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EZV Algorithms: Looks Like Clear Sailing For A While

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  • It's interesting to see how the dashboard metrics allow us to watch the risk-on psychology develop in slow motion.
  • In my August 31st blog I commented how markets needed to pick a direction.  Then on September 5th it looked like metrics were healing.
  • Right now it looks like clear sailing - at least for a while.  I'll show you why.

My dashboard is starting to look rosy.  You can never dismiss the possibility of a big surprise, but for now markets are shaping up for continuation of a healthy rally.  Here is the dashboard at the close of September 12th.

EZV Algorithms Dashboard - September 12, 2019

Source: Michael Gettings    Data Sources: Fidelity, VIXCentral.com, CBOE

The Primary Slope is now very positive and the SHAPE metric is "Safe."  The only lingering issue since the August turmoil is the Confirming Slope which will probably be positive by next week.  

I find it interesting watching the daily evolution. 

In my August 31st blog I wrote " Recent stocks prices are stagnating in seemingly vicious mini cycles, going nowhere."  And I closed with this:  "Which way will it break? I don’t care, but I wish it would break in one direction or the other."  I said that because I'm confident that we can make money either way.  If it broke up, we'd compound returns, and if it broke down, we'd see the metrics turn, sell on the signal, and then buy back later at lower prices.  

In the interim, for my September 5th blog I wrote " Finally, EZV Algorithms metrics are showing some signs of healing. Primary Slope is rising and SHAPE is finally above zero . . . I'm becoming hopeful that with Summer doldrums over, we might be setting up for a meaningful rally."

Well, it's now breaking in the upward direction, but it's been two weeks since the buy signal, and while that feels like a long time, the slow-motion metrics facilitate clarity, like slowing time to hit the knuckle ball pitched by chaotic markets.  

And now things are looking very healthy.  Healthy enough that I'm going to make a small portfolio adjustment, selling bonds equal to 5% of the portfolio and restoring weighting to IWM.  I had under-weighted IWM since it was lagging, but now it's doing far better.  That will bring my growth portfolio near 55% of total and above 62% with preferred stocks.   Confidence in retirement!

Watching inflection points in slow motion does build confidence.  I wish I could read greens like this.


I've reached the magic 750+ followers, so I'm preparing a proposal to Seeking Alpha for a Marketplace service.  Here is the logo and elevator speech.  

If approved, I'll roll it out with some attractive pricing for early committers, so if you're interested keep a look out for the opening window; it will probably take a couple of weeks, but I'll let you know by blog as I gain clarity.

Thanks for reading and especially for following.

Analyst's Disclosure: I am/we are long SPY.

I trade all the tickers mentioned using the algorithm described. The artificial intelligence algorithm monitors daily performance and periodically recalibrates look-back horizons and triggers in a step-wise sequence. New calibrations are applied prospectively only, and never applied to the historical period from which they derived. The algorithm described and the discussions herein are intended to provide a perspective on the probability of outcomes based on historical performance. Neither modeled performance nor past performance are any guarantee of future results.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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