October 2, 2023

We are following the plan set out in mid-September, to achieve an 80% equity exposure as this pullback completes. We're still estimating a couple of choppy sessions ahead, so no need to rush in, at the moment.

Today, we got a BUY signal for Tech (XLK). As a consequence, we are re-initiating AMD in the portfolio, while also adding to our existing position in NVDA.

Both names are helping us increase our correlation to the momentum factor (MTUM), as well, which is technically desirable.

Overall allocation to equities will rise from 68% to 71% by the end of the day.
Executing the following orders in the Sigma Portfolio at today’s close:

• BUY 2% AMD (Initiate 2% to Position)

• BUY 1% NVDA (Add 1% to Position)

September 27, 2023

In The Sigma Portfolio, we are initiating a 2% in MCD, a position with a very favourable risk-reward setup.

The goal is to raise our equity risk exposure gradually on this pullback up to 80%. We will keep adding to positions every day (or so), if the market holds support.

Executing the following trade at the market close:

• BUY 2% MCD (Initiate 2% Position)

September 26, 2023

In light of the recent market action, we are slowly allocating more risk to our portfolio. Sentiment is getting highly depressed, and we could see more weakness in the near term.

"All time highs by year end" is a bit too "consensus" among forecasters at this stage, so expect losses that would truly inspire fear in market participants.

However, the risk-reward ratio is now much better than during the summer months. The plan is to complete our risk-on allocation in the next couple of weeks, and hold this portfolio for the next 6-9 months if no more downside materialises.

Overall allocation to equities will rise from 62% to 66% by the end of the day. We are also swapping healthcare position BDX with LLY, as we expect more upside from LLY at this point.

Executing the following orders in the Sigma Portfolio at today’s close:

• BUY 5% LLY (Initiate 5% Position)

• SELL 100% BDX (Close Position)

• BUY 1% NOW (Add 1% to Position)

• BUY 2% MSFT (Add 2% to Position)

• BUY 1% NVDA (Add 1% to Position)

September 21, 2023

Due to risk controls, we need to close the position in AMD. We like the company, and its position as a competitor to NVDA and will surely revisit the position.

But for now, a STOP-LOSS has been triggered and technical downside is concerning.

Similarly, lithium producer ALB has triggered a stop. Until technicals improve, these positions will need to be closed.

Executing the following order in the Sigma Portfolio at today’s close:

• SELL 100% AMD (Close Position) - Stop Loss

• SELL 100% ALB (Close Position) - Stop Loss

September 19, 2023

The recent run-up in oil has most energy majors following suit and rising near analyst price targets. Given the extended nature of the rally, it's a fine point to take profits in Energy names (XOM in our case).

Executing the following order in the Sigma Portfolio at today’s close:

• SELL 50% XOM (Reduce Position by 50%) - Take Profits

Our overall exposure remains elevated. The weakness we are experiencing in the markets is partly explained by seasonality and partly by investor psychology.

However, there's no reason to get overly defensive at this point.

September 14, 2023

In The Sigma Portfolio, we are maintaining exposure to the same trio of asset classes (Equities, Gold and Treasuries), while being modestly leveraged. There is no need to make adjustments at this stage, but we will execute one trade in particular at today’s close:

• SELL RTX (Close Position)

• BUY 5% EXP (Initiate 5% Position)

RTX has violated our stop-loss level. After analyzing the engine powder coating issue, the lack of credibility of the management team is a major concern going forward. We will instead replace the position with EXP (Eagle Materials Inc), a similarly Industrials focused company selected from Millennium Alpha’s portfolio.

August 30, 2023

We are using the current signals as confirmation of a rally and adding to risk exposure, as a "trading position".

We will also be rebalancing Treasury exposure at today’s close so that the overall bond duration in lengthened. Swapping short term bonds (SHY) for the longer dated treasuries (TLT), while keeping the overall allocation the same, at 32%.

Executing the following orders at today's close:

• SELL 5% SHY (Reduce Position to 8%)

• BUY 5% TLT (Add 5% to Position)

• BUY 20% QQQ (Initiate 20% Position)

August 28, 2023

Initiating a 3% position in NVDA at the close today.

August 22, 2023

Our automated strategies are heavily allocating to risk exposure at today’s close, on a buy signal triggered by Monday’s reversal.

