Transcript
Hello everybody, welcome to Tuesday. Good day today, the S&P 500 was up almost 1.4%. And a very powerful day altogether, especially since we broke through the resistance that was above us yesterday, we’re very close, again, to the all-time high. And my experience, when we have two really strong days, usually that means we’re back to the trend we were on before, which in this case was the upward trend. So we’ll see what happens. Again, reaction is better than prediction. But it does look really good.
I’m very, very pleased with what’s happening here, this would be a great chance for me to describe kind of how we find the emerging trends within the stock market that we want to kind of get in front of. And we’ve been doing that, you know, obviously very successfully here for a while. And so let me describe what we’re doing. Just please keep in mind that the process I’m about to show you is constantly evolving. It’s different than it was a month ago, it’ll probably be different again, a month from now. So here’s a spreadsheet, lots of numbers, and what have you. But this is a pull down from Morningstar. And this is all 2335 Exchange Traded Funds or ETFs. And again, an ETF is a basket of stocks or basket of bonds. I do eliminate in that screen and pull down any leveraged ETFs. So I’m not counting those. So these are the non-leveraged kind of what I call the normal ones. So the first thing that I do is I take out segments that I’m still not interested in, for example, and I call this the Client Select Screen. And so I take out Bitcoin, I take out in this case, China for now, uh Cannabis, and oil and gas and really volatile components of the market. And I now have a smaller, you know, subset that I’m working with. And then what I do is I go through using standard deviation. And I also use how much these things fell in the last several downturns as part of my risk gauge.
So my first level and so this would be kind of the highest risk, I make the signal portfolio have very specific process for getting here. And so this is looking at what happened, you know, last week, for the year prior. And, you know, all of this light blue, here is Clean Energy. All of this red here is things that are short. And last week, we had a down market. So you can see a lot of the pieces that go up on the market go down come up, pop up, these blue areas are technology with 3-D printing and ARK Technology and Robotics, and then rare earth metals, you know, so again, and then you keep going a slice down to a lower risk level, still see a lot of clean energy, little short technology starting to grow. Here are some battery pieces. next piece. Now technology is actually the biggest piece at this risk level. Short is next. Clean Energy come down. Batteries are growing, et cetera. And then you know, here at this lower level, again, technology’s biggest piece of starting to see some international come through here, you know, and what have you.
So I then take that and I create one giant portfolio, I take all of the Select pieces here and put them into what I call Super Select. Now this looks kind of crazy, because it is. But what I do here, now I want to find those pieces inside of here that are moving up compared to the market on a very smooth basis. So I’ll give you an example. This is TAN, okay, this is Invesco Solar. It’s a piece that we have in our portfolios right now. And what I’m looking for down here is a nine month Alright, this is a nine month chart, for example, I look at 1, 6, 3, 12 months, I mostly look at weekly data. So each one of these little bars is a week. And what I’m looking for here is a fairly smooth progression on relative strength. So what this blue line shows is, how did this particular holding do compared to the S&P 500. The red line represents the S&P 500. So if this blue line is below the red line, then it’s done worse than the S&P 500. If it’s above, it’s done better. But what I’m really looking for is a smooth ascent here as much as possible, because I prize that type of overperformance. And so then when I get after I look at every piece that’s in here for relative strength is what I call the Relative Strength. Super Select Chart.
And so again, lots of Clean Energy. Yeah, definitely a big piece. technology. So one thing I have seen here over the last several weeks is that technology is starting to emerge again. Especially kind of this innovative technology. We still have Genomics that’s in here. There’s a short component that’s in here at the moment. That might disappear next week, because this market has been pretty good this week. But this is my Signal Portfolio for the week. And so the two things that jumped out at me that are trends, you know, we’re already heavily invested, we have six pieces of Clean Energy in our portfolios. So I’m good there. The things that I’m really looking at this 3-D printing, and this Gig Economy.
These are fairly new into the Signal Portfolio, they got through all of this screening process and still made it. Because one of the other things, if you notice, here’s an ARK Portfolio and ARK Portfolio and ARK Portfolio. This 3-D printing is also an ARK Portfolio. And this is Cathie Wood, and she is just knocking it out of the ballpark. So this is a very fascinating piece that I will start to track. And then the Gig Economy, of course, is all of these companies that are you know, allowing people to kind of plug in and do work when they want to in those types of things. And so that those are two emerging pieces, the Gig economy and the 3-D printing, that I’m currently you know, spending some time looking at. And so, you know, go through a whole process, but that Signal Portfolio is really important for me to kind of just show, okay, here’s where the money’s going right now, here’s where things are happening. And, you know, we got to take a look at that, and what have you, and we’ve got nice relative strength, and you know, all the things that I’m really looking for, as far as that goes.
Lots of effort goes into this, again, just continuous tweaking and working on making those Signal Portfolios, you know, I have good results over a period of time and that such too so that’s how we’ve done it, I mean, that process, you know, we are quite a bit ahead of the overall stock market. Part of the reason is because of these kind of Signal Portfolios. So, I hope that helps and let you kind of understand you know, what we’re doing, and I really look forward to seeing what’s going to happen tomorrow. So we’ll talk to you then. Thank you very much.