For those following the dynamic momentum rankings for ETF Rotational Trading, this Monday is a new trade day and the following should occur:

• Liquidate at Monday’s open any positions entered last month.
• Enter new rankings at open on Monday.

Please note the disclaimer below. These actions are not recommendations. They do represent the timing used in backtests for this system.

Consult your financial advisor prior to making any major changes in your investment/trading strategy.

Best Momentum Rankings

The rankings shown below are for the Trading Normal style which has produced the best backtesting results (see previous article here or others in the Investing Category). This system is designed to trade long only:

Normal Trading Style

Best Rankings

Only the top-five ranked ETFs are shown. XLF, the number one ranked, is highlighted as the top-ranked ETF based on proprietary momentum calculations. This system produces better results with fewer choices (again, see backtesting results).

Worst Momentum Rankings

These five ETFs produced the worst momentum rankings:

Worst Rankings

The effects post-election are clearly reflected in these new rankings. Money has moved into stocks, particularly financials, and out of bonds. A review of the top-ranked ETFs per month further shows the shifting market favorites:

At the beginning of the year, bonds (in the form of TLT) were highly ranked. Currently they are on the worst performers list. Gold, GDXJ and SLV rose to the top of the list early in the year and produced the bulk of the profit during the year. Recently, they have been getting clobbered. BIL is a cash equivalent. The system goes to BIL when momentum of other indicators are low or danger is assumed in markets.

Outcomes Based on Selections

2016 is not over yet, but all but one of the selections (XLF) have been accounted for. The P&L for 2016 up to this point from buying the number one ranked ETF each month is shown by month:

Jan  Feb Mar  Apr  May Jun Jul  Aug  Sep  Oct Nov Dec 

December is not shown as it has not completed yet. However, as of the date of this publication, XLF is up 6.74% since its purchase on 12/2 and this gain is not reflected above.