SD-2020 TRADING WITH THE TIDE

[sd]

7-6-20-m Tech index again led +1.44% and stops were not executed- I will adjust tighter again- knowing I am too close for any slight pullback- but it's locking in profits when it happens- I added 150 shares to the ARKG position- which is finally showing some momentum-
The fact that none of my tight stops did not execute today is surprising- While pleased with being long, I recognize that this seems unsustainable and is based on momentum alone-
Gold- and GDX broke higher again- and as noted on Fast Money- Silver -SLV- and PAAS broke higher-
Some of the spec stocks- NIO in the electric space- a qiuick double in the past week- Not a position unfortunately- but might be a consideration - China electric cars-
NKLA a purely hyped alternative energy play- total gamble - not a position-
Plug power- no opinion-
Pot stocks- traded TOKE a while back - cannot find a tighter base than where it is presently- A very low risk trade that I'm not bothering with- but this is ideal from a controlled Risk trade- If it manages to make a breakout- it may be of interest

Emerging markets breaking out higher this week- likely a faster recovery from the virus, a lower PE ratio, and potentially higher growth prospects-
I held KWEB and sold it off a while back- and it is now breaking higher - Tcehy, BABA, JD all are momentum moves higher- I think the internet/web theme makes sense across the globe as these companies are all breaking out- I will likely consider to Buy Kweb again..... in the IB account when cash frees up from the Snap trade-

[sd]

Friday ended with mixed results in the portfolio- The VPU position had stopped out earlier in the week on a large red bar for a small loss, and today closed slightly higher-
I had today off- and planned to make some adds with some cleared trades, but got busy- and -while picking up a new truck for the Company, bought a used Dodge Ram as a back up personal vehicle. I was considering to follow NIO, PAAS, and GDX intraday, but got back after the Close-
Futures were in the Red at 6am, but positive news from GILD's drug benefical results with the virus, caused the markets to turn net positive- As I review today's individual performance- I am surprised that the ARKG position closed with a 2nd lower day- ARKQ breaking out higher and ARKW also making a new high for the year. We are extended here, the past week's momentum shows price above and a wider than average gap in the emas that likely will see a retracement .....and a good place to consider tightening stops-

[sd]

Reading some articles in ETFDB.com, ETF.com


etfdb.com/disruptive-technology-channel/genomics-long-term-trajectory-highlights-arkg/
Presently, I am overweight in ARKW- which has been on an equal trajectory higher with ARKK, and holding positions in ARKK, ARKG, ARKF as well.
Florida just reported an added 15,000 Covid cases overnight- and the spread there seems epidemic - If this is what Texas, Arizona is also facing,
How do we manage to get back to Normal unless enough people get the virus so that we develop "herd immunity" which will come at a steep price for
those most susceptible.

[sd]

2 STEPS BACK: Lost 2% in net Port value in yesterday's decine- and numerous stops were executed- I tightened the remaining stops- looking to see if the weakness can push prices down so I can consider a reentry.
Timely article -on price being narrowly extended with Tech-
seekingalpha.com/article/4357982-this-is-nuts-again-reducing-risk-tech-goes-1999?utm_medium=email&utm_source=seeking_alpha&mail_subject=must-read-this-is-nuts-again-reducing-risk-as-tech-goes-1999&utm_campaign=nl-must-read&utm_content=link-0

[sd]

MRNA posting positive 2nd stage vaccine results- Markets optimistic- Futures up-
I've got limit orders in for the ARK positions below yesterdays closing prices- ArkW splitting orders at $75, $72 ,ARKK,ARKF, ARKG

[sd]

Repurchased positions in the Ark funds today, as my lower limits weren't even close- But, it Feels like Tech has topped - and momentum has clearly slowed- based on the concept that the smart money is now looking to the undervalued industries to out perform in the recovery- The decision to reenter back into the ARK Funds today close to where I stopped out- chasing ARKG at a higher price move though. Also bought a small position in MRNA in the IB account- will hold this for the time being, although it has pulled back lower at the Close and is a losing position-
Interesting in chasing momentum- particularly the pre market news- and finding that you got it wrong- Momentum fizzled on the MRNA trade - at least for the initial entry- But i'll hold the small position to see where it goes-

