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Top 3 Sector Portfolio Market Update

Updated: 14 hours ago


SECTOR INVESTING FOR MAXIMUM PROFITS


We focus on Sector Investing Strategies using an algorithmic trading model

that analyzes MACD, Momentum, On Balance Volume and Relative Volume indicators to select Stocks and ETFs. The portfolio can go long or short depending on market conditions. A small select group of 2x Index ETFs are also key parts of our portfolio mix.


Follow the Top 3 Sector Portfolio, up 11% in 2022 v.s. SP500's -19%,

+18% past 1.5 years, versus the SP500's gain of +3%.


Our Aggressive Growth Portfolio is up 15% in 2022, and +20% in the past 1.5 years.

This portfolio features a mix of stocks and Sector ETFs.


TOP 3 SECTOR MISSION


Highest Total Return thru Sector ETFs and Stocks showing strong momentum, in industries that disrupt, innovate and improve the way the world works.


Top 3 Sector Site Map

  • Market Update

  • Top 3 Sector Portfolio Outlook

  • Top 3 Sector Portfolio & Aggressive Growth Portfolio Performance 2022 YTD Buy/Sell Stops

  • Today's Sector ETF and Stock Performance - Best and Worst

  • 2022 YTD Best Sector ETF & Stock Performance

  • Market Dashboard Stock indices, Adv/Decline, Volume, VIX

  • Stocks In The News Today – Earnings, Upgrades/Downgrades, Mergers

  • Breaking News Links

  • Best ETFs Past 18 Months

  • Best Dividend ETFs Past 18 Months

  • Top 3 Sector and Aggressive Growth Portfolio Performance Past 18 Months

  • Hot Charts Of The Day

  • The Top 3 Sector Strategy - Why It Gives You An Edge



STOCK MARKET UPDATE TODAY

Monday 6/27/22 Market Close





"Stocks Mixed As End Of Quarter Looms


Moving the Market

-- Downside leadership from mega caps -- General growth concerns -- Resilience to selling interest -- SF Fed President Daly (non-FOMC voter) noted she sees additional tightening beyond the neutral rate

Dow -62.42 at 31438.26, Nasdaq -83.07 at 11524.54, S&P -11.63 at 3900.11

"The major indices did not move a whole lot in either direction today which is not necessarily a bad thing for sentiment after last week's rally. Similar rally efforts this year have been met with a tendency to sell into the strength.

A general lack of conviction on both sides of the tape could be seen in the advance-decline line. Market breadth at both the NYSE and Nasdaq was roughly flat today.

The major indices were pulled down by the mega caps. The Vanguard Mega Cap Growth ETF (MGK) closed down 1.0%. Relative weakness here is not completely surprising as the mega caps outperformed last week with a gain of 8.0%.

The broader market held up better on the day, evidenced by the more modest 0.1% decline in the Invesco S&P 500 Equal Weight ETF (RSP). Most mega cap constituents closed in the red with Amazon.com (AMZN 113.22, -3.24, -2.8%) exhibiting the largest loss.


Apple (AAPL 141.66, +0.00, +0.0%), the best performing mega cap, closed flat after Reuters reported today that Supreme Court decided not to hear Apple's patent challenge with Qualcomm (QCOM 127.18, +2.08, +1.7%).

Further showing that the mega caps pulled down the broader market is the outperformance seen in small and mid cap stocks. The Russell 2000 (+0.3%) and S&P Mid Cap 400 (+0.3%) both closed with modest gains.

Of the 11 S&P 500 sectors, three closed in the green. Energy (+2.8%) was the leader by a decent margin followed by the defensive-oriented utilities (+0.8%) and health care (+0.4%) sectors.

The top laggards were the consumer discretionary (-1.1%), communication services (-1.1%), materials (-0.8%), and information technology (-0.6%) sectors.