Nostromo is buying the dip in QQQ, a factor which we are interested in gaining exposure to as well. While the market has not reached "Extreme Fear" yet, it's a decent point to add equity exposure according to our risk metrics.

However, in yesterday’s newsletter, we said we would use any rally to reduce exposure. So how do we reconcile the two?

As a reminder, automated models tell us “what a computer would do”. That informs our own decision making, in line with our risk tolerance and investing goals. Today, the models are essentially telling us to go “max risk allocation” - whatever that may be, for each of us.

We’re going to thread the needle in this case, and strongly move to our equity risk allocation target, using tech and large-cap positions. Equity risk will rise from 34% currently to 52% after the orders get executed. Ultimately, we are aiming for 80% exposure to equities, expecting a rally into year end. We’ll need to get another BUY signal in order to increase exposure again.

If any of these positions fail to hold support, we'll have no choice but to reduce or cut them completely. For now, this is "just a trade".

Simultaneously, we are using this session to cut underperforming positions, and balance out sector and factor correlation in the portfolio.

Executing the following orders for the Sigma Portfolio at today’s close:

Increasing Position Sizes:

• BUY 3% AMD (Add 2% to Position)

• BUY 2% RTX (Add 2% to Position)

• BUY 2% ALB (Add 2% to Position)

• BUY 3% BDX (Add 3% to Position)

New Positions:

• BUY 5% NOW (Initiate 5% Position)

• BUY 5% FICO (Initiate 5% Position)

• BUY 6% MSFT (Initiate 5% Position)

Closed Positions:

• SELL ENPH (Close Position) - Stopped Out

• SELL BANF (Close Position) - Stopped Out

• SELL GPC (Close Position) - No longer aligns with goals

August 11, 2023

Adding to Energy names at the close on the breakout experienced by the sector itself and several well positioned stocks. Executing the following orders at market close:

• BUY 2% XOM (Add 2% to existing position)

• BUY 2% RRC (Initiate 2% Position)

Range Resources has been ranked BUY with a Price Target of $38.89 and a 13% CAGR.

August 2, 2023

In The Sigma Portfolio, we are boosting our cash levels by closing the position in Gold miners (GDX). This way, we maintain a balanced approach, with many names in the portfolio at risk-reward lows (more upside than downside).

We are executing the following orders at the close:

• SELL 100% GDX (Close Position)

Our plan is to eventually add exposure to equities on a pullback (using cash reserves and Gold), and swap short term treasuries for longer term ones, when the right signal triggers.

July 26, 2023

In The Sigma Portfolio, one of our positions has reached a Take Profit target (OMF), so we are reducing that - unfortunate that the moment coincides with an earnings call that has seen the stock drop somewhat. Simultaneously, we are adding 2% to RTX, which also fell after announcing earnings, on an engine coating issue that will impact cash flow in the short term. In our book, this is what a buying opportunity looks like. Similarly, the risk / reward for ENPH is starting to look very attractive, with a lot of negative factors priced in.

Nostromo’s intention to reduce Gold volatility will be expressed as a “take profits” order in GDX.

We are executing the following orders at the close:

• SELL 20% OMF (Reduce 20% of Existing Position)

• BUY 2% RTX (Add 2% to Existing Position)

• BUY 2% ENPH (Add 2% to Existing Position)

• SELL 40% GDX (Reduce 40% of Existing Position)

The adjustments will take our overall exposure up to 30% Long equities.

July 19, 2023

The breakout in IWM is encouraging for adding exposure to Financials.

We’ll execute the following orders at the end of the trading day:

• BUY 2% ZION (Add 2% to Existing Position)

• BUY 2% BANF (Initiate 2% Position)

Both financial stocks have a high correlation to IWM, per our Correlation Screener.

July 11, 2023

We are following Enterprise and Nostromo's lead here in precious metals positioning, recognizing the correct technical setup for Gold and Gold Miners (series of higher lows, potential fundamental catalysts). We'll discuss more in tomorrow's Portfolio Rebalance Article.

Executing the following order at today's close for the Sigma Portfolio:

• BUY 5% GDX (Initiate 5% Position)

July 05, 2023

In the Sigma Portfolio, we are executing the following orders at the session's close, adding 1% to each of these positions. Technically, we are buying the dip in these names:

• BUY 1% AMD (Add 1% to Position)

• BUY 1% RTX (Add 1% to Position)