Thanksgiving Day Portfolio Performance

This time last week I posted an article which showed that certain equity market sectors perform better than others between Thanksgiving day and the start of the new year.

At the end of the article I explained that I would create a hypothetical portfolio which consists of one stock from each of the 7 sectors which have produced the strongest seasonal gains during the past 15 years.

These sectors are:

  1. Materials
  2. Financial
  3. Energy
  4. Industrial
  5. Telecommunications
  6. Consumer Discretionary
  7. Healthcare

To select the individual components of the portfolio I used the Volume profile and Relative strength Indicators which are available to members of the Flagship Trading course.

The following graphic provides a quick overview of these indicators…

rel

 

The exact process in choosing the portfolio components was as follows…

Scan each of the 7 sectors outlined above. From each sector, find a stock which meets the following rules…

  • The stock is showing relative strength against the market.
  • The stock is in a long-term up-trend.
  • The volume profile is positive. (This means that strong days are supported by high volume but weak days coincide with light volume.)
  • The number of recent high volume up days is higher than the number of recent high volume down days.
  • Finally, if there was more than one stock from each sector which met the above rules I selected the stock by ranking them in order of strongest quarterly performance.

This produced the following list of stocks…

  • DOW (Materials)
  • CINF (Financial)
  • FANG (Energy)
  • LUV (Industrial)
  • VG (Telecommunications)
  • BYD (Consumer Discretionary)
  • DYAX (Healthcare)

Each of the stocks was then equally weighted.

This meant that with a $10,000 account, we would have to divide $10,000 by 7 to arrive at the amount of cash that we should spend on each position.

($10,000 / 7) = $1428.57

To calculate the number of shares to buy, simply divide $1428.57 by the share price.

For example, if the share price of DOW is $51.71, we divide $1428.57 by $51.71.

This allows us to buy 27 shares of DOW.

This process is repeated for each of the stocks which are to be a component of the portfolio.

The final Thanksgiving Day portfolio looked like this…

portfolio

The question remains, is the Thanksgiving Day portfolio outperforming the market as it did during the same period last year?

Let’s find out after the first week…

Thanksgiving Day Portfolio Performance. Close of Week 1.

Week1

Benchmark (SPY) Performance. Close of Week 1.

spyweek1

Between now and the first trading day of 2016, I’ll continue to update the performance of this portfolio at the close of each week.

 

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