Author: Gerry Wollert of Rebound Trading Systems
Covestor model: Rebound ETF
Disclosure: None
The month of May saw the bears take control of the market with a series of lower highs and lower lows. This was largely due to deteriorating news related to the economy. The sovereign debt concerns in Europe along with the civil unrest in Northern Africa and the Middle East added to investors’ concerns during the past month. The first few days of June started off on a sour note as well.
I am not a registered investment advisor and I do not try to predict what the market is going to do next month, next quarter, or next year. Rather, I rely on my momentum models and robust buy criteria to tell me when it is appropriate to be invested in the market.
My short, intermediate, and long term market timing systems all are currently bearish.
At the end of May, I have only 57% of my funds invested in my Rebound ETF portfolio. When fully invested, I hold seven exchange traded funds. Given the market weakness and the status of my timing systems’ signals, I currently hold only four positions, with the balance of my funds allocated to the money market.
I use an upgrading strategy to continually upgrade my portfolio with strong-performing ETFs. When they start to lag, I replace them with an ETF that is exhibiting stronger growth momentum.
Since all three of my timing models (long, intermediate, and short term) are currently bearish, I am taking a very cautious approach to the market. The markets may be a bit oversold at the present time; however, in this environment, it’s smart to keep a close eye on current holdings and not to second guess your sell discipline.
