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Weekly Signals Update – October 18, 2021 [Premium Signals]

The weekly systematic trading reports include open positions, new signals and year-to-date performance of seven trading strategies. Access to article requires Market Signals or All in One subscription. 

Market Recap and Comments

Stocks (SPY) closed Friday up 1.8% after dropping as much as 1.4% by mid-week. Commodities (DBC) gained 3.1%. Gold (GLD) was up 0.7%. Bonds (TLT) rallied 2.2% after falling -0.3% on Monday. DBC is up the most (+47.5%) year-to-date while GLD is down the most (-7.3%.)

Last week I wrote:

Without proper timing it’s hard to avoid large losses…

During this week most asset moves were unexpected, especially in equities and bonds. The rally in commodities continued while many analysts were expecting the market to take a breather. Without robust strategies it’s difficult to deal with these markets. Discretionary trading can lead to erratic and random decisions with highly negative impact on P/L.

Numerous posts in financial social media daily are proof of random decisions by an overwhelming majority of traders. Random trading causes losses and may lead to ruin if traders start placing “revenge trades” driven by emotions. On the other hand, following strategies has never been easy due to the requirement of exercising discipline and refraining for interfering with the signals.

Anyone who has followed strategies such as ETFNRW and MRSPYW with 21.7% and 17.7% returns year-to-date, respectively, has been rewarded so far. Other strategies may be doing worse at this point in time but the objective is that the ensemble of all seven strategies will reduce variance in case asset prices reverse direction and even if the final return is low, the maximum drawdown will be much lower than that of the benchmark. In addition, we expect strategies to exit the market soon enough to avoid large losses but this isn’t always possible to achieve in a timely manner since it also depends on the speed of a decline.

Strategy Performance Recap

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