UZZ Fund

The Safer Approach to Consistently Higher Returns

Phone:  919.454.1080


Performance Updates



Update for 12 June 2020

This was a FOMC decision week.  The fund does not trade in such weeks and was in cash (good thing it turned out ;-)


Update for 5 June 2020

At the beginning of the week there was hope for better economic results with reopining combined with a desire for the ongoing BLM protests to remain peaceful.  And we got all of that plus a triple whammy of a much better ADP jobs (on Wednesday), Unemployment report (on Friday) and ECB stimulus on Thursday.  The result was never in doubt after Wednesday morning with a combination of SPY PUT 300/298, IWM PUT 135/133 and VXX CALL 35/37 resulting in 2.9% gain for the week, 39.2% up so far in 2020 and 82% year over year gains.  With all of the major indexes now safely above their 200 day moving average and volatility declining from the danger zones, this could continue on for awhile unless China trade issues or higher than expected infection rates recur.


Update for 29 May 2020

Volatility remains high (VIX at 28 or so) but the risk ratio continues just below our "at risk" level.  So we had three trades this week, two bullish (IWM PUT 133/131 and SPY PUT 292/290) and one bearish (TLT CALL 166/167).  Wednesday and Friday presented challenges mid day to these positions, but they held on to gain us 2.8% for the week.  We are now at 35.2% gain year to date, 87.9% year over year and an overall yearly average gain since since inception of about 62%.  I expect a downturn in equities at some point here, but regardless, we will let our indicators and approach be our guide to managing our risk and trades.


Update for 22 May 2020

Some sector rotation seemed to be at play this week as IWM was rising aggressively while SPY and QQQ (especially) were lagging.  The big boys were probably running some relative value analysis and decided it was time for the Russell 2000 to catch up!  So we went along trading IWM PUT 128/126 (end of Wednesday rather than our normal Tuesday because of better signals) and as a result gained 1.1% for the week.


Update for 15 May 2020

No trades this week as the risk ratio was over our limit and inconsistency among indicators told us risk was to high for anything.


Update for 8 May 2020

Optimism over reopening pushed the risk ratio into acceptable territory and the indexes responded with consistent trade signals - bullish for equities and bearish for everything else.  We had a full slate of four trades (QQQ PUT 212/211, SPY PUT 280/279, IWM PUT 122/121 and TLT CALL 170/171).  We gained 4.1% for the week bringing us to 30.1% year to date.


Update for 1 May 2020

No trades this week.


Update for 24 April 2020

No trades this week.


Update for 17 April 2020

The risk ratio continued at a very high level this week.  Normally, that means that we avoid bullish equity positions because a high risk ratio (where one month volatility is greater than three month volatility) can lead to very quick downturns.  On the other hand, one of the side effects of a high risk ratio is that option premiums are very high (representing that risk) and so we can take positions that are much further out of the money than we would normally and yet gain good return with moderate safety.


Patterns for four out of our five issues we track were all in sync (except for that high risk ratio).  And so we went a bit speculative with QQQ (PUT 205/200), SPY (PUT 272/267), IWM (PUT 116/111) and VXX (CALL 42/44) with Thursday being a bit sketchy for IWM especially.  We survived without adjustments to gain 4.5% for the week bringing our year to date to 25%, historical average to 61.3% and year over year to 96.7%.


Update for 10 April 2020

The weekly options market seems to have gotten back to a form of normal (whatever that is these days).  Since this was a short week, we looked for trades on Monday and only VXX (CALL 48/53) qualified. Since the risk ratio remains well above 1, the bullish signs from equities disqualify QQQ, SPY and IWM from any trades by us.  TLT has been waffling for awhile now and that continues.  We gained 0.9% this week - although our YTD gain declined to 19.6% from 21.1% last week due to estimated tax payments and management fees.  As always, we'll continue to be diligent on our trade choices because we still expect another bout of declines as the COVID-19 news and it's effect on the economy continues.


Update for 3 April 2020

The weekly options market has been in some distress the past few weeks.  When premiums and volatility get this extreme, the market makers find it difficult to facilitate trades while they also find risk free positions necessary to accomplish their role.   So trades sit waiting and never happen.  Even though volatility (fear index) is still very high, the markets have stabilized enough that trades in weekly options are once again possible.  This week VXX (CALL 55/60) met our criteria.  With premiums so high we could do a $5 spread instead of our normal $1 and still get a good gain form it.   We finish the first quarter with a 21.1% gain for the 2020 year to date and 93.2% year over year gain.


