Q4 2024
December 19, 2024
Yesterday's liquidation event provides a decent entry point to increase equity exposure into year end, up until inauguration day in the second half of January. It should be noted that there is the potential for more downside in the medium term; we could see the market rally and fail at $596 - $600 resistance; until the dollar transaction volume settles down and sentiment spends more time reading “Extreme Fear”, we would be hesitant in giving the “green light” to full blown risk taking.
We will execute the following order at today's market close in the Sigma Portfolio:
BUY 3% FTNT (Initiate a 3% Position)
BUY 3% MCO (Initiate a 3% Position)
December 18, 2024
The Federal Open Market Committee (FOMC) voted to lower the target range for the fed funds rate by 25 basis points to 4.25-4.50%. It was not a unanimous vote. Cleveland Fed President Hammack dissented in favor of leaving the target range for the fed funds rate unchanged at 4.50-4.75%.
The knee-jerk reaction to the Fed news includes a sell-off in stocks and bonds, as the balance of today's information reflected a less dovish-minded Fed.
We need to respect our Stop-Loss level for the bonds asset class and reduce the position in TLT by half, taking it to 15% overall. For stocks, it is too early to "buy the dip" at the moment, although the opportunity is close to presenting itself. We will execute the following order at today's market close in the Sigma Portfolio:
SELL 50% TLT (Reduce position from 30% to 15%)
November 20, 2024
We will maintain our overall risk-on allocation in the Sigma Portfolio and continue to make adjustments as needed. First of all, our position in Eli Lilly (LLY) has violated its stop-loss and should normally get cut. However, given the very high downside deviation for the whole Healthcare sector, we’ll give this one more week to bounce.
Our tactical play in the Regional Banks space has paid off nicely and we will take profits on KRE. We will replace this with another tactical position, buying Gold Miners (GDX) on this dip. Finally, we will replicate Millennium Alpha’s trades and replace POWL and ANET with ALSN and VST.
To sum up, here are the orders for tomorrow’s market close:
SELL 100% of KRE (Close Position)
SELL 100% of POWL (Close Position)
SELL 100% of ANET (Close Position)
BUY 3% GDX (Initiate a 3% Position)
BUY 3% ALSN (Initiate a 3% Position)
BUY 3% VST (Initiate a 3% Position)
BUY 2% IESC (Add 2% to Position)
BUY 2% NFLX (Add 2% to Position)
November 1, 2024
Following this week's string of earnings reports (which were rather unpleasant from a P/L perspective), we will be doing a bit of "housekeeping" in the equity portion of our portfolio. The overall weighting will not change, as stocks will still make up 70% of our allocation.
The point of this rebalancing action is to weed out some "losers" and add to the winners, especially in a slight "dip", as we are trading in right now.
Removals:
SELL 100% COKE (Close Position)
SELL 100% MPLX (Close Position)
Reduce:
SELL 1% FANG (Reduce position from 5% to 4%)
Additions to existing:
BUY 1% APP (Add 1% To Position)
BUY 1% ANET (Add 1% To Position)
BUY 1% UTHR (Add 1% To Position)
New positions:
BUY 3% FTDR
BUY 2% POWL
All orders will execute at today's market close.
October 24, 2024
We will continue to tweak exposure in our portfolio today, taking into account the trading in Millennium Alpha. There is no change to the overall allocation, as the market has not evolved meaningfully from last week. We are still 10% leveraged, as our portfolio is composed of 70% Stocks and 40% Bonds.
Executing the following orders at market close:
SELL 100% HALO (Close Position)
SELL 100% EME (Close Position)
BUY 3% NFLX (Initiate a 3% Position)
BUY 3% FICO (Initiate a 3% Position)
October 16, 2024
All things considered, a healthy dose of risk allocation makes sense at the moment. Our primary strategy (Enterprise) maintains 70% equity exposure and the stock picking Millennium Alpha has done very well due to bullish market internals. There is nothing currently that has us worried and we don’t see any signs of too much exuberance either.
Our portfolio allocation is currently leveraged to the tune of 10% portfolio value (that’s resulting in a negative cash position). The opportunity in the bond market is too good to pass up, and our stock allocation is fine as it is.
We will make a single adjustment to our stock portfolio, taking profits in Exxon Mobil (XOM) and buying the dip in Colgate-Palmolive (CL). The overall allocation remains unchanged.
Executing the following orders at market close:
SELL 100% XOM (Close Position)
BUY 3% CL (Initiate new 3% Position)
October 11, 2024
Two days ago, we said that there are a couple of trading themes which we are watching. Among them:
More downside for treasuries
We believe that most of that downside has now materialized and investors have priced most of the risk out of bonds. Therefore, at present prices, it makes sense to allocate the final part of our treasury allocation and go to our target (40%).
At today's market close, we will execute the following order:
BUY 10% TLT (Add 10% to our current Position, which will go to 40% of NAV)
Overall, this will mean dipping slightly into a leveraged position, as we will now be 110% allocated (70% stocks + 40% bonds). For now, the increased leverage makes sense and we will reduce it on the next selling opportunity.
October 10, 2024
Yesterday, we said that there are a couple of trading themes which we are watching. Among them:
A potential bounce in Healthcare stocks (XLV correlated)
More downside for treasuries
While bonds are trading lower, given the hotter than expected inflation print, some healthcare stocks are showing signs of life.
At today's market close, we will add 2 Millennium Alpha positions to our live portfolio, at 3% weight each. The orders are:
BUY 3% HALO
BUY 3% UTHR
The dip in HALO is especially enticing.