Separately, Treasury note yields settled the session near their highs of the day after some relatively soft auction results for the 2-yr and 5-yr notes. The 2-yr note yield rose six basis points to 3.12% while the 10-yr note yield rose seven basis points to 3.19%. Reviewing today's economic data:

  • Total durable goods orders increased 0.7% month-over-month (Briefing.com consensus +0.1%) following an unrevised 0.4% increase in April. Excluding transportation, durable goods orders also increased 0.7% (Briefing.com consensus +0.4%) following a downwardly revised 0.2% increase (from 0.3%) in April.

  • The key takeaway from the report is that business spending held up quite well in May, evidenced by the 0.5% increase in nondefense capital goods orders excluding aircraft.


  • May Pending Home Sales 0.7% (Briefing.com consensus -3.5%); Prior was revised to -4.0% from -3.9%

Looking ahead to Tuesday, market participants will receive the following economic data: May advance goods trade deficit (prior -$105.90 bln), May advance Retail Inventories (prior 0.7%), and May advance Wholesale Inventories (prior 2.1%) at 8:30 a.m. ET. April FHFA Housing Price Index (prior 1.5%) and April S&P Case-Shiller Home Price Index (Briefing.com consensus 21.1%; prior 21.2%) at 9:00 a.m. ET.

The June Consumer Confidence reading (Briefing.com consensus 101.0; prior 106.4), released at 10:00 a.m. ET, will be watched closely after the June Consumer Sentiment Index was the lowest result on record.



Earnings warning signs should start flashing soon


Mark your calendars. We have roughly a month until the second quarter earnings reporting period goes into full swing, and it is likely to be a swing factor for the stock market.

We should hear our fair share of positive earnings surprises but, more importantly, we should hear a larger share of earnings warnings.

A P/E Disconnect

There has been a pickup in warnings already for the second quarter. FactSet informs us that 103 S&P 500 companies have provided guidance for the second quarter, and 71 of them (or 70%) have issued negative guidance.

That is a large percentage, outpacing both the 5-year average (60%) and the 10-year average (67%).

That has helped account for the small (emphasis on the word "small") downward revision since March 31 to second quarter per share earnings (-0.9%), which is less than the 5-year average (-2.3%) and the 10-yr average (-3.3%).

Still, the second quarter estimated earnings growth rate for the S&P 500 is 4.3%. That compares to an estimated growth rate of 5.9% on March 31.

The projections for earnings growth may have slowed, but they have not gone off the rails to any large extent. That is good news. Of course, it doesn't match the price action at all since March 31.

As of this writing, the S&P 500 is down 18% since the end of the first quarter, but at one point last week it was down 23%.

The magnitude of that decline had everything to do with an expectation that the magnitude of current earnings growth projections for coming quarters is woefully out of whack with what is expected to be a much more challenging economic climate.

Forward Thinking Needs Some Re-thinking

Some will say the stock market has suffered like it has because of the shift in rate-hike expectations, the rapid uptick in market rates, the inflation pressures, the COVID-related lockdowns in China, the war in Ukraine, high commodity costs, and the dour disposition of consumer and business confidence.

They aren't wrong. Those items have caused a stir in one way or another but, in aggregate, they contribute directly to the view that S&P 500 companies, in aggregate, aren't going to live up to expectations.

The expectations are high, too. According to FactSet, analysts expect earnings growth of 10.7% for the third quarter, 10.1% for the fourth quarter, and 10.4% for all of calendar 2022.


 

STOCK INDEXES YEAR TO DATE 2022


  • Dow Jones -13%

  • S&P 500: -18%

  • Russell 2000: -22%

  • Nasdaq: -27%

 

Top 3 Sector Portfolio Update 6/27/22


Stocks sputtered out of the gate on Monday in a mixed market.

At 10:45 am, the Dow is down 8 points, SP500 -.2%, Russell 2000 up .5%

(mostly on oil stocks), and Nasdaq is faring the worst, down .35%.

But most losses were mild, following Friday's blistering rally that

sent the Dow up over 800 points.


We are encouraged to see some big $TICK readings of 800 -900 even

as stocks wavered, that shows some buying power with stamina.


Adv/Decline is now improving to 1800/1121 on NYSE, Dollar down .3%,

10 year bond yield at 3.15%, with oil only up .3%, but Oil Stocks as

measured by the XLE are the best performing sector up 3.5%.


Indeed, energy is topping the list with HAL up 4%, XOM +3% and CVX +3%.


Other strong sectors include Solar up 2.2%, China +1.3%, Builders +1.5% and

Semi's +.75%.


Weak side: Bitcoin getting hit again, GBTC -3%, COIN -9%. ARKK -2%,

Cloud -1.5%, Internet, Airlines, Software all down 1.3%, and Social Media -.8%


Gaming stock Electron Arts down a sizeable -4%, Airlines BA -2.2%, AAL -2.2%,

ABNB -3%, NFLX -2.7% and Square -2.5%.


We are seeing some institutional buying, as pension funds re-balance

at quarter's end, that could see over $30 billion in stock buying this week.

Even ultra bear Morgan Stanley's Michael Wilson says the S&P 500 Index may climb another 5% to 7%, before resuming losses.


We continue to hold our Energy Services etf OIH, and may add to it if

oil prices continue to climb based on the latest Russia restrictions from

the G-7 meeting.



Oversold Markets

Everyone waiting for earnings estimate cuts, but have we already begun to

adjust PE's prior to that event? For instance, the equal weight SP500

index is 13x forward earnings, while the Russell Small Cap 600 is only

an 11 PE.


The SP500 index PE is currently 19, obviously pushed higher by the 5 stocks at the top, whereas the SP500 equal weight reflects how much damage the 'average' stock has taken in.


The average stock in the SP500 is down 30%, while that number is 48% in the Nasdaq.

This illustrates how the SP500 and Nasdaq performance is so dominated by a handful of

big cap tech, which is not reflective of the broader market.


The Last Shall Be First


Did you know that the Worst 4 sectors in a decline will gain an average +56% in the

following 12 months versus SP500’s +45% and those 4 sectors will outperform the index 82% of the time? So watch the first sectors rising out of a major decline as a rule.


 

TOP 3 SECTOR PORTFOLIO -

STOCKS AND SECTORS WE LIKE NOW...


Current


Added some due to bear mkt rally past 2 days.


Energy: TAN Solar Energy, XLE, HAL , OIH Oil Svcs

Defense: LMT, NOC, ITA Defense etf

Commodities/Matls: LIT (Lithium etf), USO Oil etf

Tech/Software: GOOGL, MSFT, AAPL, AMT, FDN Internet etf

Consumer Prods: KO, ULTA, XLP (Cons Prod etf), LYV (experiences), SBUX, ORLY

Health Care: XBI (Biotech ETF), BMY, MRK, LLY, VHT (Hlth Care etf), VRTX Cyber Security: FTNT, PANW, HACK (Cyber Sec etf)

Dividend ETFs: RDIV (Rising Div/Rising Rev 3.3% div)

Index: QLD 2x Nasdaq


Stocks: Strong charts now 6/25/22:

NOW, VRTX, LLY, AMT (broke 200 DMA), FTNT, GOOGL,

BLK - broke above 50 DMA, SBUX, ISRG, CMG, PANW,

MSFT - strong chart, ORLY, AAPL, BMY - break out above prev high,

MA, AMZN, ITB -Builders etf, WCLD - Cloud et, ARKK (not yet, but watching)


 


LOOKS LIKE 6/16/22 WAS A BEAR MARKET LOW - WHAT SECTORS CAME UP FIRST AFTER THE DESTRUCTION?


If in fact 6/16/22 was a short term low, let's examine what sectors/indexes have

done since then. The SP500 is up 6.4%, and the Nasdaq QQQ +8.5%.


Best Sectors

Cloud +22%, ARKK +18%, Biotech +18%, QLD +16%, Travel +13%, Solar +12%


Worst Sectors

Bonds +.2%, Dollar +.3% and Materials +.9%


We currently have XBI Biotech, QLD, and Solar TAN in both Top 3 and Aggressive Growth portfolios. We are watching Cloud WCLF (+22%), ITB Builders (+9%), Travel OOTO, and Lithium (+9%).


