Strategy Note: WOTE US 60

Adding defensive exposure.

Current View

Action

The WOTE US 60 strategy sold its ~30% position in SPLG (SPX placeholder) to bring Utilities, Staples, and Healthcare up to a ~7% active weight each.

For reference, positioning as of January 17 was as follows:

Discussion

With SPX set up for a trip down to its 100dma and Powell decidedly hawkish yesterday, the weight of the evidence supports taking a position in defensive sectors for a tactical trade into March. Today’s market action of a sharp reversal higher in VOL and on-going stickiness in CDXs, the set up is in place to take a contrarian stab at the Defensives Group. As we’ve written about, the NDX Group is the only segment of the market with durable relative strength trends, and before yesterday there was not a clear-cut set-up to take a decisive contrarian position outside of that group, but Powell was the tie-breaker so now it’s time to move.

Positioning Framework

Disclaimer

NOT FINANCIAL ADVICE

The Weight of the Evidence (The WOTE) newsletter (inclusive of anything and everything publicly and privately associated with it, no matter how tangential) contains the author’s own thoughts and opinions on financial markets. The WOTE is for educational and entertainment purposes only and none of the content or ideas should be taken as financial advice. The author is not responsible for any financial gain or loss that you may incur by acting on the information provided. You are solely responsible for making your own investment decisions and should do your own due diligence in regard to opinions and ideas on the markets to form your own personal view and form your own trades. For investment or financial advice, consult with a registered investment advisor and/or financial advisor. By reading The WOTE you are agreeing to these terms, and acknowledge it is for sharing the author’s thoughts and opinions on financial markets. Your trading and investing style, preferences, and risk management may significantly differ from the author’s.