TRADE ALERT: MacroTraxx
TRADE ALERT: MacroTraxx
Significant steps to get to "fully invested"
I just made a few trades in this strategy. Here’s the bottom line, followed by a discussion of these moves and a broader context around the MacroTraxx strategy, which occupies 25% of my total Institutional portfolio (SungardenInvestment.com site).
Note: I normally do not publish full commentaries on my moves to the general public, but MacroTraxx is new we have been getting questions about it. So this seems like the perfect time to provide a feel for what it is about.
TODAY’S TRADES IN MY MACROTRAXX PORTFOLIO
Full sale of PSQ (Nasdaq 100 inverse ETF). Was a 3% position, sold at slight profit.
New buy 12% QQQ (Nasdaq 100 ETF)
New buy 2% VIXY (ProShares VIX Short-term futures ETF)
Current Portfolio allocation
80% 1 year T-bills
12% QQQ
6% DIA (Dow Jones Industrial Average ETF) - this was an existing position
2% VIXY
Comments on today’s trade activity
OK, time to “take the wraps off” of this newest creation of mine. I’ve been soft-peddling with it so far, having put the key part in to start a while back, in the form of an 80% allocation to 1-year T-bills, purchased around a 5% yield. 1-year bills are down to 4.4% now, but the 6-month bill rate is currently still right at 5%, so someone starting with strategy now could either play it 6 months out and re-address, or lock in the lower rate for 1 year like I did. Either way, that position is there for stability, but can be adjusted as I see fit. In other words, while I don’t plan to sell it prior to maturity, I could change my mind on that.
The other 20% of the MacroTraxx portfolio aims to be aggressive. However, I am such a (self-admitted) “chicken-shxt investor” a.k.a. risk manager, I have to this point made few moves, and in most cases they were a combination of regular “long” ETFs and “inverse” or “short” ETFs. So more of an arbitrage approach.
But I’ve been doing some research on the MacroTraxx approach I created, and have gained a lot more confidence that even in a market that changes its mind as often as I change T-shirts, I can put on positions that I think in combination can be in tune with the near-term “swing trading” type of opportunities I see all the time, while still protecting against the brunt of what could happen if early August’s market freak-out was a prelude, not a false alarm.
MacroTraxx will likely be a highly active portfolio. However, my soon-to-be-released study on the concept behind the strategy indicates to me that by allocating even a modest 1/10 of the 20% of the portfolio not in T-bills (so 2%) of the MacroTraxx account I run) to an ETF like VIXY provides some “crash support” alongside the T-bills, which allows the other 18% of the portfolio (currently 2/3 QQQ and 1/3 DIA) to try to “do its thing,” should the market do what it shows signs of doing here: burst higher, but only temporarily.
What is “temporary?” Who knows? That’s why I created MacroTraxx: to have a simple, “T-bills plus aggressive” mix that I may adjust at any time, perhaps even multiple times a week.
I also believe that the markets are getting so “binary” where so much moves up and down in sync, this gives me a better shot of trying to grab some tactical profits, while covering my “tail” if you will.
If you have any questions on MacroTraxx or any other aspect of the model signal service at Sungarden/ETFYourself, contact us at info@sungardeninvestment.com.