Dividend ETFs: Note that RDIV +6% and NOBL +5% are beating the

SCHD +3.4% and RDVY +4% for this 'rally.' This remains a Bear mkt rally, so

we expect a pull back soon, definitely not the bottom all wish for.


Indexes: Also note that SPY Growth IVW is up 8% from 6/16, while SP500 Value is only

up 4% showing where investors are going: all growth.


Sector/Index Performance From 6/16/22:




Stocks From 6/16/22 Low


Best Stocks

DDOG +28%, ROKU +18%, SQ +17%, SNAP +19%, MRNA +15%

(note that these leaders have lost 2-4% in today's action)


Some of the cloud and internet high fliers in the top 10 are still too volatile

to buy here in our opinion, so be careful.


Worst Stocks

MPC -5.5%, CVX -5%, MO -4%, CAT -3.5%, NUE -3%



The SPY fell 22.5% for 2022, at the low:




Nasdaq QQQ down fell -32% at it's low, now rebounding:





2x Nasdaq etf QLD, moving fast, +18% from 6/16:




Biotech etf XBI: Huge fall from Feb 2021, but now

rising with M&A a big factor (like MRK buying SGEN)

It's up 21% from the 6/16/22 low:




Cyber security etf HACK breaks out above the 21 day avg.

In a recent poll, 70% of CEO's will spend the most on cyber

protection. Chart shows nice double bottom pattern:





Vanguard Hlth Care etf VHT:




American Association of Independant Investors Survey 6/22/22


Bulls fall to 18.2%, and Bears increase to 59.3%, near 1 year extremes,

and a strong contrarian level on both.





OIL's WILD RIDE - PRICE PER BARREL WTI

From 20 in March 2020, to 120 in June:



See More Charts in 'HOT CHARTS TODAY' section below


 



Top 3 Sector Portfolio Performance 2022 YTD


The Top 3 Sector Portfolio is up 12.5% so far in 2022 versus SP500's loss of -18%.


Our current asset allocation: Index 7%, Sectors 36%, Dividend ETFs 21%, Cash 36%.


Best Holdings in Top 3 Sector Portfolio


#1 OIH Oil Services +27%

#2 QLD 2x QQQ +11%

#3 XBI Biotech +10%


Buy Stops



Sell Stops






Aggressive Growth Portfolio Performance in 2022


The Aggressive Growth Portfolio which features a mix of ETFs and Stocks

is up 16% so far in 2022, versus the SP500's -18%.


Asset allocation: Index 7%, Stocks 23%, Sectors/ETFs 36%, Dividend ETFs 11%, Cash 23%.


Best Holdings in Aggressive Growth Portfolio


#1 OIH Energ Svc +27%

#2 QLD 2x QQQ +11%

#3 XBI Biotech +9.5%


Buy Stops:



Sell Stops:



 



TODAY'S BEST SECTOR/INDEX ETFs


Up Today:

Energy +2.5%, Oil Svcs +2w.5%, China +1%, Solar +.8%, Bldrs +.5%


Weak Today:

ARKK -4.4% (is the rally over?), Travel -3.5%, Cloud -3%, Internet, Airlines,

Biotech, Software and Retail all down -2%.





TODAY'S BEST/WORST STOCKS


Up today:

HAL +3.3%, XOM +2%, MRK +2%, UNH +1.8%, QCOM +1.7%, LLY +1.5%


Weak:

ROKU -6%, SQ -5%, IGT -4%, NFLX -4%, AAL -3.5%


*These select stocks are chosen for their representation of key Sectors, and large

trading volume. We are aware that not all stocks are covered. These bellwether stocks show where the big money is flowing in, and even more importantly, where the money is flowing out of.




2022 BEST SECTOR ETFs YTD


So far this year - Energy, Dollar, remain the leaders.


#1 Energy XLE +32%

#2 Oil Svc OIH +27%

#3 Dollar UUP +8%


Laggards: ARKK -54%, Travel -50%, Internet -40%, rOBOTICS -40%


SP500 -18% QQQ -26.5%



*This is our select list of representative sector and index ETFs. We do not cover every subsector. We also look for lowest expense ratios & highest relative strength in selecting ETFs.


