Weekly Signals Updates include open positions, new signals and performance of a group of six systematic trading strategies. Access to report requires Market Signals or All in One subscriptions.
Market Recap and Comments (January 18 – January 21, 2022)
Stocks (SPY) plunged 5.8% in the holiday-shortened week. Commodities (DBC) gained 1.1%. Gold (GLD) was up 0.8%. Bonds (TLT) rose 1.1%. Year-to-date, DBC is up (+5.9%). SPY is down the most (-7.8%) and also oversold.
Dow 30 long/short gained about 0.4% on the week. All strategies outperform S&P 500 year-to-date with Dow 30 long/short nearly flat and Dow 30 Mean-reversion down 2.2%.
This is an excerpt from last week’s Weekly Market Analysis:
I will start considering whether the uptrend has ended if the index falls to around 4440 for initial signal and 4275 for confirmation. If the confirmation level is reached, then possible actions include a rebound or continuation in a bear market. The first potential target of a bear market could be around 3600 corresponding to a drop of about 20% in the index. However, all these are hypothetical scenarios. No one knows what the market will do.
The S&P 500 fell below the 200-day moving average on Friday to close at 4,397.94. This could be an initial signal of a bear market but there is no confirmation yet. No one knows if the index will fall additional 18% to about 3,600. More importantly, several short squeezes could occur along the way and cause pain to shorts despite being right about direction.
In the long-term following strategies is more promising way of dealing with uncertainty and risk than trying to predict what the market will do. Obviously, recovery time and drawdown are important and diversification can play an important role in minimizing these. See this article for more details.
Strategy positions and performance as of close of Friday, January 21, 2022.
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