MDM - Mid-market Commentary

Published : June 20 2013 at 15:34 ET

Q: It took a month for the model to finally provide one good entry last month and in one day; TQQQ almost wipe it all... 7% down in one day... I was almost 11% up before for the year...
Any comment would be welcome.

A: That has been the nature of 2013. The market baby steps higher in 1Q twice only to give it all back in a couple of days. The recent uptrend from mid-April to mid-May was steeper, and today's pullback erases much of that gain. Due to the highly challenging nature of markets since 2012, position sizing with care is essential. TQQQ is a 3x ETF thus one should always position size within their risk tolerance levels.


Indeed, the market is swinging around here due to the perceived negative testimony by Ben Bernanke. That said, the economy is fragile, recession is clearly evident in the UK and in Europe, and a dearth of economic reports showing recovery are keeping Bernanke from saying he will start tapering on any particular date. All Bernanke can hope for is that the economy does indeed recover so he can start slowing the pace of quantitative easing (QE). In the meantime, the markets will most likely find their footing once again and head higher. That said, should the markets and leading stocks continue lower, the model will switch out of its current buy signal into cash or sell signal, depending on the degree of selling pressure across the major averages and leading stocks.

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