I have recently made reiterations to two speculative, yet potentially very lucrative trading calls. During the month of June I also fielded questions and concerns about market direction, both up and down, so I also had to reiterate my interests in proactive portfolio management.
Aside from these two speculative calls, which should only be undertaken with small amounts of money, core proactive strategies should be used to manage the bulk of a portfolio, and those strategies should also be able to control risk while making money regardless of market direction. I will discuss that here as well.
The two recommendations that I re-iterated were VXX long (anywhere under $17.4 is okay) and Apple (AAPL) short at or above $611. I would use a stop loss for the AAPL call at its YTD high, but I would just tuck VXX away and let it ride. Only use a small amount for each trade, and do not let my upside price target for VXX (VXX) sway that, but I am looking for over $40 from VXX within 5-6 months. These calls are updated to clients in real time and they may change at any time without disclosure through Seeking Alpha or any other public venue, so anyone interested in real time updates to these calls should visit us at: Stock Traders Daily to ensure prompt alerts when changes are made.
By every measure, I believe that VXX can be a 'home run' trade, but we cannot invest the bulk, or even a significant amount of our wealth into a 'home run' trade. For the core parts of our portfolio we must use proactive strategies that incorporate risk controls, and one of those is our Swing Trading Strategy. This is a good example of how this market should be handled, because the Market can do anything.
With an open mind, my macroeconomic work also tells me that the Market will eventually fall on its face, but that does not necessarily mean right now. Arguably, right now may actually be what happens after the Central Bank decisions, but the point of proactive strategies is to go with the flow of the market, not to fight it. The Swing Strategy, for example, was up 7% last week, and it had a beta of 0.29 last year, which means it does not correlate to the market. Instead, it can make money when the market falls as well, and that is the key for all core parts of investment portfolios given current market conditions.
Core portfolios must focus on risk control and be nimble enough to transition with the market because eventually the troubles will come home to where it hurts us most. Eventually the market will fall again and adversely affect the wealth of all of those who are dependent on the market to increase in order to preserve wealth and realize a positive return. Sitting at the mercy of the market given the high levels of risk that exist today is not okay with me; therefore proactive portfolio management is a no brainer.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
