Our Winning Edge

Investment Philosophy

• Data Collection:
  We collect market data and key indicators from Yahoo Finance and FRED APIs until Wednesday’s close. This ensures we have a full picture of recent price movements and economic conditions.

• Analysis & Decision-Making:
  Using our proprietary model, we blend macroeconomic trends with composite technical signals to create actionable insights for the coming week.

• Execution:
  Trades are executed at the open on Thursday, ensuring decisions are based on up-to-date market information while minimizing intraday noise.

This realistic, weekly routine keeps our strategy clear, timely, and actionable.

Macro-Economic Fundamentals 

We start by assessing the broader economic environment using key indicators sourced from FRED:

• GDP Growth: Measured year-over-year, this indicator helps us gauge the pace of economic expansion.

• CPI Inflation: By tracking inflation, we understand pricing trends and purchasing power.

• Unemployment Rate: Reflects the strength of the labor market.

• Market Volatility (VIX): Acts as a proxy for market uncertainty and risk.

These indicators are converted into scores (ranging from 0 to 1) to quantify economic conditions. We further refine our view by incorporating:

• A S&P 500 Trend Score based on its 200-day moving average, and

• A measure of Market Breadth among the Magnificent 7 stocks.

These components combine into an overall Economic Score. This score directly influences our cash allocation by applying the formula:

• Cash Allocation = 100 − 100 × (Economic Score)^1.75

In adverse economic conditions (or if the VIX exceeds a critical threshold), our model shifts more capital to cash—preserving capital until conditions improve.

Technical Analysis & Stock Selection

Parallel to our economic evaluation, we perform in-depth technical analysis on each of the Magnificent 7 stocks using a suite of indicators:

• EMA Crossovers (7-day vs. 20-day): These provide rapid signals of upward momentum.

• SMA Crossovers (50-day vs. 200-day): Capture longer-term trends and potential reversals.

• MACD & RSI: Combined to gauge momentum shifts and detect overbought or oversold conditions.

• Bollinger Bands: Identify when a stock’s price is deviating from its typical range.

• ADX & Volume Signals: Validate the strength of trends and ensure that moves are supported by trading activity.
  
  

Each indicator is assigned a base weight (for example, 0.25 for SMA, 0.20 for EMA, and so on) that may be adjusted based on economic conditions. These weighted technical signals are then normalized to produce a Technical Score for each stock. The relative technical scores determine the allocation of the non-cash portion of the portfolio, with individual stock weights capped to prevent overconcentration.

Dynamic Rebalancing & Execution

Our portfolio is rebalanced weekly, ensuring that our allocations always reflect current market conditions:

• Dynamic Adjustments: The model recalculates both economic and technical scores each week, adjusting the cash position and reallocating funds among the Magnificent 7 accordingly.

• Risk Control: If technical signals indicate a “death cross” or trigger specific cautionary flags (such as a combined MACD-RSI signal), the system reduces exposure to that stock.

• Real-World Execution: Trades are executed using realistic pricing (market open prices and the next available trading day’s price), thereby minimizing slippage and aligning with actual market conditions.

The Outcome

• By marrying macroeconomic insights with high-frequency technical signals, our approach is designed to capture the superior returns of the Magnificent 7 while protecting your capital in volatile conditions. This disciplined, data-driven model continuously adjusts to market dynamics—ensuring that every rebalancing is both timely and rigorously justified. With Mag 7 Trading, you gain not only exposure to the market’s top drivers but also a sophisticated mechanism for managing risk and seizing opportunity.