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 24 – January 28, 2022)
Stocks (SPY) gained 0.9% amid rising volatility. Commodities (DBC) gained 1.5%. Gold (GLD) plunged 2.3%. Bonds (TLT) fell 0.3%. Year-to-date, DBC is up (+7.5%). SPY is down the most (-7%). DBC is overbought and High Yield Corporate Bond (HYG) is oversold.
Dow 30 long/short strategy soared 3.4% for the week primarily due to gains in long AXP and short CAT. This strategy is up 3.3% year-to-date and is providing some partial hedge as was intended. All strategies outperform S&P 500 year-to-date but are in the red other than Dow 30 long/short.
Last week I wrote:
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 confirmation was received followed by a rebound on the last day of the week. The S&P 500 ended the week down 7.7% from all-time highs and 7% down year-to-date. In the last 15 minutes of trading on Friday the market rallied towards the 200-day moving average but the index closed slightly below it for the week.
Last week I also wrote:
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.
Large corrections and bear market cause pain due to short squeezes and large declines. Experience isn’t enough to deal with randomness in price action because every market regime is different. Strategies aren’t a panacea but offer higher chances of navigating the waves while minimizing risk and loss. No one knows what will happen next week but one thing is almost certain: most discretionary traders will lose if chop continues. Not all strategies will profit but a good mix of strategies could offer better chances of success. This is what we try to achieve with the weekly strategies.
Strategy positions and performance as of close of Friday, January 28, 2022.
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