20-DMA level or get firmly rejected from it. We will be performing some normal housekeeping, however.
We do need to take profits in Gold and reduce exposure to treasuries, however.
Gold (GLD) has done all it can do for us in the current environment. It’s time to take profits and close the position entirely. Similarly, our bet on Valero Energy Corporation (VLO) has paid off entirely. On the other hand, the position in Progress Software Corporation (PRGS) has not worked out as expected and we need to honor our stop-loss.
Treasuries have failed to trade above key resistance, so we need to adjust the TLT position to a lower weight until the next breakout attempt.
We are executing the following orders at today’s close: