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Daily Trend and Trade Review

April 11, 2017

Trader Talk

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

The trend remains up, while the Hedge indicator (light blue line bottom of chart) continues to signal hedging longs is called for, with the daily ADX position suggesting a hard and fast move is coming in the next day or so.

History shows the daily ADX (grey line) can only fall so low before it turns up and heads north, with the lows in the chart indicative of just how low that indicator can go before hitting bottom and turning up.

A falling ADX signals weak momentum with the trend – thus expect sideways churn when the ADX is falling - while a rising ADX signals a hard trend move underway – thus expect stocks to go “somewhere” different than the recent trading range when the ADX is rising.

Since the weekly ADX (maroon line) continues to trend up, we may be looking at another surging rally to new highs, and if so we expect to be locking in some QQQ and QLD profits as the trend trading indicator (green line) crosses into the high risk exit zone.

The dotted red line is my expectation if we drop here without hitting new highs.

Either way, trade the opposite of what happens next is the way to go.

For now, holding longs while hedged with a small amount of TZA and TVIX remains the optimal allocation, where we expect to adjust these positions on the next big move stocks make.

Current positioning for the Index/VIX/Hedge Portfolio is 94% QLD, 5% TZA, 1% TVIX. This portfolio is up over 21% in 2017.

The 401K portfolio is in a stock index mutual fund, with QQQ used for tracking purposes. This portfolio is up over 11% in 2017.

Next update after the markets close Wednesday.

Kevin Wilde Kevin Wilde
Chief Trading Strategist

Portfolio Update Archive

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