Update for 27 March 2020

No trades this week as no clear signals.   We're staying in cash.


Update for 20 March 2020

Things have been so chaotic that the market in weekly options has become mostly locked up (that is - the market makers cannot find ways to make trades happen while also taking risk free enabling positions - because things are changing too fast [huge index movements both up and down]).  Our indicators were completely bearish to start the week of March 9 and so we changed tack.  Rather than trading credit spreads (which was not working) we swing traded inverse ultra shares of SQQQ, SPXU and TWM.   We bought these on 3/11 using 12.5% allocation each (per our usual trade practice) and held on to them until they retraced by 10% on 3/16 when we sold.  That resulted in a gain of 9.3% but also cost us far less than credit spreads usually do.   So we are at 20% year to date gain so far.


This technique of using leveraged swing trades is something that we would only do in this sort of special situation (our normal credit spreads markets not working as we would like AND a high momentum situation for either bullish or bearish positions).   Don't look for it to happen very often (in fact this is the first time we have used it in the UZZ portfolio - although I personally have done it quite often in the past).


Update for 6 March 2020

On Tuesday, the Fed lowered rates unexpectedly.  For us that meant no option trades on equities since weeks with Fed decisions tend to be chaotic.  And so it was.  Since the direction of moves for TLT was in line with the Fed change (unusually, we knew the decision before our 3:30 trading window!) and we had consistent signals there, we did trade TLT (PUT 152.5/151.5) for a 1.1% gain for the week to bring our year to date to 9.7%, 78.9% gain year over year and 60.2% annual average return.


Update for 28 February 2020

Well, last week we said a correction could help moving forward.  And what did we get?  A correction!  Consistent bear signals on equities and bull signals on TLT and VXX led to a full slate for the first time in 2020.   We traded QQQ (CALL 223/224), SPY (CALL 322/323), IWM (CALL 162/163) and TLT (PUT 149/148).  The result was a gain of 7.9% for the week and 8.6% for year to date.  Our overalls stand at 77% year over year and 60.2% annual average since 2013.  I don't expect a continuation of this rate of downturn next week as most indexes are now below their 200 day moving average.  But as always, we will let our trading signals be our guide.


Update for 21 February 2020

The Coronavirus continued its "growth will be ok" / "growth will suck" oscillations in the market.  Despite this we had nearly consistent signals on TLT and took a position with PUT 144/143 to gain 1.1% for the week.  We are at 70% return year over year and 0.7% return year to date.  A slow start for 2020 to be sure.  But a good correction here could set up many weeks of good trades.


Update for 14 February 2020

The recent uncertain pattern - punctuated by ups and downs as the coronavirus story evolves - continued this week.  Once again, no trades and we are still all in cash.  At some point, when things are like this, a clear bull or bear pattern will emerge and that will free up the trades we like to do to obtain safe but high returns.


Update for 7 February 2020

I am writing this on Tuesday 4 February, but we already know that we are in cash this week (again!).  You may wonder why when the media has touted a recovery from the coronavirus downturn of last week.  The following chart for QQQ tells the tale (SPY and IWM similar although TLT and VXX would be opposite directions).

The big disconnect here is that the risk ratio (center graph area) is above 0.92 and in that state our rules are that we do not trade bullish equities such as QQQ (or SPY or IWM).  The momentum (bottom graph) is below the signal line and that also says don't be going after bullish positions (only QQQ being bearish would work here).   And so the fact that QQQ in its price movement (top graph) looks fine (above the twenty day moving average) we have no trade under the rules we follow!


We give up gains we might make in such situations because history shows that it is unlikely that under these conditions that we will have complete trades through Friday - which is our goal.   So we skip such things and wait for things to be more consistent and tradeable for us.


Update for 31 January 2020

We had mixed signals across the board on Tuesday and so stayed in cash.  All of our indexes rebounded from Monday but not enough to counter the negative momentum and high risk profile that had started last week.  As usual, we will not speculate and will instead wait for clear signals (one way or the other) before we trade for our benefit.


Update for 24 January 2020

The outbreak of a coronavirus in China spooked the market early in the week.  We had mixed signals on most things but TLT (PUT 138/137) was clearly bullish and QQQ (PUT 220.5/219.5) was a bit more marginal on the bullish side (in fact, if we had waited until closer to 4 PM Tuesday we would not have traded it).  Tellingly, QQQ stopped out on Wednesday morning with a quarter of the gain we had traded for eighteen hours before.  By the end of the week, QQQ would have been fine - but one can't predict such things.


