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Weekly Trend and Trade Review

February 10, 2017

Trader Talk

The trend momentum is a strong 70% uptrend.

We are bullish, while hedged with a small amount of TZA and TVIX, with the odds of a royal melt-up landing here similar to a bull ending peak and reversal.

Which puts the analysis in the chart below as the most likely, with the lesser probably of a 1999 repeat melt-up matched with a 1987 repeat melt-down.

The former – 1999 thing – is most likely to land later this summer, followed then by the latter – 1987 thing.

For now, steady as she goes is underway, and we need to see some technical “happening” to change things to highlight better where we go next.

The usual trading pattern when in high risk blow off bull years is shown below, overlaid over some past other blow off bull years, with the white lines to the left of the chart the NASDAQ for 2017.

As the chart shows, we have moved into the peaking area of the starting rally where the first of an expected three corrections are slated to land right here, where all three corrective swoons slated to retest the year start, zero return line.

The final Big Kahuna correction is targeting the fall this year, and has the potential to be a history making biggie, depending how high the final blow off move goes.

From a trading perspective, the trend remains up – thus holding longs remains the optimal trade – while the VIX Hedge Cycle signals danger that requires hedging those longs with a small amount of TZA and TVIX.

The 401K portfolio remains fully invested in a stock index mutual fund.

On the performance front, no change to the big picture performance chart of the Index and 401K since the last closed trade, though the second performance chart below has been adjusted to represent performance through this week for 2017.

The black line in the first chart shows buy and holding the NASDAQ index since 1973.

The purple line shows 401K performance, which trades 100% on new buys, then reduces to 50% on trend trading indicator extremes, cash on sell signals.

The solid green line shows AK bull/bear cycle adjusted performance. That bull/bear cycle indicator divides the stock market into four phases based on risk – low risk (new bull markets,) moderate risk (sideways churn that ends well,) high risk (blow off bull destined to end badly,) extreme risk (major bear market underway.)

The current stance is a high risk blow off bull (orange arrow upper portion of chart below) that is destined to end with a major bear market, though the gains seen between now and then could be spectacular.

Have a great weekend!

Current positioning for the Index/Hedge/VIX portfolio remain 94% QLD, 5% TZA, 1% TVIX.

The 401K portfolio is in a stock index mutual fund, with QQQ used for performance tracking purposes.

Performance-wise, the 401K portfolio rose 1.35% on the week, and is currently up 7.5% in 2017.

The Index/Hedge/VIX Trader portfolio advanced 2.45% this week, and is currently up 13.42% in 2017.

Kevin Wilde Kevin Wilde
Chief Trading Strategist

Portfolio Update Archive

Results are tabulated using the opening price the day following a new trading signal, and exclude commissions, dividends, or interest paid on cash balances during sell periods. Stock prices highlighted in blue are temporary - using the end of day quote the day a new buy or sell signal is generated - with the final price adjusted the following trading day when the opening price is available. Past performance is no guarantee of future success

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