Remove the noise..

Friday 28th June - Daily Equity Update

I was going to write stuff, but I am not good at it and its always dangerous.

Many words about many things will be written today. We could tie ourselves in knots about the implications, first, second or third-order effects…

Or we can look at the pretty green colour and see that ~ 2.2% below the current price level on SPX we have a decision to make.

Job done have a good day/weekend.

Let’s have a look at something more interesting.

I posted a new chart style yesterday. Here it is for XLK.

Here are the corresponding percentages of time spent in the different zones.

Why is tech outperforming? Just like the opening comment today, we could tie ourselves in knots explaining this with our big-sounding words.

We could simplify it and say although the % drawdown in April was relatively small, it breached levels to where it only spends ~2% of its trading time.

Using the measures here April 2024 was “worse” than October 2023 for the technology sector.

If you remember in April out of 74 tech tickers in the SP500 only FSLR was a long, which worked out well for us :)

Get to the point Chris!

The point is it only took a 5% drawdown to do damage under the surface. Causing people to shift positions or change their hedges etc. While people were waiting for “a crash” the table had already been reset.

We need to move away from price levels and see that short sharp price moves or long periods of consolidation can achieve the same things to the underlying math governing each ticker/sector/index.

These things are not foolproof. That is why I backtest everything and why I test using these different things in combination.

It is much better than chasing the news though!