TLT, on the other hand, stayed the course and we ended the week with 1.2% gain bringing us to -0.4% for the year to date.  The lesson is that consistent signals help us make good trade choices.  But even when we miss on those, trading for option premium and using stops on our trades provides safety from what may be potentially larger losses (even if they didn't occur this time).


Update for 17 January 2020

So finally we had a trade in 2020 - VXX Call 14.5/15.5 (Bearish).  Everything else has remained inconsistent for our signals (even though the general pattern for stocks has been bullish).  With first quarter taxes and management fees, we sit at -1.6% for 2020 so far.  On a rolling annual basis we are at 79.4% and our overall average from January 2013 is at 59.7%.


Update for 10 January 2020

QQQ was the only one of the five ETF's that we track where the signals on Tuesday the 7th were almost good enough for a trade.  QQQ faded at the end of the day and so we skipped - and everything else.  So all in cash so far in 2020!


Update for 27 December 2019 and 3 January 2020

All of the main indexes (despite records highs!) traded within a range the past two weeks leaving our indicators confused.  There was a glimmer of bullishness in IWM on Dec 24 (a ghost of Christmases past?) but alas, there were no trades available that met our stringent criteria.  So we remained in cash throughout to end the year and start the new one.  Our final 2019 results were 82.8% shareholder return with no weekly downdrafts (losses) and a seven year annual shareholder return average of 60.2%.


Update for 20 December 2019

For the first time in awhile we had a full suite of consistent signals to start this week.  Except for VXX (that had no trades available that meet our criteria), the other four were all traded this week.   Bullish were QQQ (PUT 207/206), SPY (PUT 315.5/314.5) and IWM (PUT 162.5/161.5).  TLT (CALL 139/140) was Bearish.  No pullbacks were to be had in this pre-Christmas rally (despite the impeachment mess) and we gained 3% for the week to bring our year to date return to 82.6% and annual average 58%.   One more week to go in 2019!!


Update for 13 December 2019

All five of the indexes we track were inconsistent on indicators this week.  We remained in cash with no active trades.


Update for 6 December 2019

On Tuesday the 3rd the patterns for the five ETF's we track (QQQ, SPY, IWM, TLT, VXX) were all confused.  On the equities we had downward momentum and yet pricing had risen over the day (it had started way down on trade concerns).  Similar conditions existed on TLT and VXX.  So we stayed in cash this week.


Update for 29 November 2019

This week, when it came time to make trade decisions at 3:30 on Tuesday the 26th, we had weak BULLISH signals on IWM and SPY, but no trades existed that could meet the 80% out of the money threshold and be worth more than 5 cents.  So we only traded TLT (PUT 140/139) as BULLISH netting us 0.9% for the week and yielding us 77.3% year to date and 57.3% annual average for the Fund.


Update for 22 November 2019

The negative momentum for equities seemed to continue into this week.  Nonetheless we had a BULLISH signal on QQQ (PUT 201/200) along with a BULLISH signal on TLT (PUT 137.5/136.5).  For QQQ, that was the high for the week.

As if to reinforce that equities are getting tired, QQQ reversed downward Wednesday and we closed that position via automated stop.  You can see the chart that resulted above.  Note the red downward move in the top section and the red negative momentum in the bottom section.


Now, as it turns out, QQQ would have worked out for us if we had continued to hold it.  But when things reverse, we have no way to know that it is temporary.  So we accept small losses in these circumstances in order to avoid larger ones.


TLT, on the other hand, went on to perform as we hoped and expired worthless on Friday.  Our gain for the week was 0.4% bringing our year to date to 75.7% and annual average to 57%.


Update for 15 November 2019

The main equity indexes we track were starting to lose momentum as the week started on Monday and Tuesday.  Despite this, we had BULLISH indication across the board on QQQ (PUT 199/198) and SPY (PUT 306/305) and executed those trades late Tuesday.  IWM had rolled over and it being down is usually an early indicator of bearish potential.  Indeed, on Wednesday, QQQ came close to stopping out with a loss.  Expectations of (or not) of a trade deal seemed to drive everything (up and down) and yet by Friday close we had a 2.3% up week, bringing our year to date to 74.9% and annual average to 56.9%.


Update for 8 November 2019

The BULLISH equity pattern continued this week (in line with BEARISH TLT and VZZ patterns).  Of those we track, only SPY (PUT 304.5/303.5)and IWM (PUT 157/156) had clear and consistent signals as of about 3:30 on Tuesday.  However, if we had waited until closer to 4 PM, then only SPY would have been traded.  In any case, things were tight Wednesday for both SPY and IWM and tight again for IWM on Thursday (in other words, we came close to exiting these positions via stops).  By Friday, all was good and we gained 1.9% on the combined 25% allocation trade for the week bringing our year to date performance to 71.0% as compared to our annual average of 56.4%.


