This week there were no position changes in the ETF Country Plus model. Our current three positions are FXI, TMF, and IFN. For those trading the “Stops & Targets,” TMF is only 2/3rd’s of a position.
The MSCI World Index closed the week up +1.07%. The ETF Country Plus model ended the week down a slight -0.12% on a small pullback in TMF. The ETF Country Plus Strategy is up +18.84% year-to-date compared to its benchmark, the MSCI World Index, which is now up +5.2% year-to-date.
This Week’s Strategy Lesson: Exciting New Changes and Updates for Your Product
We have rolled out a few changes to the Stops & Targets versions of the ETF models. For our new ETF Complete members, all of these changes are built into that system. These changes will only effect the Stops & Targets models, the Basic system remains the same. We thought it would be useful to go over the changes and how we feel it improves the system both from a tradability and performance standpoint.
New Trailing Stops
The current Stops and Targets model uses an initial stop which never gets moved and three targets. We like the way these work. Across all our models, you were almost five times as likely to reach a first target as get stopped out on the initial stop. In fact, the initial stop is only reached in about 5% of trades. This provides a great risk-reward ratio.
Additionally we instituted trailing stops that reduces some of our downside exposure without many trade-offs. In the Sector Plus model, this actually improved the historical performance while in the Country Plus model the overall effect was negligible, with some trades performing better and others worse.
The trailing stop will only come into effect once we have reached a first profit target. Our daily emails will start including notes when the trailing stop is adjusted. You can also view the current stop and next target in the model’s open positions.
Buy Zones
As you might notice above, there is a new column labeled “Buy Zone.” This is a brand new feature we have added to help our new subscribers and also current subscribers who might not be fully invested get into new positions.
The concept of the buy zone is that there is a range of prices where you can enter the position and get roughly the same or sometimes better risk-reward parameters. The buy zone is initially set near the entry price and extends down to our current stop. Once a target is hit, the buy zone will more dynamically change and follow the price giving subscribers a chance to get into trades that may have already matured.
We still recommend for our subscribers to follow the initial entry and trade signals, but this adds another layer of accessibility to the models and an ability to get started at any time, though it might not be possible to enter all the positions at any given time using this system.
Our daily emails will now alert subscribers when a position is in the buy zone. You can also view this information in the open positions page. The buy zone will light up in a shade of green when the ETF is within its range.
Closed Positions
We have changed the way the information is displayed. Subscribers to Mish’s Market Minute Premium may notice some similarities in the way it is presented. The core data remains the same, with the exception that it now reflects prices from any trailing stops that might have been hit.
Live Training Webinar
We will be scheduling a live training webinar next week where we will cover these changes in greater detail. We encourage you to attend or view the recording after it is posted. If you are unable to attend live and have questions you would like to have answered, please send them to[email protected].
Note for our ETF Sector Plus Subscribers
As per our new trailing stop rules, you may notice that model’s open positions shows that we were stopped out of ERX. This occurred on 8/1/2014 from the selloff in early August. ERX is currently back trading above the stop level of $115.59. You can feel free to stay in ERX as it has rebounded from this level or put in a hard stop at that price level. Going forward, all positions will reflect the new trailing stops and target levels.
The Current Condition of the Model
For the country model, we are in FXI, IFN, and TMF. No position changes are imminent. THD is currently in 3rd place with FXI dropping out of the top three but the TSI scores are still close. No position change is imminent.
Stay tuned to daily updates for any position changes.
Here is a summary of the weekly performance of all the ETFs that the strategy monitors:
