Thoughts On The Week Ahead And What Types Should Work The Best

by Geoff Garbacz | 08/13/2022 12:10 PM

Major stock indexes rose this past week, making it down twelve weeks of the last nineteen weeks for the S&P 500.

Correction Price Pattern Status for S&P 500: Last week’s action saw all indexes move higher but still down 12 of the last 19 weeks. Nonetheless, the indexes were up their fourth week in row. The S&P 500 has now recaptured all of June's losses. We remain with a focus on selective buys and but would no longer use selective shorts of Type 2s moving to Type 4s as well as Type 4s that do not an Erlanger Options Rank higher than 70 as we are now in rally mode on a weekly basis. The Sector Erlanger Options Rank sees 1 of the 24 Sectors (Energy) with a score about 70 down from 3 last week. Put Squeezes are mostly played out now.

So how did our screeen do after making 4.23% the week end August 5th? It lost -1.57% for the week.

Last week saw the S&P 500 trade lower three days and higher two days. Two weeks ago there was one big up day that drove the return for the week. This week it was two days. The S&P 500 was higher by 3.26%. The conclusion is up days are turning into "big ups" and down days are turning into "small downs" for now.

The hedge ended down -1.57% with today's changes. Type 1s rose 0.79% while the Type 4s rose 2.36%. We are okay with the results given that our full list of 3s and 4s gained 5.96% and 5.09%. Our list rose about 50% of the full lists which is attributable to using bias and triggers to help with the selection process. Our short list is a loser's game for now and all we can do is limit the damage with a focus on Large Cap that are lower beta in nature.