Recently retired and looking for some other ETF traders to discuss and collaborate with. I'm interested in the trades that last weeks and months, not hours and days; not day/swing trading, but not buy-and-hold investing either. I use relative strength and momentum charts and look for the leading categories (sectors/sub-sectors, industries, geographic regions / countries, etc.) and even constituent stocks of the leading ETFs. and my old EliteTrader login still works!
My experience tells me the best swing trading strategy is momentum trading. The work from home stocks have reigned supreme since the collapse but that trade looks very crowded. Looks like in the last few days the trend might moving back to "value" stocks aka physical companies. I personally doubt any energy, banks, leisure, etc. trade will last long probably a few weeks like in late May early June. Your best bet is still the tech & gold trade. Some things I observed watching the markets every day since the collapse: Gold/Silver have skyrocketed due to massive debts (GLD SLV GDX) Everyone wants to leave urban US for suburban/exurb US (XHB) Any tech company disrupting the physical world has skyrocketed (QQQ) I think all these will continue.
I have an automated system running that looks at industry sector ETFs and put money in the top performers (long only, no short positions). The ranking of the ETFs is purely based on historical daily close prices and some technical analysis to determine trend and momentum. There is no subjectivity or manual interference involved. I notice that the turnover (change in ETFs in the portfolio) is rather low. Currently I'm holding IBB, SMH, XLB, XLK and XLY. The latest trade was to exchange XLC for XLB.
Sounds very similar to my more subjective manual approach. It would be interesting to compare notes from time to time. Here's the top-level viewpoint that I use to lead me to other subsector and industry ETFs and occasionally to constituent stocks. It's my way of getting an all-in-one view of relative strength/momentum and leadership changes ... kind of a visual ranking method. Thanks for responding. Relative performance of leading U.S. sectors using Vanguard ETFs from March low. In order from top to bottom at right axis ... VCR, VAW, VGT, VDE, VIS.
Right. While I use the Vanguard sector funds for tracking, I'll often buy the SPDRs because of better spreads and overall liquidity. In fact, I bought XLY in April instead of VCR, but later "upgraded" to ITB and a couple stocks in the sector. Are your ranking period(s) static/pre-determined or do you use technical start points to rank multiple trend segments? My logic for tracking multiple segments is to help identify momentum divergences that look like they may eventually result in changes in leadership (sector rotation) prior to actually crossing on my longer term chart. There hasn't been enough of a "technical correction" to justify adding a second ranking period for this trend (since March) based on my observation of weekly sector charts. Another question, if you don't mind. In your "only long" approach, will you go to cash (money market, T-Bills, etc.) during downturns or does your strategy keep you fully invested in more defensive sectors? I will short, but very rarely and only the major market indices like SPY, QQQ, IWM. In a good bond market and a bull in equities, I'll keep my dry powder in a relatively low volatility bond fund, like LQD. I'll use shorter term options at other times.
I don't know what you mean by "pre-determined". I download historical data and from that calculate both trend and momentum for multiple lookback periods. Each of these result in a rating, which are then combined in an overall rating for the ETF. This is done for the ETFs I track, and then ranked to find the top 5 performers. I only invest in an ETF if its rating is positive. Otherwise I keep it as cash. I consider the costs of going short too high, eating too much of the potential profits. The list of ETFs I use is limited to industry sector ETFs only.
Thanks for reminding me. I have used those in the past. But currently are they not part of the ETFs that I'm tracking.