Uncertainty prevailed among institutional investors, who looked to Washington for guidance and found none – healthcare reform failed to materialize, not clear whether it will be re-attempted again soon, thus clouding the outlook for meaningful results on the next project, tax reform.  With consensus investing sentiment among institutions lacking, the choppy trading conditions seen of late continue.

Another in a string of mixed weeks for our stocks, with many not moving much and others moving erratically.  More new weekly highs than lows, yet another reversal from last week’s downward bias, in a series of such weekly reversals lately.  Trade durations on so many stocks are too short for good gains to have materialized yet.  Widespread profits hard to come by in these conditions.

Analytics:  Against this backdrop of many stocks whipsawing back and forth, a positive development is the adoption of revised analytics, termed Version 52.  Eight different sets of adjustments underwent testing over the past 5 weeks, all a slight reduction on the sensitivity scale.  Back-testing usually reveals less sensitive analytics produce fewer trades (a good thing) and fewer losing trades (a good thing), but also a lower overall trading return (a bad thing) because gainers are smaller from later entries (some profits missed) and later exits (some profits forfeited), and seven of the variations did just that.

The eighth variation, however, proved to also reduce number of trades and percentage of losing trades, while also improving the overall return (because the reduction on gainful trades was more than offset by the avoidance of trading losses), and this Version 52 is in effect for this week.

On several stocks these revised analytics indicate a different trade direction than the previous version.  The prudent response is to react immediately with trades to sync our positions to this newer (better) version, rather than wait the contrary position out until the next reversal cycle (we did this with a Level 2 stock with very damaging results).  In most instances, recent short signals were premature, and trades this week on HUN, KMT, NRZ and TROX are among those adjustments.  Going forward, expect a decrease in number of weekly trade signals and fewer unproductive, offsetting trades. 


Highlights:  Only 4 new weekly highs in long positions.  6 stocks with double-digit long gains:

       ABX +18%      FIVN +11%        IVTY +24%                                                   NEFF +84%

       EVH +17%      TRUE +13%                                                                                                                  

Only 1 new weekly low among short positions.  2 stocks with double-digit short gains:

      NPTN +19%                                 URBN +28%                          


Locking in short gain of +26% in ATW (9 weeks).