[sd]

7-16-20
Futures down with Nas down pre-market -1%+ Going back into the ARK funds yesterday as they held the pullback may prove to have been premature indeed.
The decision today is to put in additional lower limit orders vs reacting to today's weakness- During the rally off the March lows, Using ARKK as an example- has seen price retrace as deep as back to The 20 ema. and previously the 30 ema. EMA's spread are at an all-time width - due to the recent up momentum, so a wider pullback could be there- Both ARKW and ARKK had intraday ranges of -10% from the high set this week. would seem to be a good target level to dollar cost average the present positions- 14k available in the Van Roth to set those orders-
will target ARKK @ $72.00 ,ARKW @ $83.00.

[ira85]

The article "This Is Nuts... Again. Reducing Risk As Tech Goes 1999" is very interesting. If I understand him, the multi-year out-performance of big cap tech has desensitized us to high valuation for these companies. It's been years in the making, but at some point investors will say, "this is nuts," big cap tech will fall from grace, and new leadership will arise. That will happen, but no one knows when. So knowing the big correction is coming is of no practical use. Instead of trying to use this insight, you will focus on the ARK funds, based on their relatively recent performance, recent compared to Apple, Google, Facebook, et. al. Smaller, brighter future prospects. You will get out of them if they head south. That's were the stop loss and limit orders come in. So there is no reason to fear the ARK funds will experience that correction tomorrow. You've limited your risk ahead of time. Is that fairly accurate?

I'm not sure I understand the dollar cost average target, e.g. ARKK @ $72. You are expecting to see it dip that low in the next few days and you will have buy orders to get it while it's marked down. Right? I hope to better understand your strategy. I've been afraid of high fliers like ARK and Tesla. Your strategy may help reduce fear as well as risk. - ira

[sd]

Hey IRA,
I'm not sure I understand the dollar cost average target, e.g. ARKK @ $72. You are expecting to see it dip that low in the next few days and you will have buy orders to get it while it's marked down. Right? I hope to better understand your strategy. I've been afraid of high fliers like ARK and Tesla. Your strategy may help reduce fear as well as risk. - ira

The ARKK and I think ARKQ funds each hold a 10% exposure to TSLA- Woods doesn't view TSLA as simply a car company per se- and gives it a high valuation and exposure in the Fund-
While I would agree that several of their funds seem to be "High Fliers" - the outperformance simply justifies the Risk associated with owning something with high momentum. Let me add that by holding a Focused fund-Multiple exposures to other companies. I am not totally at Risk as I would be if I owned TSLA only. Similarly, the ARKF has exposure to some Bitcoin- but also many other new financial companies in the financial sector- so that a loss or downturn in bitcoin is offset by gains in the other companies and doesn't crush the Fund itself because one position it owns sees a decline in value, earnings etc.
Yes, having a stop-loss in place does reduce Fear- Particularly once the stop can be moved to above the cost of the entry- and so the question to deal with- is where do you set a stoploss-
and a tight stop-loss nets more of the gain, but also may simply get whipsawed out -(Like this past week's action), where 1 or 2 wider volatility days see price decline enough to generate a sell- but then they close higher vs declining further- I essentially locked in gains on the other positions with the stops- but since price failed to decline significantly lower, I repurchased- possibly at a bit higher price than where i sold- Essentially I averaged a 2.5% decline in account value from the all-time high- as I stopped out- and I would have liked to have been able to repurchase at a 4 or 5% lower price. Didn't happen yet- so My reentry at these levels is now higher than my prior entry- but in reviewing the potential for periodic pullbacks since the March lows, a 10% swing is not uncommon . But Price did not go far in that direction , the choice was to reenter- but not the entire allocation- keeping some cash to buy at a discounted price - And that would essentially reduce my present cost of reentry slightly- That's assuming that I do not use the same tight stop ratio on the present positions- and was willing to see those positions decline in value- I have to ask myself if I would essentially be comfortable with a 10% position decline in those funds- which now only average 20% of the net port, but have historically provided the vast % of the net growth this year.
In this instance, my ARKQ position did not hit it's stop- but came close. It also has closed today at an all-time high-
I also bought (repurchased) the stoic VPU today as it made a breakout above the base- Potentially it provides some upside growth momentum plus dividends-
So, I don't have all the eggs into high momentum names- but with the lack of growth in bonds, And the S&P 500 -SPY- and the DOW- DIA not able to recover to the Feb highs- and "Value"
seeing an even harsher decline- QQQ's is where the momentum is -in Tech - and I think it's prudent to put a decent portion into what's performing well, and even out performing-
One could simply compare sector performance and reallocate their assets on a monthly basis % wise to those sectors favoring us with up momentum-
The PERF function on the bottom of the stockcharts chart page - or Summary page on the charts adjusted to weekly gives a good way to compare sectors.
Computer is giving me issues and I seem to have a conflict with the ShareX program I was using recently- or I'd demonstrate with a chart or two.
My approach is certainly not for everyone - but with commissions not being a factor these days, one can take a series of small trial positions without putting a lot at Risk- just to ease into the learning curve.... Since I've been dabbling with this for a while, I totally understand I will have both winning and Losing trades- but believe that -over time- my approach that stays concentrated primarily on positions that are in uptrends keeps me on the right side of the market- It took me years to understand that simple fact of Physics- The Trend is your friend- until it rolls over.
Have a good weekend!

