Investment Philosophy: Employing a Top-Down Technical Approach to create a portfolio of non-correlated assets with largely asymmetric risk/reward potential.
Below Is a More In Depth Look at My Approach:
First off, as a technician, my investment process does not involve any fundamental information about the underlying security. I focus on the price action of the security being analyzed and the behavior of the market itself. At the end of the day, it does not matter what a security should or shouldn’t do, but what it is actually doing in the market. Technical analysis introduces risk management into the picture by outlining levels where my analysis is wrong. As a market participant, I expect to be wrong the majority of the time, which is why I look for high risk/reward scenarios to add to the portfolio. The goal of my process is to construct a portfolio of non-correlated assets that currently have a risk/reward profile that is dramatically skewed in my favor. I work from a Top-Down Approach in that I try to identify broader themes present in various markets around the world and then drill down into individual securities to identify how best to take advantage of that theme while managing risk within the portfolio. By applying a technical approach to markets I can analyze and participate in any market whether it be equities, commodities, currencies, fixed income, etc… The factors that are important for my analysis are; absolute and relative performance, momentum, sentiment and seasonality. How these factors are quantified, measured, and utilized differ based on the asset class being looked at, which will be discussed further below.
An important part of my process is to analyze securities utilizing multiple time-frames: a weekly, daily, and intraday (65 / 60 minute). The weekly chart provides insight into the structural trend, while the daily and intraday charts provide a more tactical view that can help with the risk management process.
Indicators Used for Weekly and Daily Charts:
- 14 period RSI.
- 14 period ATR.
- 200 period simple moving average.
- Correlation labels (monthly, quarterly, yearly).
Relative performance is an important part of my analysis because I want to be involved in assets where relative performance is either trending or at pivotal turning points where my risk/reward is clearly defined. I can also participate in ratio (long/short) trades when the risk/reward on a relative basis is better than on an absolute basis.
- Ratio charts: When analyzing a security I’ll look at how it is performing relative to the broader market, its sector, an industry proxy or individual names in its peer group. This helps to identify the levels on which this particular security is showing relative strength or weakness.
- Ratio charts with trendlines and indicators: Once I’ve identified how a ratio looks from a structural perspective, I’ll add trendlines and indicators to identify areas of support and resistance while watching for traditional chart patterns to develop.