 

2022 BEST STOCKS YTD


Energy stocks, Health Care and Defense push to the front.

Top 4 of Top 10 are all Energy.


#1 XOM +45%

#2 HAL +40%

#3 MPC +36%

#4 VRTX +31%

#5 BMY +28%

#6 MRK +24%

#7 NOC +21%


Laggards: SNAP -69%, NFLX -68%, PYPL -59%



*Best Stocks of the select stocks we track.



 

STOCKS IN THE NEWS TODAY

Click on stock name for real time quote


"Spirit Airlines (SAVE) – Spirit Airlines lost 4.7% in the premarket after saying it would accept the latest improved takeover bid from Frontier Group (ULCC). The latest Frontier cash-and-stock bid is valued at $2.7 billion based on Friday’s closing prices.


JetBlue (JBLU) all-cash offer is worth $3.7 billion. Spirit believes it is unlikely regulators would approve a combination with JetBlue, a notion that JetBlue has disputed. Frontier lost 1.7% while JetBlue was unchanged.


BioNTech (BNTX) – BioNTech added 2.1% in premarket trading after the drug maker and partner Pfizer (PFE) said their omicron-based Covid-19 booster shots generated an improved immune response against the variant.


Robinhood Markets (HOOD) – Robinhood rose 2.5% in premarket action after Goldman Sachs upgraded the trading platform operator’s stock to “neutral” from “sell” although it cut the price target to $9.50 per share from $11.50. The rise comes despite the release of a Congressional report detailing the trading platform’s difficulties in handling the meme stock frenzy of January 2021.


Digital World Acquisition (DWAC) – In an SEC filing, the SPAC linked to former President Donald Trump’s media company said additional subpoenas were issued in an ongoing probe of its registration statement regarding the proposed business combination. Digital World said the investigation could materially impede, delay or even prevent the combination from being consummated. The stock slid 5.8% in the premarket.


Coinbase (COIN) – The cryptocurrency exchange operator saw its stock slide 5.3% in the premarket after Goldman downgraded it to “sell” from “neutral,” pointing to the continued fall in crypto prices and slower industry activity levels.


Altria (MO) – Altria rose 1% in the premarket after Juul won a temporary stay of the FDA ban on its e-cigarette products. Altria holds a 35% stake in Juul.


Newmark Group (NMRK) – The commercial real estate firm’s shares rose 1.6% in the premarket after the New York Post reported on increasing talk of a possible merger between Newmark and rival Cushman & Wakefield.


Walgreens (WBA) – India-based conglomerate Reliance Industries is reportedly in talks with global lenders to raise $8 billion to finance the purchase of Walgreens’ Boots drugstore chain. Walgreens added 1% in premarket trading.


Chewy (CHWY) – Chewy jumped 4.1% in premarket action after Needham upgraded it to “buy” from “hold,” saying that price increases for the pet products retailer are sticking and that supply chain issues are improving.


AutoZone (AZO) – The auto parts retailer was upgraded to “buy” from “neutral” at Goldman Sachs, which called it a good defensive play as the vast majority of auto parts sales are non-discretionary and demand remains relatively inelastic. The stock gained 1.9% in the premarket." - cnbc.com 6/27/22




BREAKING NEWS LINKS


RUSSIA DEFAULTS ON DEBT, FIRST TIME IN 100 YEARS


NATO BOOSTS MILITARY PRESENCE TO 300,000

IN MASSIVE BUILD-UP OF 'HIGH READINESS' FORCES


NEW POLL: CONSUMER SENTIMENT SHOWS DROP IN INFLATION EXPECTATIONS


CRYPTO HEDGE FUND COULD FACE DEFAULT, UNABLE TO REPAY $670 M IN LOANS


WHY ARE OIL PRICES FALLING?


