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Daily Trend and Trade Review

February 21, 2017

Trader Talk

The trend momentum power rating remains a strong 70% uptrend.

The energizer bunny rally keeps on going and going, and that’s fine with us, with gains on our longs easily swamping the losses on the hedges, though the VIX hedging products appear under accumulation even during rally days like today, as if the dumb money is finally moving into stocks, while the smart money loads up on hedges.

The weekly ADX (maroon line) is trending up, suggesting this melt-up is for real, and overbought conditions will stay in place till that momentum monitoring line turns down.

To counter that, while the daily ADX (grey line) also trends north, it has reached the fourth highest level in over two years, with past such spikes to this level highlighting trend turning points as shown in the chart.

That grey line suggests we are a day or two from hitting a significant peak.

The trend trading indicator (green line bottom of chart) is poised to cross above the white high risk – exit – line, should the melt-up continue, while the TZA and TVIX hedges remain in place ready to profit should a corrective swoon land next.

Till something gives, and the indicators move to trigger a change in positions, the optimal allocation remains as highlighted below.

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

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

Kevin Wilde Kevin Wilde
Chief Trading Strategist

Portfolio Update Archive

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