What I call Permanent Portfolio Trend is only similar to the Permanent Portfolio (25% Equities, 25% Treasuries, 25% Gold, 25% Cash) in that in trades the same core assets: Equities, Treasuries, and Gold. The strategy of Permanent Portfolio Trend is to simply apply a 200 day simple moving average filter with volatility sizing.
Rules for backtest:
This breakout in AAPL should attract more late-to-the-party buyers and reinforce the positive price action. Markets continue to print new highs daily and beginning of the month and strong December seasonality should begin to show next week. The market was hit with a large rebalance trade end of Friday and we will have to watch how that develops early Monday.
Sticking to the playbook and looking for spots to add to stocks that have consolidate and pulled back from recent highs continues to be the right path. 3D printing names led, financial broke to new highs, and small cap stabilized. While we were hoping for more of a pullback, we don’t want to be left holding too much cash if and when the markets break out again. Year-end performance pressures are likely beginning to surface and fund managers will be adding to their winners into year-end in window-dressing fashion. After 6 straight up weeks, the best Thanksgiving wish would be a 10-20 point dip to reload next week.
Growth stocks are succumbing to profit taking with many testing or breaking below their 50-day moving averages. The correction crowd got jumpy after the TWTR sell off. The rollercoaster ride continued Friday and got the market back to close to Thursday open before option expiration week and Veterans day. Looks like the bulls are not giving up as some mechanical sell signals are probably firing on the strong Friday rally.