BIDEN TO CALL FOR 3 MONTH SUSPENSION OF GAS TAX


EXISTING HOME SALES IN MAY FELL 9% YEAR

OVER YEAR


THREE MAIN SOURCES OF INFLATION: FOOD, FUEL, SHELTER - AND THE FED CAN'T FIX THAT



 


Sector ETF Performance Past 1.5 yrs (From 1/4/21)


Let's take a longer term look at how all Sector ETFs have done since the beginning of 2021 - basically the past 1.5 years.


Best: Energy, Dollar, Rising Dividend, Lithium Batteries for EV


#1 Energy XLE +94%

#2 Oil Svcs OIH +52%

#3 Rising Div RDIV +25%

#4 Lithium LIT +23%

#5 Dollar UUP +15%


Laggards: ARKK -64% Biotech -47% Social Media -46%


SP500 +4% QQQ -7%







Best Dividend ETFs Past 1.5 Years (From 1/4/21)


Yield seeking investors turn to Dividend ETFs over bonds. Dividend ETFs

are holding up remarkably well in this extreme volatility.


Best Dividend ETFs - Percent increase in price from 1/4/21:


#1 DVY Hi Div Weighted +23% 3.1% div

#2 RDIV Ultra Hi Div/Hi Rev +23% 3.5% div

#3 SCHD Schw Div +13% 3.3% div


20 year bond etf TLT -29% 2% div

SP500 +3.5% 1.6% div



 

TOP 3 SECTOR PORTFOLIO PERFORMANCE

Past 1.5 yrs (from 1/4/21)


The Top 3 Sector Portfolio is up 19.5% from Jan 4, 2021. The SP500 is up +4%.

We are beating the SP500 by 15%.


#1 OIH Oil Svc +27%

#2 QLD 2x QQQ +11.5%

#3 XBI Biotech +10%



 


AGGRESSIVE GROWTH PORTFOLIO PAST 1.5 YEARS

(From 1/4/21)


The Aggressive Growth Portfolio is now up 22% from January 4, 2021, versus the SP500 gain of 4%, we are beating the SP500 by 18%.


#1 OIH En Svc +27%

#2 QLD 2x QQQ +11%

#3 XBI Biotechh +9.5%

#3 LMT Lockheed +8%





BEST STOCKS PAST 1.5 YEARS (From 1/4/21)


#1 XOM +116%

#2 NUE +105% #3 FTNT +99%

#4 LLY +95%

#5 AZO +85%



 

HOT CHARTS TODAY - Updated 6/24/22


Chart Key For All Charts:


Green line: 21 Day Moving Avg

Orange: 50 DMA

Pink: 100 DMA

Blue: 150 DMA

Red: 200 DMA



NOTE: IF YOU CLICK ON A CHART, IT WILL ENLARGE, THEN ALLOW YOU TO SCROLL THROUGH ALL THE CHARTS.



Cloud etf WCLD , big 22% pop off the low, best sector in that

time period from 6/16/22:




DataDog - Best stock off the 6/16/22 low that we track, +32%:





Software etf - IGV - up 12.5% from the low:





JNJ chart looks very strong, as pharma rises...





Rising Dividend/Rising Revenue etf RDIV - the best of the Dividend ETFs. After falling 14%, bounces 5.7% off the

6/16/22 low





Lockheed pops off the 100 DMA (blue lline)






The 10 year bond yield -Falls back to 3.1% from 3.5%:





Housing starts drop in May along with building permits:








ULTA Beauty- Huge reversal off of 330 level:





Latest CFO Survey Shows #1 Spend for 2022: Cybersecurity.

We own Fortinet FTNT in the Aggressive Growth portfolio:






Haliburton: Chart pattern is the same in all Oil stocks, but could bounce after such a big correction in 5 days, bouncing off 200 DMA:




 

Example of How Our Proprietary Sell Signal Model Works - Oil Services etf OIH -

The Smart Way To Force You To Take Profits


The Top 3 Sector Portfolio features a unique technical analytical program that issues specific sell levels as a stock peaks out, usually selling 1/3 of a position as each sell stop is hit. In most cases, we set our fist sell stop midway between Sell Stop #1 and #2.