[ira85]

Thanks for the explanation. I too had computer problems this weekend. I think I was a victim of a hacker posing as a tech support guy. After at least an hour, maybe more, of "fixing" and "cleaning up" I don't know what he did but it was too much work for the simple reason I called. My local computer guy suggested the safest thing was to replace the hard drive. So whatever was done will be gone. I start over with a new machine. There's a lot of work to be done to install programs and hardware and get my email working. I am painfully slow of foot and mind. I don't look forward to the job ahead. I'll probably spend the next several days getting this cleaned up.

I hope you have a prosperous week. Good luck -ira

[sd]

7-20-20 Big day for tech- Another vaccine proved positive today- ARKG making a new high today, as well as ARKK, ARKW, putting me within 1% of a port high. ARKF also coming Close ....
With the positive moves higher today, it also allows for stops to be pulled up under the past week's basing action-
The Fed action supporting the markets as we go further into 2020; the extended Tech sector continues to see inflows ....
Part of a momentum approach is the need to be able to identify which area of performance is doing the best- broadly speaking, The premise behind momentum is the Brian Livingston thesis- for his market approach- Taking that approach 1 step further- you put more assets into that which is working, and less into an underperformer-
I wish I could add a chart to illustrate- but perhaps it's on the reader to do their own comparisom-

When I take a performance chart from the start of 2020, and I use the S&P 500 Value fund - (a good Buy in times of duress you would believe- and you would be WRONG) IVE, The S&P 500 -SPY, The Dow Jones largest industrials DIA-

Would you be disappointed to learn that the Value fund -IVE- is DOWN -15% for this year! after a decline of -36%!
The Dow Jones - through DIA- is Down -7% YTD- after a decline of -34% !
The S&P 500- SPY- is net positive about +1%- after a decline of -30% !

I think it is important to understand that "VALUE" is truly in the Eye of the beholder- and this year Value was the underdog on the way down and remains so.

Conversely, Let's look at the broad Tech sector- through the QQQ's Up 24% YTD with a -20% decline from where it had started the year during the March decline.

NOW, consider comparing the performance of the various ARK funds-
The best performer YTD in 2020 is the ARK Genomics fund- Up + 70+%
ARK Web and ARK innovation are both up + 65% YTD ,
ARK fintech - ARKF, and ARK industrial ARKQ are up +40% YTD.

Now Compare the performances from the March 23 lows:
If you bought at the very low, the S&P value is now up 20% , The S&P Dow up 28% and the SPY 32% Not too shabby a return from the absolute Lows- and impeccable buying!

But, If you had bought what was leading since the start of the year, ARKK, ARKW, ARKG all over +100% - That's 300% better performance than SPY....

