Today ‘s FSC template looks at the Lazy Man’s portfolio: SPY, QLD, EEM, DBC and TLT as well as a VIX overlay. We chose QLD inl ieu of the Qs to pick up beta and the chart indicates that was a wise decision. We are again using a 3 day bar chart extending back 12 months just to get a snapshot of how the Lazy Man Rotator works. The lower Prognosticator panel tracks the SPY, but the beauty of this template is that we can easily substitute QLD or any other component as the focus (area chart) and overlay the residual components as line charts. An interesting byproduct of this template is the array of clear VIXEN signals generated when the VIX has crossed SPY, either up or down. This has happened 8 times in the last year and in each case the 3 day VIXEN signal correctly forecast SPY momentum for 1 week to 2 months. These are high probability trades and, when applied in conjunction with proper risk management controls( exit strategies and stop losses), can produce a steady revenue stream with extremely limited drawdown. Tomorrow we’ll check out the updated performance metrics for the Lazy Man system to further support the argument for a rotational approach.
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