Saturday, February 21, 2015

$SPY, $STUDY, Last week was another very profitable week for the Alpha One Model although the lion share of the appreciation came from the portfolio holdings rather than the day trading activities.  Outside commitments had me away from the desk most of the week. Currently the portfolio is allocated at 55% long 45% cash versus the recommended level of 75% long and 25% cash.  There may be a few trades in the coming week from the Watch List but again I am not going to aggressively chase return when the day trading is doing well.

The shorter term Active Traders Model is very Bullish as you will note but here the model is extremely short term and totally technical in nature.  On the intermediate term side the Allocation model is also Bullish but not at yet at the level of the Active Traders Model. While it is also technical in nature it does analyze both Interest Rate and Investor Sentiment data in formulating its output. For me the combination translates into an exposure level between 55% - 75% along with hedging activities (Day Trading the SPY) to protect the YTD gains.  It remains a stock pickers market, earning season is most done with about 62% of the announcements beating estimates thus far.  The remainder of the quarter will be driven by news and those that know me already understand that I do not let blind people drive my car, enough said on that subject.

With the Greece problem getting kicked down the road and the ECB to start its own QE in March, stocks are set up for more short term gains. Like what we saw in the past two sessions, pullbacks are likely to be bought. The lack of selling pressure, coupled with eagerness from those underinvested to buy in, is likely to allow stocks to melt up further into record territory.