This week there were no position changes in the Sector Plus model. Our current three positions are SOXL, ERX, and DRN. To open next week, we will remain in those three ETFs.
The SPY closed the week up +1.21%. The ETF Sector Plus model was up +3.45%. The ETF Sector Plus Strategy is up +44.88% year-to-date compared to its benchmark, the SPY, which is now up +7.31% year-to-date.
This Week’s Strategy Lesson: Halftime Report
We are now half-way through the year. Happy 4th of July to all of our U.S. subscribers. We thought we would take this opportunity to review the performance of the model so far this year.
The SPY started off the year with a shaky first couple months, before a period of consolidation and finally breaking out to new highs in May. The Sector Plus model charted a similar course, quickly jumping to +6% in January before plunging down to -8%. The model rebounded a lot faster than the market to new highs.
We likewise had a general period of consolidation before catapulting up in the last two months. A timely entry into ERX (Energy) and some tremendous outperformance from SOXL (Semiconductors) were largely responsible for the climb, though DRN (Real Estate) has been no slouch up 17% from our entry.
We are now sitting on fresh all-time highs in the SPY and new all-time highs in the Sector Plus model. If you have begun following the “Stops & Targets” version, we recently hit price targets in ERX and SOXL.
The ERX target is straight-forward since most people following our model should have a similar entry point. The SOXL trade is a bit unusual in that it is based off an entry that occurred before we released the model.
Without trying to predict the future or contradict the models rules, if you are intending to trade the “Stops and Targets” and sitting on substantial gains in SOXL (without taking any profits yet), it would be worth considering taking some risk off the table at these all-times highs after a quick run-up in the ETF. Officially, the “Stops and Targets” model already closed the SOXL position as it reached its third target.
Closed Trades
CURE and TECL were our most profitable closed trades with the others being close to a break-even. The CURE trade is one where the model ended up giving back a lot of its “paper profits” before exiting. At one point that position was up near +30%, but a swift pullback and rank change caused us to sell out of that position. The switch proved to be beneficial in the long-run as we got into ERX which immediately surged forward.
Open Positions
The Current Condition of the Model
For the Sector model, we remain in SOXL, ERX, and DRN. ERX and DRN were basically flat this week while SOXL soared to new highs up over 10% this week. No position changes are imminent in the sector model but stay tuned to the daily updates should there be any changes.
Here is a summary of the weekly performance of all the ETFs that the strategy monitors:
Best wishes for your trading,
James Kimball
Trader & Analyst
MarketGauge