Tactical Update: Shrinking Growth (PREMIUM-UNLOCKED)
*The following Premium Post was issued to TLS members on the morning of March 4, 2021.*
Risk off is hitting growth stocks; time to bail — or buy the dip?
The answer is yes. The choppy market that we’ve been anticipating continues to play out. And, as we have been saying, the stocks which are most at risk are the growth names that have run so much over the past 4 months and got a bit too extended. Thus, we have been focused on that area in terms of our hedging/selling. Specifically, we have had a hedge/short on in the Nasdaq 100 via the inverse fund, QID. As mentioned in today’s DSS, we added to our position into today’s early strength. Specifically:
- We bought more QID near 28.10. The NDX has near-term risk down to ~12,200 (QQQ ~297.70) which is where we’d look to cover this hedge.
At the same time, some growth areas are already testing near-term support levels. And as we’ve been saying, while we’re not in a straight-up market anymore, we are likely in a 2-way market still. Therefore, we are still open to buying high relative-strength areas into pullbacks to support. Many of the growth areas that are pulling back were ones in which we took profits/trimmed exposure into their recent rallies to all-time highs. We are happy to add back into good support levels. To that end, we added back to the following positions (these were discussed in today’s DSS):
- FDN near ~212.98
- IGV near ~339.80
The only other move today was to take some profits in XLE near ~51.85, which represents the 38.2% Fibonacci Retracement from the 2014 all-time high. And FYI, the gold/miners strategy from yesterday’s post remains in play. Today’s moves take our portfolio to an approximately net-long position in equities of ~40%. Including non-equity positions, it’s about ~50%.
That’s all for now. As always, stay tuned to our DSS posts for further developments — they provide the most current updates to our investment portfolio and outlook. We touched on many of these potential moves in today’s DSS.
**3/4/2021 12:15PM CST UPDATE**: We covered/sold half of our remaining Russell 2000 short/hedge, TWM, near ~16.39.
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Disclaimer: JLFMI’s actual investment decisions are based on our proprietary models. The conclusions based on the study in this letter may or may not be consistent with JLFMI’s actual investment posture at any given time. Additionally, the commentary provided here is for informational purposes only and should not be taken as a recommendation to invest in any specific securities or according to any specific methodologies. Proper due diligence should be performed before investing in any investment vehicle. There is a risk of loss involved in all investments.
