01-04-2021: Is this the much-anticipated correction?

Updated: Feb 5

Year-to-Date Strategy Stats as of today:

+ 0% : Turner Quant Advantage (TQA)

+ 0% : Tactical Growth (TG)

-0.08% : Diversified Income (DIS)

+ 0% : Leveraged Index (LI)

-1.66% : S&P 500

It is quite amusing to hear the so-called 'experts' try to explain why the market is selling off today. Some say it is because the professional betting community has the odds-on favorite in tomorrow's Georgia election to be the Dems. While the professional gambling world might have it right (or not), I really doubt that the market is now, all of a sudden, terrified that the Senate will come under Democrat control when the market yawned at the outcome of the Presidential election last November. But, that is just a guess on my part.

As you know, if you have been reading my weekly Client Letter for the past few weeks, I have made you aware that the market was getting more and more overbought. An OB market is always ripe for a correction. Could today's action be the start of a 15%, 20%... or... the big one... sell-off. No one knows that answer, but this much we do know:

  • The market is seriously overbought.

  • Markets tend to correct on almost any trigger when in an OB condition.

  • We are (appropriately, I would say) 100% in cash in all the growth models.

Come this Wednesday (or Thursday), we should know how the market is digesting the Georgia election results. If the market continues to trend lower, by rule, we can put up to 15% of capital to work in inverse ETFs.

If the market shrugs off the results of the election and moves back onto its unrelenting Bullish trend, we plan to put 10% (or so) to work on the long side.

Frankly, I would prefer to be buying inverse ETFs in this market rather than buying Bullish positions. But, my "preference" is not how we manage client accounts... we rely on what the market's "preference" is, and that requires us to wait patiently on the sidelines until we can detect a solid trend one way or the other.

The first trading day of 2021 went in our clients' direction. Definitely a good day. Any day that you can beat the S&P 500 by nearly 1.5% by safely sitting on the sidelines is a very good day, indeed.

We will be sitting out tomorrow on the sidelines as we await the Georgia election results. But, we will be working... I am looking for the best 3 tickers to buy in TQA and TG. I'm also looking for a solid gainer for DIS. We already know what we want in LI. And, I am also narrowing down my ETF selections for a new ETF-only model that I am testing that focuses on high momentum thematic ETFs... more on this new model as time goes by. I am not taking any client capital for this one, yet, but will keep you posted.

Here's to an amazingly profitable 2021. We will do our best to help make that a reality!

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