The program works similar to a trailing stop, but uses a combination of key Moving

Averages, On Balance Volume, MACD, Momentum, Price Gaps/Pivot Highs Lows, and Relative Strength indicators to set the specific levels. We can run this program on all of our Sector ETFs and stocks.


Here's an example of how we sold the Oil Services etf OIH after it peaked in both the Top 3 Sector and Aggressive Growth portfolios.


As you can see, OIH had a huge run, rising 97% in the past 1.5 years, and +80%

for the year to date on 6/8/22. That's impressive, give the fact the SP500 is down 22%

for 2022.


But then, sadly, OIH rolled over, falling 25% in the next 7 days As noted, OIH was up 80% for 2022, and now as we post this on 6/17/22, that gain has fallen to +28%.

Lucky for us, we had the sell stop program to make us sell at intervals as it dropped.


As it began to fall from the peak, we got a sell signal on the MACD trigger on

6/10/22. Our sell stop algo program told us to sell 1/3 of our position at 299, for a +69% gain, then 279 for a 56% gain, and 267 for a +49% gain.


The program forced us to take profits as internals weakened, which preserved our hard won gains. Note that we will sometimes wait a day or two before selling.

And in this case, we sold at a lower price, especially becuz of the speed of the fall.


The OIH is now up 28% for 2022 versus the June high of +80%. The sell-stop program systematically took us out of the position, as it banked some nice gains along the way. In so doing, we have helped our followers make the most of their investments.






Here's Another Example Of Top 3 Sector Sell Stop Algorithm chart:


The Rydex Emerg Mkts etf RYWVX ran up 110% from Sept 2020 to

Jan 2022. Then it fell -71%, before bottoming around 50. (From a high of 165).


The sell stop algo took us out of 1/3 at +91%, then 1/3 at 67%, then the last

1/3 +58%. The Emerg Mkts etf then went on to fall 71% from high to low.

In fact it is now down 38% from the 'low' it made in Sept 2020.


This is an actual trade we made in private accounts. It shows you how disciplined

profit-taking can keep you safe from a crash, yet lock in profits as you sell fractional

allocations. Sell stop levels determined by a blend of 7 indicators including Fibonacci

Retracement, MACD, Momentum, % above Avg Daily Volume, RSI and others.

Each indicator is also weighted according to its historic accuracy, not all indicators

are equal, some have a much greater correlation with trend change and ROC.


Many times we have looked back at a chart on a red hot stock that peaked and rolled over,

ultimately falling 60% to 70%, and seen these sell tops lines, wisting to heck we had obelyed

the signals.




 



The Seven Percent Rule

The “Seven Percent Rule” is a trading method used to cut losses early.

Most successful investors say minimizing losses is even more important

than picking a winning stock in terms of wealth creation.

Investor’s Business Daily cites this technique as crucial to good money

management.

It’s pretty simple: If a particular holding drops 7%, it’s time to sell.

For us, a loss of -3% to -4% would probably get us stopped out prior.

But let’s see how this works:

Let’s say you have a $10,000 investment in a hot tech stock.

But overnight, negative news sends it down 7%, here’s what happens:

$10,000 x -7% loss = $9300 left

In order to get back to even, you would only need a +7.5% gain:

$9300 x 7.5% = $700 + $9300 = $10,000 (back to original)

But if you let that loss increase to -15%, the dynamics change:

$10,000 x -15% = $8500

$8500 x 18% = 1530 + 8500 = 10,000

(You would now need an 18% rise to get back to $10,000)

And a -35% loss pretty much guarantees you’ll never get whole

as you would need a +54% move to get even

$10,000 x -35% = $6500

$6,500 x 54% = 3,500 + 6500 = $10,000 (takes 54% move to get to $10K)

At -50% loss, you would have to make 100% to break even:

$10,000 x -50% = $5,000

$5,000 x 100% = 5,000 + 5,000 = $10,000

And just how many stocks go up 100%?

For some investors, this mathematical reality is a given.

But for many others, the idea that if you lose 35%, all you have

to do is make 35% to break even is more commonplace than

you would think.