27 March 2017: Watershed?

President Donald Trump failed to reform the healthcare system. He suffered a tough defeat in the House of Representatives at the end of last week. True to form, the Donald seeks revenge and he predicts the implosion of the current healthcare system, Obamacare. How will stock investors judge last Friday’s events? Will it be a matter of having a good cry and starting again? Or will they consider the refusal of the House of Representatives to go along with Donald Trump a watershed moment? The sentiment of investors has changed for less plausible reasons in the past…

white-chapel-logo-smallMarkets had a bumpy ride last Friday. After it became clear that Donald Trump’s healthcare proposal failed in the House of Representatives, stock prices retreated, to bounce back not much later. The S&P 500 was almost unchanged (-0.08%), the Dow suffered a small loss (-0.29%) and the NASDAQ recorded a small gain (+0.19%). UVXY ETFs followed the pattern of the indices: it went up as much as 4%, but ended the day with a loss of almost 4%. XIV ETNs ended the day with a gain of more than 2%.
Danny Daredevil closed a positive week in a minor key, but its return for 2017 improved from -18% to -8% in the course of a week. Adventurous Anny did not change. Solid Suzy and Lazy Larry had a positive ending of a somewhat weak week. Their RSS was at almost 4% at the end of last week.

Model Holds Start date

RSS

YTD

QTD

AAR

Danny Daredevil UVXY 1 January 2016

270.12%

-8.18%

-8.18%

190%

Adventurous Anny Cash 6 March 2017

8.17%

8.17%

8.17%

Later

Solid Suzy XIV 6 March 2017

3.72%

3.72%

3.72%

Later

Lazy Larry
XIV 6 March 2017

3.72%

3.72%

3.72%

Later

RSS = Return Since Start | YTD = Year-To-Date | QTD = Quarter-To-Date | AAR = Average Annual Return

 

Two of our models gave a trading signal at the end of Friday’s session: Danny Daredevil and Adventurous Anny. Danny switched from UVXY ETFs to XIV ETNs and Anny bought XIV ETNs at the opening of today’s session. Solid Suzy and Lazy Larry keep XIV ETNs in their portfolio.

 

 

RS_v05-smallA couple of weeks ago, René planted some flower seeds. After a period of heavy rainfall, followed by warm and sunny early spring weather, René was expecting to see some seedlings popping up by now. But not even a single seedling has sprouted through the soil so far. It is like watching paint dry. Hard to imagine that among the flowers he planted, there are some that should reach a height of six to seven feet in just two months time.
Patience is a virtue. No doubt, in a couple of days, there will be seedlings all over the place. Yet, past results are no guarantee of future performance. Maybe too much rain has fallen, which may have drowned the seeds? Only time can tell. To be continued.