BEATING THE MARKET WITHOUT A TRADING FRENZY

 

To gain an edge, this is what you need to know today.

Beating The Market

Please click here for a chart of S&P 500 ETF () which represents stock market benchmark index ().

Note the following:

  • The momo crowd has gone manic.  The trading frenzy has reached a new high.
  • The current prevailing wisdom that the more you trade the more money you make is highly flawed.
  • The goal of investors should be to generate the highest risk-adjusted returns.
  • Unfortunately, the media and Wall Street have persuaded the less informed investors that the goal is the number of trades they do.
  • The chart compares three ETFs from ZYX Global Asset Allocation Portfolio.  This portfolio focuses on less trading but still generating high risk-adjusted returns.
  • The chart shows that for the period shown, clean energy ETF  has beaten  by 26.35%.
  • The chart shows that  ETF has beaten SPY by 13.03%.
  • The chart shows that spinoff ETF  has beaten SPY by 8.44%.
  • The foregoing illustrates that investors can do very well without much trading.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial)  stocks in the early trade.  Smart money is 🔒.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒.

For longer-term, please see gold and silver ratings.

Oil

API data showed an oil draw of 4.785M barrels vs. consensus of a draw of 2.1M barrels.

The momo crowd is 🔒 oil in the early trade. Smart money is 🔒.

For longer-term, please see oil ratings.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking up and bonds are ticking down.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1884, silver futures are at $26.39, and oil futures are $47.75.

S&P 500 futures resistance levels are  3800 and 4000: support levels are 3630, 3600 and 3520.

DJIA futures are up 76 points.

Protection Bands and What To Do Now?

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold existing positions. Based on individual risk preference, on dips, consider holding 🔒in cash or treasury bills or short-term bond funds or allocated to short-term tactical trades and short to medium-term hedges of 🔒 and short term hedges of 🔒. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, total cash level should be more than stated above but significantly less than cash plus hedges.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

 

This post was just published on ZYX Buy Change Alert.

 

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