My Model ETF Portfolio Strategy
My focus is on trading short-term swing trades that last 5 – 90 days. This allows us to take advantage of quick explosive price movements in the market each month like clock work. These wave like patterns are too small for hedge funds to take advantage of and are too lengthy for day traders. This provides us with high probability ETF trading opportunities for those who can take advantage of them like you and I. While I like to actively swing trade it is important to have a diversified portfolio.
My model ETF portfolio is based on trading and investing only into stocks, sectors, commodities, indexes and currencies which are in stage 1 accumulation and stage 2 market phase. Knowing that there are always a few investments starting a bull market at any given time, we dig deep and find you a steady stream of growth investments while ignoring the rest of the market.
With a focus on daily and weekly charts to identify the next hot market you can expect most trades and investments to last 3 – 12 months in length. As investments mature and volatility begin to rise within our stage 2 investment we will slowly rotate money out of those investments and into newer investments.
Our model ETF portfolio provides diversification because we trade in a broad range of investments. And through the use of inverse exchange traded funds we can also boost profit during a global bear market. These funds rise in value as the underlying investment falls, and because prices always fall quicker than they rise, big gains can be made quickly during these times.
Imagine if your portfolio continued to grow month after month, year after year no matter of the stock market trend.
Stan Weinstein’s – Four Stages Theory
Classic economic theory dissects the economic cycle into four distinct stages: Accumulation, Markup, Distribution and Decline. The concept of stage analysis was popularized by Stan Weinstein in his book, Secrets for Profiting in Bull and Bear Markets. I also cover this in more detail in my new book “Technical Trading Mastery – 7 Steps To Win With Logic” A stock or index is no different; it proceeds through the following cycle:
- Stage 1 – Accumulation: After a period of decline a stock consolidates at a contracted price range as buyers step into the market and fight for control over the exhausted sellers. Price action is neutral as sellers exit their positions and buyers begin to accumulate.
- Stage 2 – Markup: Upon gaining control of price movement buyers overwhelm sellers and a stock enters a period of higher highs and higher lows. A bull market begins and the path of least resistance is higher. Traders should aggressively trade the long side, taking advantage of any pullback or dips in stock price.
- Stage 3 – Distribution: After a prolonged increase in share price the buyers now become exhausted and the sellers again move in. This period of consolidation and distribution produces neutral price action and precedes a decline in stock price.
- Stage 4 – Decline: When the lows of Stage 3 are breached a stock enters a decline as sellers overwhelm buyers. A pattern of lower highs and lower lows emerges as a stock enters a bear market. A well-positioned trader would be aggressively trading the short side, taking advantage of the often quick decline in share price.