Monthly Macro Portfolio January 2021

This is the inaugural Blog post for the Monthly Macro Portfolio. 

Each month, before the first trading day of the month you will receive an email with the current portfolio, any exits and any new entries. 

This portfolio is the model portfolio here at Pollinate Trading and not a recommendation to buy or sell, it is up to you to make the decision to buy or sell any of the assets we will cover here. 

All entries will be made via buy stops above the signal level.

All exits will be made at the open of the first trading day of the month, there will be no exits during the month, which can cause drawdowns, but the system is designed to wait for the entire trading month to end before exiting positions. 

The strategy was designed in 2019 and began live trading the beginning of 2020 (forward testing). 

This strategy was also utilized exclusively (outside of Pollinate) by a family office who will continue to run this strategy alongside us all. 

The universe of assets that the strategy trades are over 40 US Traded ETF's, giving excellent exposure to the Macro environment while providing the easiest access. Equity accounts are more simple to trade than futures as there is no contract specificity.

The average holding time of a winning position is over 900 trading days, about 4 years. 

The average holding time of a losing position is less than 2 years. 

Additionally most of these symbols issue dividends, which adds an income generating layer if you look at it that way, and pays you to wait for a trade to play out or get stopped out. 

Let's start off with the current portfolio and entry price.

EXISTING POSITIONS AND ENTRY PRICE

• GLD 168.31
• XLE 39.09
• QQQ 253.66
• EWP 21.26
• EWQ 25.09
• EWW 30.40
• EWU 25.63
• EWA 17.26
• XLI 66.23
• XLK 104.58
• TLH 157.25
• TLT 150.79

Existing Positions Thoughts

The current portfolio is up 42.7% since inception with QQQ providing the largest unrealized returns to date and GLD in second place, while XLE TLH and TLT have accounted for the largest dividends to date. 

This month TLH the 10-20 Year Treasury ETF was close to exiting, however it moved back to stay a long position. 

All other positions show no sign of taking a break. 

During the COVID crisis of March 2020, many long positions were exited locking in notional profits, had the strategy been trading live the past 20 years. This provided an excellent opportunity to get long Spain, France, UK, Australia and Mexico where we see tremendous opportunity over the coming decade. 

Energy XLE is our only losing position at the moment, yet our highest dividend earner. There is reason to be bullish energy, as drillers have the technology and experience to pivot from traditional fossil fuels (crude) to advanced geothermal drilling (read more here https://elidourado.com/blog/notes-on-technology-2020s).

NEW POSITIONS

• FXE Buy Stop ABOVE 115.56
• EEM Buy Stop ABOVE 
• EWL Buy Stop ABOVE 45.25
• SLV Buy Stop Above 24.84
• DIA Buy Stop Above 306.29
• IQQQ Buy Stop Above 46.695
• WOOD Buy Stop Above 80.57

The following positions triggered last month but can be purchased via limit orders if they have a drop in price

• XLB long anywhere at or below 72.41 (Can use Limit Order)
• EEM Market Entry anywhere at or below 50.17 (Can use Limit order)

New Positions Thoughts

The Euro (FXE) has bottomed after a multi year bear market, while the USD is showing weakness all other major currencies are strengthening. As the United States looks to bring manufacturing jobs back on shore a key component to that will be a weaker dollar to allow US pricing power in the global marketplace for goods. I would expect this trend to extend across other currencies over the coming months/years.

Emerging Markets have already started moving favorably in 2020, but there is still plenty of opportunity here, along the lines of dollar weakening. I expect more exposure to non-US ETF's to continue, such as our EWL entry increasing our exposure to Europe. 

Commodities are showing a lot of strength, the lesser exposed Water IQQQ, WOOD (self explanatory) and Silver (SLV) and I expect other commodities to pull us into positions long into this decade. 

We were long SPY and DIA along with QQQ going into March 2020, both SPY and DIA got stopped out, while QQQ held strong and has proven to be the true winner of 2020. The Dow looks to be back in business.

Last month the builders XLB and Emerging Markets EEM fired off buy signals, but they are close enough to their entry prices it is possible to put limit orders in allowing portfolios to get long on any weakness. 

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I'm really excited to be sharing this portfolio with you all and I look forward to building out a lot of research looking in to the future and guessing what trends we might see years from now with the guidance of these portfolios positions.