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RRG® Momentum+ Share Baskets – Q3 Rebalance

After a good start to the year for the UK 350 RRG Momentum+ basket, which continued into Q2 after the portfolio rebalance in March, stock markets in general (including the UK) started to lose strength and trade in a choppy, sideways fashion. These are not optimal market conditions for momentum-driven strategies/stocks, and it took its toll on the basket’s performance, causing an underperformance of around 5%.

Going into Q3 the RRG model selected 10 new stocks that are exhibiting strong, relative momentum.

 

 

The constituents come from six different sectors:

  1. Financials: Investec, Brewin Dolphin, and M&G
  2. Communication Services: Future
  3. Industrials: IMI, and PageGroup
  4. Healthcare: Indivior
  5. Materials: Elementis
  6. Consumer Discretionary: Frasers group, and TI Fluid systems

This results in a very diversified basket which, in the light of the current market choppiness, positions the CFD portfolio well for Q3.

 

The RRG® Momentum+ Range – 6 NEW Baskets

In April we added six new baskets to the range. These new baskets cover the following indices:

  1. SPX 500
  2. NDAQ 100
  3. Australia 200
  4. US Growth 1000
  5. Hong-Kong Large Cap
  6. Germany Large 100

The strategy applied to these baskets is the same RRG® Momentum+ strategy as used for the initial UK 350 RRG® Momentum+ basket.

These baskets started trading halfway through April, so they had little chance to show performance. That said, the research we did for all those baskets showed encouraging results over longer time periods. So, we’re excited to track their development going into the new quarter.

 

In Focus: SPX 500 RRG Momentum+

This basket selects its constituents from the SPX 500 index. Going into the new quarter, the following 10 stocks are included in the recently launched SPX 500 RRG® Momentum+ basket.

 

 

This basket also contains constituents from 6 sectors:

  1. Information Technology: DXC Technology, Gartner Inc, and Seagate Technology
  2. Consumer Discretionary: Ford
  3. Healthcare: IQVIA Holdings, Charles River Laboratories
  4. Financials: Discover Financial Services, First Republic bank
  5. Communication Services: Google
  6. Consumer Staples: Archer Daniels Midland

The Technology sector is heavily present with 3 stocks. All in all, this basket is also a mix between more defensive and offensive sectors without a clear bias towards one or the other.

This composition is probably an accurate reflection of the ‘mixed’ nature of global stock markets right now.

 

 

Since mid-April the S&P 500 index started to move sideways. The new highs that were formed were only marginally higher, and the market was never able to convincingly push higher.

The rising channel is still intact, but the index is coming very close to the rising support line that marks the lower boundary of that channel. Breaking that support will weaken the picture even further and make it more difficult to push higher in the near future.

Only when that horizontal area of support, around 4250, is taken out convincingly, will a further acceleration within that channel be possible. The latter scenario is a far more optimal environment for the RRG® Momentum+ strategy.

 

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