Rate Cuts, Sector Trends, and Momentum Picks
March 24, 2024 - Update
Here is my review for the week.
Macro
Oil Prices (Brent): -0.6% (good, to be watched closely)
Liquidity (M2): neutral to restrictive
10 Year treasury yield: -2% for the week (good, to watch closely)
Inflation nowcast for Feb 24: 3.37% (bad vs. 3.17% from Jan24)
The most important news from the week was the neutral to dovish tone of the FED chairman who still sees 3 rate cuts before the end of 2024.
We don’t want to see energy prices and then inflation picking up again which might result in a significant market correction.
The US economy looks robust until proven otherwise.
The Market
Below is the weekly chart of the Nasdaq that looks healthy in all regards:
Price is above all moving averages and rising.
When looking at my indicator for the health of the market, after a deterioration for 2 consecutive weeks, the index is back at 100/100 points, indicating a strong market (below my scorecard on the daily chart):
Sectors
Looking at equal-weight sectors, interesting to see Industrials overperforming even the Nasdaq over the last 6 months. Then we have Technology, driven by the AI theme and Financials. Over the last month, Materials and Energy have been performing well.
Industry Groups
Looking at specific industries beating the SP500, Semis keep leading, yet, looking at best groups, it is easy to recognize a market that is betting on a stronger economy to come, not a worse one: construction, industrials, travel, mortgage, home improvement, commercial vehicles, etc.
Themes
Last, looking at themes through ETFs, marijuana stocks are very strong here:
PORTFOLIOS
10X LARGE CAPS MOMENTUM POT
I was stopped out from SMCI 0.00%↑ for a combined gain of +223%. I was also stopped out from LI 0.00%↑ for a -10.6% loss.
Now I am left with one position only DKNG 0.00%↑ which is up 24%. This portfolio will be 1 year old since inception on April 4th and is now at +100%.
In this portfolio, after 1 year, I have closed 15 trades and got a win rate of 40% (loss rate of 60%), an average % gain of 83% per winning trade, and an average loss of 7% per losing trade.
I understand that an average gain of 83% is skewed because of my “lucky” SMCI 0.00%↑ trade, so it is not sustainable. Yet, it tells me that getting into a big winner is what makes a big difference in the performance of my portfolio.
So I will be investing more of my time in finding these types of stocks.
Below is my updated portfolio:
And the list of all my closed trades in this account.
Here is what I am doing this week:
I’ll buy 80 shares of DKNG 0.00%↑ if it goes above $49. Stop Loss at $39.7
I’ll buy 115 shares of SQSP 0.00%↑ of it goes above $35. Stop Loss at $31.8
2. 10X SMALL CAP MOMENTUM POT
Here I am left with 2 positions after being stopped out from DHF 0.00%↑ and MGNI 0.00%↑ . Unfortunately, after being kicked out from DHF the stock went up by more than 20%. Something that has happened very often for my closed trades. Have a look at the table below:
Circled in red, you can see how often a stock went up 40%, 80%, or even 154% after I was kicked out by my stop loss.
Takeaway: in good market conditions, I need to be less aggressive with my Stop Loss levels.
Here is my Portfolio Updated:
And here is what I am doing this week:
I’ll buy 1090 shares of ESPR 0.00%↑ if it goes above $2.39. Stop Loss at $1.98
I’ll buy 125 shares of YOU 0.00%↑ if it goes above $20.65. Stop Loss at $18.75
I’ll buy 2240 shares of MAPS 0.00%↑ if it goes above $1.16. Stop Loss at 0.94
All my orders will be valid for one week. If they are not triggered, then they will be canceled.
That’s all for the week!
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Important: This is not investment advice. Consult a licensed financial advisor before making any investment decision.