Short note: The Rotator's choice of EEM on Monday worked out nicely with yesterday's sort producing a similar ranking for today.
The MLR Rotator now has a slightly different look and an adjusted portfolio of components. I've initiated the component changes based on continuing Project Z studies and will eventually merge the output of single stock/ETF Project Z system studies with the MLR ranking in order to evaluate the rotation model using 2 diametrically different timing models.
First, the deletions . . DBA, EFA and DIA. DBA has never fared well as a rotator candidate and DBC effectively covers the commodities market for my study. EFA tracks technically very similar to EEM and I prefer the robustness of EEM. DIA is, in my opinion the toughest of the majors to trade technically. The massive gaming by major prop shops of DIA components makes trading this ETF a challenging proposition and I think there are many other ETFs/stocks that respond to timing models in a more reliable manner. Project Z actually does a great job of timing the DIA (85%+) but I think it's 30 stock base makes it too susceptible to surprises. That's just me.
New components include GE, BAC and EWC. While those selections may seem a bit odd at first glance there's really some method to my madness. GE is like Caesar's wife, all things to all men.
It's a financial stock, it's a tech stock, and it tracks more like an ETF than a single stock. With daily volume that often exceeds the Qs and IWM, GE is a high beta juggernaut that provides some attractive trading opportunites for short-timers like myself. Ditto for BAC which routinely trades 200M shares a day and which tracks very well technically. While it has no tech side like GE, BAC does have a beta 1 point higher than the XLF and for rotation evaluation purposes I believe it will prove useful to see how BAC ranks relative to XLF on the daily rotator update.
EWC . . OK, here's a wild card but, after many, many hours of testing, I've found EWC provides an interesting relational sounding board for both EEM and GLD, and EWC technically tracks very well (92%) on Project Z.
Side note: I've realigned the Rotator columns with % change (yellow) moved closest to the sort value. To further clarify: the "5 Day" column is looking at the stock/ETF's 5 day performance relative to the 5 day SPX.
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