Following Strength Through Market Volatility
Tactical Opportunity Portfolio Update
I shared the following changes to our Tactical Opportunity Portfolio with clients this morning:
Selling XME (Metals & Mining) and buying GLD (Gold).
Why: Momentum in XME is deteriorating and the up-trend relative to the S&P 500 that emerged over the second half of 2022 has been abruptly broken. Gold, however, is breaking out and trends have turned higher.
Selling XHB (Homebuilders) and buying SMH (Semiconductors).
Why: Homebuilders are rolling over while Semiconductors (along with gold-related names) have moved toward the top of the relative strength rankings for a broad universe of liquid ETFs. In this environment, Semi’s act more like a defensive Industrial than speculative Tech.
Selling KIE (Insurance) and increasing cash.
Why: Tactical tailwinds for equities are exhausted and our “Fear or Strength” suggests there is more risk being in equities than being out of equities.
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