This is a new experimental series I began after election to show how one could use this site for an actively managed ETF strategy with some (not excessive) leverage.
My one error from last week was including currency and commodity in total exposure count so I'm revising this to be:
Up to 150% long stock index ETFs
Up to 50% short stock index ETFs
Max total exposure 200%
Then currency & commodity positions I will do in similar scale 1-5 and capital allocations are really up to you. Currency ETFs don't move too much so if I said 2 USD and 2 oil that should mean roughly similar risk reward, although the oil will likely move much more. Of course futures are another story.
Basic view was up to max leveraged long 11/11-15 since safe havens crumbled and IWM, DIA, SPY and VTI had all launched above YR1s.
I took off leveraged on 11/28 move which now appears too cautious. I further lessened long exposure with 3 hedging positions on EEM and QQQ, which SPY daily comment said to reduce on 12/5 and then obviously any move above pivots that made hedge invalid from there meant further elimination of hedges and out 12/6-7. Reduction of hedges when you are fully long means back to fully long without touching the long positions.
On 12/7 I said back to 100% long and in fact best place to add leverage would be on QQQ.
So, if we use the scale on stocks only, leaving currency and commodity as separate, it would be something like this at start of last week.
3 IWM, 2 DIA = 50%
3 XLF, 1 SMH = 40%
1 RSX = 10%
2 QQQ shorts (-20%) valid below DecP, reduced and out 12/5-7
1 EEM short (-10%) valid below YP, out 12/6
Back to leverage 12/7 would be something like
3 IWM, 2 DIA
3 XLF, 1 SMH
1 RSX
2 QQQ from 12/7
12 longs or 120%
Even though I think markets higher, not a good move to go max leverage with sentiment this toppy and RSIs stretched.
Then currency / commodity on scale of max 5 positions
DXY is still bullish, +2
Oil moderately bullish, +1
GLD short possible in addition to other currencies against USD like EUR but my default is to watch for what is going up so I won't count these here