Friday, September 20, 2013

It's a Small World...9.20.13

Here's a look at the Small World model...a 6 ETF version of the larger World model that requires less trading maintenance and which typically outperforms the SPY in the shorter time frames.
There are actually 7 ETFs shown here so that users can experiment with slightly different mixes.
Looking at various combinations using 2 of EEM, EFA and SPY can illustrate the robustness of the model.
For purposes of looking at a baseline model this is the mix that will normally be referenced.  Yes...all the ETFs do move pretty much in lockstep but there are also periods of weakness and strength in the various components and this is what we're seeking to capture.  The SPY is the shaded area price chart on the platform.
I've mentioned this so many times it should go without saying but...given the price volatility of the model components and the herd mentality pattern of the price charts the P6 and TrendX money management stops need to be observed and enforced.
Here's the model:
And a closer look at the metrics:
This is top#1 sort but users can experiment with a top#2 sort which also produces decent returns.

Below is the Stops panel and we should note that as of yesterday the TrendX 2 and the Pairs Momentum have both turned down slope...arguing for a CASH position.