Site Portfolio Announcement - Market Analysis for Jan 6th, 2020

In a post many months back, I stated that we would go through a portfolio redesign. We have had three components on the site, long term small and large caps, and the swing portfolio. When we started, I stated that I did not personally plan to invest in the long term model portfolios, but by and large would take swing portfolios trades unless otherwise mentioned. I do not consider my myself a long term investor. But I had a request to include long term portfolios for those that take a long term approach, and for tax efficiency. This request was on the table when I was an EWT member and in the process of planning the service, and move from member to team. 

However, we now want to phase this approach out on the site for a few reasons: 

1. Using Elliott wave on such a volatile long term asset means that the long term supports can be very broad. As we’ve seen, hitting a long term support on such a chart, and then breaking it, makes a position unrecoverable. Tighter risk parameters are needed to survive in crypto, which in my view means trading multi week and month swings and avoiding any position during bears if at all possible. 

2. Cryptocurrency is an experimental space. We have seen far too many five wave patterns that  invalidate in the next degree. This is akin to patterns we see in IPO stocks, some of whom establish a more solid trend later. Some never do. We didn't know we’d see this in 2016 to 2017, but I now believe this will be a constant reality in crypto.

3. Further, I am now highly skeptical of any crypto that is not Bitcoin, based on the clear ‘vote’ Bitcoin has received from institutions. Right now, it appears it has staying power. Many do not. Some, like Ether have secondary interest from institutions but qualitatively, not as consistent.

4. The fact that I have had limited skin in these portfolios, from the beginning has made them hard to manage. I have a stronger sense of my own short term risk than that of a more long term oriented trader. I consider myself an unfit manager of a long term portfolio. 

Phase Out

The Long term portfolios are going to be kept so long as Bitcoin is in a run in the current bulls phase, and will be sold out at the expected top in Bitcoin. If Bitcoin breaks down from the current value, the portfolio will be liquidated and not reinvested.  So, they are not closed. Instead I will seek to get those still invested in them a profitable exit. I still believe the large cap will be, just on a few positions. The small cap remains a question. 

New Portfolio

The swing trade will continue for the time being, but we plan to eventually phase it out in a favor of a portfolio that will mimic my personal positioning that is expected to last for more than a day (aka core). The percentile exposure will be accurate, not the actual quantities. Also, note I cannot guarantee a profitable portfolio however, I have been profitable in cryptos since 2016, wildly so, however some of that is achieved by micro scalping, which is unmanageable via site tables.. This portfolio will be for positions that are intended for more than a day, so recognize it will spend much time in cash during bear cycles, though it may have shorts at times. Further, it will NOT be at all tax advantageous but will seek to maximize gross return before taxes. But so many have liked following my positions, I've decided it would be easier on me to fully post my core changes. Note that by law, I need to post before I take a trade, so there will not be post facto posts of current positions. Also, note that we do not have a start date for this portfolio approach. 

The intent here is to evolve the service so it gets better, and learn from faults in the early design of the service. 

Note: This will not at all change the request process of the service. I will continue to give a point of view on any crypto chart for which you request, and I can get data. 

Ryan Wilday hosts the Cryptocurrency Trading service on ElliottWaveTrader.net.