The QG Fund is Back in Profitable Territory!

Photo Credit: Motor-Head via Compfight cc

Photo Credit: Motor-Head via Compfight cc

It’s funny how our thinking can shift so dramatically from one week to the next. As the market took off running this week, I found myself questioning the logic of using the IBD 50 as a stock universe for the QG Fund. A universe of only 50 stocks is going to have a much more difficult time producing buy signals compared to a large index like the Russell 2000.

That means that one good week could be plenty to get the QG Fund fully invested if it used the Russell 2000 as a universe. However, it is apparently going to take multiple strong weeks for the IBD 50 universe to create enough buy signals for the fund to get fully long.

A few weeks ago when the market was really choppy and looking pretty bad, I thought that was a good thing. During a week like we just had, I wished I was more invested. Obviously hindsight is 20/20. Until we compile years worth of data, all we can do is speculate, so let’s look at what actually happened this week.

Overall Performance

This is the big news this weekend. The QG Fund is back in positive territory for the first time in many months. It is currently sitting at a value of $100,227.89, which represents a gain of 0.22% on the year. While that gain is still well below the S&P 500, which is currently sitting on a 6.41% gain for the year, it still shows that the QG Fund can keep up with the S&P 500 when things heat up.

Here is what the QG Fund holdings look like this weekend:

qgholdings-060714

As you can see, the fund would be doing a lot better without the 7% loss it is sitting on in AFSI, but that is easy to see in hindsight. You could just as easily argue that the fund would be doing terrible if not for the big sudden gain it logged the day after buying AGN. Arguments like this are why we stick to the rules no matter what. We don’t know how any individual stock is ever going to play out, so following the system is where our positive expectations come from.

Entries & Exits

Because pretty much everything aside from AFSI kicked ass this weekend, there were no exits to worry about. It also means that we can probably expect quite a few hits from our weekend scan for new entries. Here is what that scan looked like:

qgscan-060714

As expected, there were quite a few stocks in this weekend’s IBD 50 that are at new 20-week highs. Sorting them by 20-week ROC allows us to immediately chop off the bottom five. Of the remaining stocks, the top dog EMES doesn’t meet our historical volatility requirement, so it’s gone too.

That means that FANG, SWKS, CAR, CLR, and AL all qualify as new entries this weekend. The QG Fund already owns SWKS, CAR, and CLR, so that limits the list even further. It also only has 1.5 open positions and I’m not entering any new half positions, so it looks like FANG is the only new entry for the QG Fund this week. If there were another position available, AL would fill it.

That means that we won’t need to do another weekend scan until we get a sell signal in one of our holdings. I’ll still run the scan every weekend though because I’m thinking that the number of IBD 50 stocks at new 20-week highs could be a pretty good gauge for the health of the overall market.