gmg733
788 posts
msg #132783
- Ignore gmg733
modified |
11/25/2016 12:04:09 PM
All,
Greetings! I took an idea from johnpaulca and some work KevinGA previously did and came up with a filter that looks at correlation to the US dollar or in the filters case the UUP ETF. The premise is if you feel the dollar which has been strong lately continues its plight to 'Make America Great Again', then you can use this filter to look at stocks that have a strong correlation to the dollar. I feel the filter doesn't need a lot of explaining.
Here is the prospectus for UUP. If you feel there is a better vehicle to do this, then great change the filter.
https://www.invesco.com/portal/site/us/investors/etfs/product-detail?productId=UUP&ticker=UUP&title=powershares-db-us-dollar-index-bullish-fund#overview
How to trade this? Well, this is not a pick me and I'll make money type of filter. You can use this filter to find a basket of stocks that you can buy on the premise that the dollar will get stronger and so will the stock price of these equities. This filter tells you what is in play based upon your dollar assumption. You can use it to create your own watch list or symlist for your favorite filter.
My conjecture: I do believe for the next few years the dollar will be stronger. I think the recent market rotation is telling me this. I will be trading this by picking non-correlated sector stocks (after a pull back mind you) and finding the ones with the best options premiums. I'll set up a core position and sell calls against them every month decreasing my cost basis until my dollar assumption changes. A great kicker to these stocks is a lot of them have dividends too.
Of course the market could go to hell too and none of this will matter. Nonetheless, trade the market you have not the one you think you'll have. For general market timing I use the 12 month SMA found on this site:
http://www.advisorperspectives.com/dshort/updates/2016/10/31/moving-averages-october-month-end-update
Lots of good info there. I would not be long if price closes below the 12 month SMA. Change the filter to your liking and I hope it helps.
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johnpaulca
12,036 posts
msg #132789
- Ignore johnpaulca |
11/25/2016 4:17:13 PM
gmg733....thanks for running with this, I do believe the dollar will run, this not due to a strong US economy but weak currency from:
Euro (EUR), 57.6% weight
Japanese yen (JPY) 13.6% weight
Pound sterling (GBP), 11.9% weight
Canadian dollar (CAD), 9.1% weight
Swedish krona (SEK), 4.2% weight
Swiss franc (CHF) 3.6% weight
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