Sunday, May 3, 2015

Market Review - May 3, 2015

After declining sharply on Wednesday, post GDP data and Fed announcement, market bounced back sharply on Friday. Overall, sideways market action continues. Soon the market will leave its current range.

Although the break from this range can be in either direction, chances are increasing for an upside rally. Some of the reasons behind this observation are:
  1. Market has absorbed not-so-good earnings and a much weaker GDP data, without a sharp decline
  2. Market has already taken into account an interest rate hike 
  3. Market has held together over the past few months without significant Fed induced liquidity
  4. Market has gone sideways for the past 5 months. This sideways action can be treated as a triangle formation before the next rally
However, one should keep in mind that we are now entering a traditionally weaker period for stocks and Nasdaq is approaching its all time highs. Since summer months don't yield good market returns and we can experience a sell-off due to double top formation in Nasdaq, things can get a little bumpy in the near term. This is the very reason, why one should trade with a system and not based on their opinion.

In order to take out the opinions, UST has developed a new long term investing model with the goal of optimizing portfolio allocation by combining it technical analysis and capital growth theories.

In comparison to short-term traders, investors with a long-term horizon, lesser time for market analysis and keen financial understanding, have a desire to accumulate wealth over time. In contrast, accurate short-term trading can yield more profits. Therefore, if one can combine short-term trading attributes with long-term approach, one can amplify the gains.

UST team has utilized our expertise in algorithm based analysis and trading to develop a longer term investing. This model has been in test mode since November 2014 and has performed exceptionally well in out-performing the market.

Although model's performance is being discussed on the blog for the past couple of weeks, following is a snap shot of actual market performance of the brokerage account where this model is being implemented in real-time.

Please note that the snap shots start from March because the pull portfolio was moved to the model based investment on March 1, 2015. We will continue to evaluate the model, its performance, holdings and other aspects on the blog.

Note: Overall market remains in a bull.

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