Just investing in the broad Tech sector- QQQ's saw gains of + 45%

This illustrates the value of following momentum and sector rotation- So far, Tech continues to be the outperformer and should be overweighted.

[sd]

Just saw your post about your computer issues IRA- Lots of tech scams out there- as well as phone scams- Just had Social Security call me today telling me my ID had been stolen- and Fraud committed on my SS ID....All a scam to get your personal info - I'm Personally frustrated with computer issues that I cannot seem to figure out- including 5+ years of family photos - that no longer can be found on the computer....after a computer upgrade- ...Still there in cyber space I assume...
Well, the Tech sector is under pressure today, and closed down -1% . Perhaps the predictions of Tech being too extended will come to fruition in the week(s) ahead.
Added to my positions today- ...

[ira85]

Wow!! Those are some big numbers racked up by ARK funds. And a testament to the success of a momentum strategy. I recently read an article by a newsletter writer touting the under loved small cap value sector. He cited a long history of small cap value beating large cap growth. He admitted the recent past several years has been bad for small cap value, but that means it's beaten down and a better value now.

Several years of under performance! I can't see them ever making that up even if the performance improves some. I wish you could show him your 7-20-20 post above. Your strategy is knocking it out of the park. You may be getting a bigger boat next year.

My computer problems are far from solved. I haven't been paying any attention to the market this week. Job one now is getting my email account back. I've had the email account for about 25 years. Hope you find those pictures. Good luck. ira

[sd]

" I wish you could show him your 7-20-20 post above. Your strategy is knocking it out of the park. You may be getting a bigger boat next year."


Quick note pre work- That is the performance of the funds- If purchased at the absolute lows and held- I have purchased- on the way down- but never captured the exact low, sold on pullbacks, and repurchased higher several times - so my personal performance results come no where's near someone that simply held- However, the principle idea of going where the momentum is and allocating $$$ in something outperforming brings greater returns-for the dollars invested proportionately. That said, any high momentum trend can react to the downside greater as well- so Stops are prudent.
Small caps -as a group IWM underperformed this YTD and also led the markets lower than the other major indexes SPY, DIA, QQQ.

Check out this recent diversified investment ETF possibly a way to balance a portion of one's portfolio

rparetf.com/ This fund appears to combine the elements of a diversified portfolio with non-correlated investments to balance out over time, along with the rebalancing aspect of the fund. Interesting - but i would expect that Meb Faber would have promoted this type of fund

-https://seekingalpha.com/article/4359436-rpar-this-ray-dalio-inspired-risk-parity-etf-is-on-fire-podcast-transcript?utm_medium=email&utm_source=seeking_alpha&mail_subject=rpar-this-ray-dalio-inspired-risk-parity-etf-is-on-fire-podcast-transcript&utm_campaign=nl-etf-daily&utm_content=link-0

[ira85]

SD, your full disclosure puts those numbers in realistic perspective. So your follow-up is accurate, but it lacks the energy of "knocking it out of the park." But accuracy is more important. As you point out it's easy to have a train wreck when a high momentum trend reverses. It reminds me of Garrett Van Wagoner from the 1990's. He ran a family of mutual funds noted for short holding periods and high turnover with a momentum strategy. In 1999 his highest performing fund netted a gain of 291%. That was followed by returns in 2000-2002 of -21%, -60%, and -65%. The fund was a disaster for long-term holders. Had you invested with Van Wagoner when he launched in 1995 and you held on till September 2003 you would have lost 43% of your money despite having that 291% gain in 1999. That was during the dot com bull market that Alan Greenspan described using the term irrational exuberance. Greenspan made that phrase famous in 1996. The party lasted a long time after Greenspan's speech.

I think SD is saying he doesn't want to party like it's 1999. He'd rather follow a disciplined strategy to reduce risk. Interestingly, your system results in lots of short term trading and high turnover which is often associated with increased risk. But the way you implement it you reduce risk of a big loss and reduce volatility. Instead of hitting it out of the park your system hits for average with lots of singles and very few strike outs.

I'm not sure but I think I have the worst of my computer problem fixed with minimal damage. We'll see in the next few days. -ira