The Good Fortune of the Quantitative Growth Fund

quantitative growth

quantitative growthLast week, we talked about how the DTAYS Quantitative Growth Fund was about to enter its first larger size position. The new entry signal was in a stock called Allergan and I had never heard of it. I actually had to look up the symbol to find out a little background on the company.

Things worked out pretty well with that little stock that I had never heard of before. It went up immediately after I entered the position on Monday morning and closed the day up something like 6%. When I tweeted about what a great start the position was off to, someone pointed out to me that the stock was up nearly 20% in after hours trading as part of an acquisition deal.

AGN gapped up huge on Tuesday morning and then continued higher in each of the following days. The stock even put in a modest gain on Friday when the rest of the market seemed to be crumbling.

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The QG Fund’s position is currently showing a 25.31% profit. Not bad for the first week of a trade.

Of course, we have to keep in mind that a 25% jump due to a takeover offer is a tremendous stroke of good luck. This is not something we could predict or anticipate in any way. By targeting stocks that are making new 20-week highs, we are naturally going to find ourselves long stocks that have this type of potential, but this type of explosion should be very rare for the system.

Because of the luck associated with this position, it is important to refrain from giving the system too much credit for finding this particular stock. Getting into AGN on the exact day that it took off was the result of good fortune, not something the system did.

Overall Performance

Thanks to the huge jump in AGN, the QG Fund made up some significant ground this week. It is currently sitting at a value of $96,761.63, which represents of loss of 3.24% on the year. That is a huge improvement over the 5.82% loss we were sitting on last weekend.

Here is what the holdings of the fund look like this weekend:

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This Week’s New Entry

Despite the tough day on Friday, the SPY is still well above its 100-day moving average. That means we are still in buy mode and scanning for new positions. Here are the stocks in this week’s IBD 50 that are at new 20-week highs:

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Of the four stocks that meet our first qualification, only one meets our minimum requirement for 20-week Rate of Change. With a 20-Week Rate of Change of 50.76 and a Historical Volatility of 0.34, SWKS meets all of the requirements for a new entry into the DTAYS Quantitative Growth Fund.

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According to IBD, SWKS is a company named Skyworks Solutions that makes a bunch of what appear to be fancy computer parts. I’m guessing that because it is in the Chips sector and the Semiconductor Manufacturing group. The stock checkup reveals that the stock has a very strong technical picture and only a few fundamental red flags.

The QG Fund has about $60,000 in available capital that will be spreed between 6.5 of the larger positions. That means that the new position in SWKS should account for approximately $9230. The fund has an order placed to enter a position of that size on Monday morning.