Author: Amin Khakiani
Disclaimer: Focal Point Advisors (Amin Khakiani) owns GDX and SPY in its Covestor Quantitative Hedging model.
July 30, 2010: After a difficult May and June, July saw marked improvement in the equity market.
Our technical indicators led to us to increase our long positions, particularly as we began to see increased institutional participation in the equity markets.
As we head into August, our models favor large cap indices (SPY), and our sector rotation model favors banking (KBE) and precious metals (GDX). Our fixed income strategies currently favor corporate bonds and high yield instruments (LQD, JNK).
One thing we are watching for is volatility, which increased sharply during the May/June swoon, but has retreated back since then (Google Finance). Increased volatility may cause our models to do more tactical shifting into and out of long and short positions.
