Global Trends ETF – January 2023

Summary

  • Cash holdings are remaining stable at high levels after raising a little cash in December.
  • Making some slow handed tactical moves looking to prepare for next bull market.
  • Risk is more international than from Fed. However, do not expect easier money soon, QT is unlikely to be cut before H2.
  • The Great Divergence is coming even faster.

Welcome to this month’s Global Trends ETF Report. Before investing, read  Making Your Investment Pie One Slice At A Time and Using Global Tr

Target Cash Slice & Investment Quick Thoughts

As always, we start with our target cash allocations. Cash is an asset and is your best hedge for short periods of time to reduce short-term risk.

Your investment nature does not change with the markets. Rather, we simply try to increase or decrease our cash holdings depending on markets within the construct of our investment nature.

Investor Nature >>>AggressiveModerateDefensive
Long-term Cash % Range2-10%5-20%10-40%
Current Level10% stable20% stable40% stable
  • We are currently at the high-end of our normal cash ranges.
  • We raised a little cash in December, but now should be in wait and see mode.  
  • We are keeping an eye out for earnings revisions and whether Jerome Powell gives any signs of pausing rates soon, although, that is not likely to be the momentums event people think.
  • The core risks are earnings revisions and international events.
  • The Fed is largely baked in right now, rates will stay higher for a while and QT is not getting reduced soon. It is a reduction of QT that would really spur markets to rise. 
  • If you own SPY or VOO somewhere, sell it and replace it with a better fund – this applies always.

Core Holdings Slice

Long-term Growth Investors

Nearly 100% Equity

ETF EquitiesSymbolSlice Allocation %
Invesco QQQ – &/or –iShares Evolved Technology*(QQQ)(IETC)*40 from 50
Berkshire Hathaway(BRK.B)10
Invesco Midcap Momentum**(XMMO)15
First Trust Nasdaq Clean Energy(QCLN)15
Emerging Markets Internet & Ecommerce(EMQQ)15
Build Your Own REIT Basket#(RQI)5
The total allocation percentage will always add up to 100% as it is for your Core ETF slice only. I’m using multiples of 5% to make life easy, but could be a few percent in either direction, a lot depends on your portfolio.
  • EMQQ is rising, but will be volatile. Buy the dips to expand asset allocation to 15%

# Current REIT targets: (AMT) (IIPR) (STAG) (VICI) (DLR)

Growth & Income Investors

Approximately 80% Equity / 20% Fixed Income

ETF EquitiesSymbolSlice Allocation % (& target prices)
Invesco QQQ – &/or –iShares Evolved Technology*(QQQ)(IETC)*25
BlackRock Science & Tech Trust (closed-end)(BST)25
Berkshire Hathaway(BRK.B)10
Invesco Midcap Momentum**(XMMO)10
First Trust Nasdaq Clean Energy(QCLN)10
Emerging Markets Internet & Ecommerce(EMQQ)10
Build Your Own REIT Basket#(RQI)5
iShares 20+ Yr Treasury Bond(TLT)0
JP Morgan Emerging Markets Bond(EMB)5 from 0 (at $74)
The total allocation percentage will always add up to 100% as it is for your Core ETF slice only. I’m using multiples of 5% to make life easy, but could be a few percent in either direction, a lot depends on your portfolio.
  • EMQQ is rising, but will be volatile. Buy the dips to expand asset allocation to 10%.

# Current REIT targets: (AMT) (IIPR) (STAG) (VICI) (DLR)

Potential Armageddon is still in play for large caps. If QQQ crashes, they all at least fall.

QQQ
QQQ December (Shooter)

Remember, Elliott Wave is sentiment based. Sentiment can change in a matter of a couple weeks, but, if the Fed is “sort of mean” for a long time, eventually, the quantitative tightening drags QQQ from about fairly valued to undervalued.

SPY and other capital intensive businesses would get hit worse on a fear-based “old man” sell-off.

FWIW, I still see QQQ breaking its decline between about $215 and $235:

QQQ
QQQ December (Kirk Spano via TradingView)

QQQ Chart

A main reason I think the Armageddon doesn’t come without an international event is that it’s going to be tough to tighten up labor markets in the U.S. That means fewer people selling off their retirement plans.

Emerging markets are starting to gain footing, however, the dollar will likely have one or two more rallies this year. EMs, stocks and bonds, are a buy the dips to build full positions soon. 

EMB
Emerging Markets Bonds (Kirk Spano)
EMQQ
Emerging Markets Tech Equities (Kirk Spano)

Tactical Holdings Slice

Thematic, international, industry and sector investing. Only use tactical holdings if you are keeping up. We will often only focus on a few ETFs that we are using for month to month or quarter to quarter trading. 

ETF EquitiesSymbolCurrent Growth Allocation % (& target prices)
Invesco Wilderhill Clean Energy(PBW)25 from 15
Invesco Solar(TAN)0
SPDR Energy Select(XLE)25 from 15
iShares Semiconductor(SOXX)5 from 0
ARK Genomic Revolution(ARKG)5
AdvisorShares Pure Cannabis or Pure U.S. Cannabis(YOLO) or (MSOS)5
VanEck Vectors Digital Transformation(DAPP)0 from 15
ARK Fintech(ARKF)25 from 15
Emerging Markets Bond(EMB)10 from 0 (at $74)
  • Energy has fallen back a bit on weather and short-term inventory. Imbalances are still likely to persist for 2-4 years. Upping XLE position on this weakness. Buy the dips on XLE this month.
  • PBW has also come down quite a bit, slowly scale in to raise your allocation. Buy the dips.
  • I like the top holdings in ARKF and it is beaten up. Buy the dips.
  • Semiconductors are beaten up, but is it the end? I don’t know, but I’m taking a starter. 
  • Small cap biotech is all over the place, I would like to grow my biotech holdings if we get more of a washout. Only have a token holding for now.
XLE
XLE (Kirk Spano)
PBW
PBW (Kirk Spano)
ARKF
ARKF (Kirk Spano)
SOXX
SOXX (Kirk Spano)