Leveraged — Allocate to the 2x or 3x leveraged counterpart, based on risk tolerance, when the undervalued criteria is triggered.
Unleveraged — Allocate to the market ETF when the neutrally valued criteria is triggered.
Inverse Leveraged — Allocate to the inverse leveraged ETF when the overvalued criteria is triggered.
Reallocation occurs at market open at the start of each trading week. Status often carries over from the prior week, so no reallocation may be needed. Data updates each weekend on Sunday, following Friday's market close.
Short-Term Trigger indicates that the leveraged status is being triggered by the short-term valuation signal (7 week SMA). Long-Term Trigger means the leveraged status is being triggered by the long-term valuation signal (FVE). Both may be triggered in the same week, or just one — Not Applicable (N/A) if neither is triggered.
XLE is excluded due to persistent historical volatility and low model conviction. XLRE and XLC are excluded as newer sectors without enough long-term data for a high-conviction strategy.
Status Spectrum:
Brown (Inverse)
Pale Yellow (Unleveraged)
Burnt Orange (Leveraged)
Category
Status
Valuation
Strategy Philosophy
We combine our proprietary FVEr Trading Strategy with Dollar Cost Averaging (DCA) to optimize long-term risk-adjusted returns. Market volatility can occasionally trigger a "Leveraged" status during significant down weeks; by consistently averaging in at lower price points, we mitigate capital loss and lower the cost basis for the eventual recovery.
Allocation Rules
Our internal system updates weights weekly to ensure new capital overweights the most undervalued segments of the market based on our FVE Star Ratings:
- 60% Market ETFs / 40% Sector ETFs — We maintain higher conviction in broad market strategies over specific sectors.
- Energy (XLE), Real Estate (XLRE), and Communications (XLC) — We do not include these sectors in our strategy. XLE is too volatile, and XLRE and XLC are too new.
How to Use
Choose the strategy that aligns with your specific risk tolerance:
- Market / Sector ETF — For standard market exposure (no leverage).
- 2x Strategy — For moderate leverage exposure.
- 3x Strategy — For maximum leverage exposure.
- Note: If a 3x instrument is unavailable for a specific benchmark, we recommend downshifting to the 2x strategy for that portion of the allocation.
Total weekly allocation adds up to 100% across all market and sector ETFs. Each week, the strategy adds new capital to the portfolio according to the percentages.
All trades are placed at the open of trading each week.
Data updates each weekend on Sunday, following Friday's market close.
Status Spectrum:
Brown (Inverse)
Pale Yellow (Unleveraged)
Burnt Orange (Leveraged)