Private Advisory Group

Winning by Not Losing–Implementing their approach

Posted by Christopher

I thought you’d have interest in this reallocation alert issued by Stadion, one of our managers.

Soon after the start of June, we noticed a change in market dynamics. The succession of higher highs, higher lows and the climb of support through resistance changed its tune. Our indicators, which had been steadily increasing in a positive level, started a descent toward a negative reading. All of our equity exposures were removed following their respective stop loss thresholds being met during this pullback.

Our first reduction in equity exposure came on June 19, as XLB (Materials Select Sector SPDR) hit its stop loss level. A further reduction in equity exposure occurred a few days later on June 23 when our large cap market holdings of SPY (SPDR S&P 500) and DIA (Diamonds Trust) hit their respective stops loss levels. As the market continued its negative trend for the month of June, the remaining equity exposure was removed with the sale of XLP (Consumer Staples Select Sector SPDR) on June 26 as it hit its stop loss level.

Current market action calls for a position of safety which will either be rewarded by further declines, or turn into a “whipsaw.” While whipsaws are frustrating, we have no reservations about re-initiating equity exposure if dictated by our Model. Making money during the good times is nice, but only if you can protect it in the bad times.” Etc. Etc.

As of today they are 100% in cash waiting for the right time to get back in.

It is always great to see them actually do what they said they were going to do. And, given the fact the S&P is down 4.5% since Stadion decided to go back to cash, they are definitely winning by not losing!