This is a new series and we'll see how much time there is to continue.
Last week's Sum
allocation: max long risk assets
USA mains: IWM, DIA
sectors: XLF, SMH
global: already reduced (funny but true, RSX best among EEM, FXI, INDA and EWZ from 11/15 on); EFA & EEM short candidates, INDA weakest but too late
currency & commodity: DXY long, oil neutral
Today I am going to introduce something that will hopefully make it a bit easier. I am going to use a numerical scale using a semi hedge fund strategy ie moderate leverage and some shorts & hedges.
1 unit = 10%
10 = 100% long
15 = 150% long
Max directional exposure 150% long, 50% short.
Max total exposure 200%
As of last week I said max long (see tag then post for entries).
That would have looked like this:
5 IWM, 3 DIA
3 XLF, 1 SMH
Or to put it another way, 80% long USA main leaders, additional 40% long USA sector leaders, small best looking global ETF, 2 long currency.
Monday 11/28 said from max leveraged long to 'long' so how to reduce 5 units? Some of this depends on entry but I'm assuming most buys 11/9-11. 3 IWM, 1 DIA, 1 XLF would mean total remaining 2 IWM, 2 DIA, 2 XLF, 1 SMH, 1 RSX, 2 DXY.
Wednesday suggested adding some hedges if bearish open Thursday. To hedge out USA positions QQQ weaker below DecP (that break was during 1st hour, not on open). Also EEM rejection of YP and falling 20MA.
I didn't say anything about oil last week other than neutral as of last weeks blog post, although CL1 held YP and jumped back above all pivots 11/30 so if you wanted to be aggressive could have added back 2 units long on that.
So by end of week something like:
2 IWM, 2 DIA
2 XLF, 1 SMH
2 USO oil
2 QQQ shorts, valid below DecP
1 EEM shorts, valid below YP
Total long = 120%, total short -30%, long exposure 90%, total exposure 150%
The question in the coming week will be to adjust back more long, or add hedges and be more short. EU politics affecting currency and indexes so that will impact Dollar and rates so we'll see what happens.