The Daily Decision for 7.1.16
The Early Take:
As I detailed in this morning's State of the Market report (which is the reason for the tardiness of this update), the current joyride to the upside is being sponsored by global central bankers. The Bank of England's Mark Carney was the latest to whisper sweet nothings into Ms. Market's ear yesterday. Carney basically surprised the market in a good way by saying that the BOE is likely to cut rates soon - as in VERY soon - and may even get back into the QE game. So, when you add the BOE to the market-friendly words out of the ECB, the BOJ, and the FOMC, the pattern becomes clear. And if investors have learned anything since 2009 it is to stay in tune with the money printers. As for our models, the indicators continue to improve. However, with STRONG resistance overhead and given the more than 5% spike seen since Monday's close, we are going to continue to take things slow. But at the same time, we should note that we've seen some additional "thrust" signals this week, which, despite the short-term overbought condition, bode well for the ensuing 1,3,6, and 12 months. Finally, here's wishing everyone a safe and happy Fourth of July!
(P.S. While the DD Main Model is the lead horse for this service, I do note that the Mean Reversion Model is the leader in terms of performance this year and has done a fine job in dealing with these roller-coaster market rides.)
The Daily Decision Model:
About: The Daily Decision Main Model is designed for the vast majority of investors. If you want a professional, disciplined approach to managing the risk of the U.S. stock market - this is it. One decision. Once a day. Done.
Current Daily Decision Position:
76.25% Long (% UPRO - ProShares UltraPro S&P 500)
Today's Early Model Reading*:
81.5% Long (27.17% UPRO - ProShares UltraPro S&P 500)
*Today's Model Reading represents the "early read" of our models. However, please note that model readings often change during the trading session and our managers ultimately decide when/if to make changes to our holdings. We will always send a trade alert (via SMS text and/or email) BEFORE changes are made to our positions.
New to the Daily Decisions?
Our current "New Member Rating" is:
Buy
Additional Daily Decision Trading Models/Systems:
In an effort to provide additional research and trading guidance for a wide variety of members, we provide the daily readings of 5 additional trading systems.
How To Use: To clarify, the Main Model (shown above) is the primary model for the Daily Decision service. However, members can use any or all of the systems below to customize their approach or to focus on a specific style of trading or time-frame.
The Timing Models (Short-Term):
About: These are shorter-term all-in/all-out timing models designed to stay on the correct side of the market's trends. The positions of these models are updated in real-time via trade alerts and the Marketfy trading system.
Today's Positions:
DD Hybrid Model: 75% Long (25% UPRO - ProShares UltraPro S&P 500)
DD Aggressive Model: 75% Long (25% UPRO - ProShares UltraPro S&P 500)
The Mean Reversion Model (Short-Term):
About: The Mean Reversion Model is designed to indicate when conditions are ripe for the market to "go the other way" from the current trend.
Today's Position:
33% Long (11% UPRO - ProShares UltraPro S&P 500)
The Graduated Exposure System (Intermediate-Term):
About: The Graduated Exposure System is designed to keep overall exposure to market risk in line with the intermediate-term"state of the market environment.
Today's Position:
65% Long (21.67% UPRO - ProShares UltraPro S&P 500)
The "Desert Island" System (Long-Term):
About: The Desert Island Model is a long-term indicator designed to tell us which team is in control of the game. The primary objective of this model is to avoid high risk, bear market environments.
Today's Position:
100% Long (33.34% UPRO - ProShares UltraPro S&P 500)
Current Market Environment Model Reading:
The Market Environment Model is designed to indicate the current "state of the market" in terms of technical health and the market's internal strength. To clarify, this is NOT a trading system. We use the model to help us identify the proper trading strategy to use in a given environment.
Daily Decision Performance:
Below is a summary of the live and backtested returns of strategies provided in the Daily Decisions service.
Before we ever invest our hard earned capital in a market strategy, we believe it is important to thoroughly test the system in different market environments. While all system tests have flaws, the idea is that a backtest can provide us with (1) proof of concept and (2) an indication of what we might be able to expect from the system in different market environments. And from a longer-term standpoint, we are pleased with the way the systems perform in most market environments.
| The Daily Decision Systems Performance Results (Updated Weekly on Mondays) | ||||||||
Period |
The Daily Decision Model(1) |
DD Timing Hybrid Model(2) |
DD Timing Aggressive Model(2) |
Graduated Exposure Model(3) |
Desert Island Model(3) |
S&P 500 Index | ||
| 1997 | +42.85% | +46.08% | +97.09% | +43.36% | +40.39% | +31.01% | ||
| 1998 | +51.12% | +85.70% | +170.47% | +41.31% | +38.08% | +26.67% | ||
| 1999 | +17.91% | +32.36% | +70.39% | +8.22% | +17.35% | +19.53% | ||
| 2000 | +6.51% | +30.93% | +63.29% | -5.92% | +2.13% | -10.14% | ||
| 2001 | +21.74% | +30.64% | +64.94% | +14.02% | +22.93% | -13.04% | ||
| 2002 | +13.87% | +21.52% | +40.48% | +14.45% | +8.59% | -23.37% | ||
| 2003 | +48.80% | +56.23% | +104.53% | +28.30% | +62.09% | +26.38% | ||
| 2004 | +15.40% | +11.81% | +26.86% | +9.20% | +23.08% | +8.99% | ||
| 2005 | +5.74% | +5.71% | +7.26% | +3.62% | +7.62% | +3.00% | ||
| 2006 | +18.89% | +26.10% | +47.43% | +5.55% | +26.05% | +13.62% | ||
| 2007 | +15.67% | +23.91% | +46.63% | +3.30% | +21.35% | +3.53% | ||
| 2008 | +50.06% | +44.62% | +92.78% | +15.29% | +21.35% | -38.49% | ||
| 2009 | +66.50% | +204.78% | +161.00% | +47.77% | +70.84% | +23.45% | ||
| 2010 | +30.37% | +33.43% | +61.20% | +26.32% | +27.32% | +12.78% | ||
| 2011 | +20.47% | -7.42% | -26.80% | +3.38% | +21.45% | -0.00% | ||
| 2012 | +27.83% | +8.14% | +16.47% | +20.33% | +29.58% | +13.41% | ||
| 2013 | +36.38% | +27.27% | +44.34% | +37.28% | +38.45% | +29.60% | ||
| 2014 | +11.19% | +3.54% | -1.14% | +7.43% | +16.83% | +11.93% | ||
| 2015 | -4.79% | -12.70% | -16.00% | -3.04% | -1.37% | -0.73% | ||
| 2016 | -0.58% | +0.76% | +0.76% | +0.70% | -2.55% | +2.69% | ||
| Compound Average Annual Return: (1997 - 2015) | +24.68% Per Year |
+27.62% Per Year |
+50.25% Per Year |
+15.83% Per Year |
+30.20% Per Year |
+5.45% Per Year | ||
| (1) The Daily Decision Model (aka the "Main Model") Components: 40% Desert Island System, 35% Graduated Exposure System, 25% DD Hybrid Trading System. Live Returns from December 2015 forward, backtested results prior | ||||||||
| (2) Live Returns from January 2009 forward, backtested results prior | ||||||||
| (3) Live Returns from January 2015 forward, backtested results prior | ||||||||
Have a great day!
David D. Moenning
Founder, StateoftheMarkets.com
President, Heritage Capital Research
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