Update for 1 November 2019

This was an FOMC decision week and we would normally not trade anything.  But confidence in the signaling the Fed had been doing was so high, that we took a risk on IWM (usually the least affected by Fed decisions of the five issues we track).   All of the others were confused on signals.  So we sold IWM PUT 154.4/153.5 on Tuesday at 3:25 PM.  We almost closed this trade for a loss on Thursday but held off and the result was a 1.2% gain for the week bringing our year to date to 67.9% and overall annual average to 55.9%.


Update for 25 October 2019

The markets for the week of October 21 seemed to enter a breather amid confusion on trade, Brexit and earnings.  The only issue we track that had clear signals was IWM as BULLISH and we traded PUT 152/151 on Tuesday at 3:30 PM.  This gained us 1.1% for the week bringing our 2019 return to date to 65.9% - above our annual average of 55.6%.


Update for 18 October 2019

Stocks seemed poised for upticks on Tuesday the 15th and four issues met our stringent criteria for credit spreads this week.  This fit the pattern of recovery from previous bearish sentiment and so QQQ (PUT 191/190), SPY (PUT 295/294) and IWM (PUT 149/148) were BULLISH and VXX (CALL 23/24) was BEARISH.  We netted 2.2% for the week.


Update for 11 October 2019

This past week started with clear signals, but alas, they were a lie!  This is where our UZZ Fund approach comes in and limits downside risk so that when signals and performance are aligned (such as the previous week or all of the previous weeks in 2019 except one!) we have exceptional gains.


Based on clear BEARISH patterns on 8 October for QQQ, SPY and IWM, we sold three credit spreads (QQQ CALL 190/191, SPY CALL 195/296, and IWM CALL 149.5/150.5) and also sold one BULLISH credit spread on TLT (PUT 143/142).  As usual for us, these were three day trades intended to expire worthless on close of Friday.  We always put stop close orders on our open spreads so on Tuesday night we put stop orders that were near current positions hoping, as is normal for us, that they would never execute.  But it was not to be.  All but IWM closed on Wednesday morning leaving us pretty much where we had started.  IWM closed out on Thursday leaving us a small 0.3% profit.


So, not the best of weeks.  But once again the UZZ Fund system has shown it works within the chaotic political and economic times we live in to protect our downside which is one reason our long term performance stands out for us all.


Update for 4 October 2019

We started October with some clear indicators and traded accordingly.  We received BEARISH signals on QQQ (CALL 190/191), SPY (CALL 297/298) and IWM (CALL 151/152) as well as a BULLISH signal on TLT (PUT 141/140).  This yielded 5.9% for the week bringing our year to date performance to 60% and now clearly above our historical average of 54.8%.


Update for 27 September 2019

There were no trades this week due to ongoing interest rate and growth worries battling with trade optimism to create confused signals for our indicators.  We end the third quarter at a net invest rate of return of about 55% for the year so far which is about the same as our long term average of 54.2% annual.  To put this in perspective, five years at 50% return turns $10,000 into $75,000 (as compared with the historical average of 8% for the S&P 500 which over five years would turn $10,000 into $14,693).


So far our expense ratios and correction rates are below average for the fund so we should expect in future weeks for an uptick in what we call false trades (reliable signals that lead us to trades that do not work).  We'll rely on our safety systems to protect us (three day trades, credit spreads, stops on positions) should that be the case.  I'd expect us to finish well above our performance average for this year even taking that into account.


Update for 20 September 2019

This week is a designated NO TRADE week because of the FOMC rate decision pending on Wednesday.


Update for 13 September 2019

After four weeks of nothing, we got some clear indicators and traded them this week.  SPY and QQQ were still confused, we had BULLISH on IWM (PUT 149/148) and BEARISH on TLT  (CALL 145.5/146.5) and VXX (CALL 25.5/26.5).  These worked in a straight fashion with none of our protection coming into play.  So that resulted in a 2.6% up week for the Fund.


Update for 6 September 2019

This is the fourth week in a row in which our indicators provide us no clear signals.  So thus, we have no trades and are all in cash.   This is fairly typical for August which usually has a confused trading picture as trading volume is light (folks are on vacation) and news on all fronts is limited.  None of this bothers us.  We'll wait for clear signals and gain from those when they come about.


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