Since my last post, the market rocketed to new highs and my portfolio participated in only limited gains because of my relatively small exposure to the market. Fortunately, my patience is now paying off. Because my short position in SH has appreciated, it's current value is now 37% of my long positions in dividend stocks. Furthermore, because of the relatively low beta of my dividend portfolio, my (small) short position reduced today's losses by a factor of 53%.
I don't plan to add to my short position. However, I plan to further reduce my long exposure in the same way that I did on May 31 by selling profits in stocks that have appreciated by 10% or more. Since I executed my "sell" strategy in late May, several of my dividend stock further appreciated and thus, are now "sell" candidates. Selling such profits will further reduce my long exposure by another 10% to approximately 30% of my portfolio. With my shorts in place, my net equity exposure on a value basis will be about 20%.
As far as my macro indicator, it established a new low two weeks ago and increased last Friday. So what does this mean? Well, as I mentioned in a prior post, my macro indicator isn't great at identifying market bottoms. However, as long as my indicator doesn't start to decrease again, it portends a negative market bias until as late as July of 2020.
As I am writing this blog, S&P futures are implying an open of another -47 points. Risk management is key.
Follow signals from the Prophet4Traders system to identify turning points in the U.S. stock market
The purpose of this site is to share results of a trading system that I use for identifying both long-term and short-term trading opportunities. I take the time to do this because of my passion for investing and helping others succeed. The system helped me avoid the "Crash of 2007/2008" and every major correction since then. The cornerstone of my trading system are analyses of market liquidity to gauge longer-term market sentiment and equity and index options (put/call ratios) to identify short-term entry and exits.
This site is for information purposes only. Past performance of the trading system is not a guarantee of its future success. Please consider consulting a qualified investment adviser before making investment decisions.