The Market Isn’t Trending. It’s Rotating. Here’s How I’m Adapting Daily.
DISCLAIMER- NOT FINANCIAL ADVICE AND THIS IS PROBABLY A DUMB IDEA.
Mise en Place
Everything in its place before you cook
I’ve been watching my portfolio tilt like a drunk on a boat.
One day energy is ripping and everything else is flat. The next day SPY has a great session, gold and silver are decent, and oil is snoring. The day after that, metals have stalled for three weeks running while regional banks quietly start moving. There’s no clean trend. There’s rotation — fast, daily rotation — and if you’re running a monthly rebalance strategy, you’re flying blind for 29 of every 30 days.
I’ve been at this for about 13 months now. Built screeners, backtested systems, written Python I’m still not entirely sure I understand. And one of the patterns I keep coming back to is this: in a market like this one, the regime isn’t just changing weekly. It’s changing daily. Which means the question isn’t just what to own — it’s how much of it, today.
That’s what this issue is about.
(Stay for the end — tonight we’re making Risotto ai Porcini, and the lesson is going to be obvious the moment you start stirring.)
The Daily Special
What the scanner says today
Here’s what my simple monitor — assets across precious metals, energy, SPDR sectors, regional banks, Europe, emerging markets, inflation ETFs — has been showing lately:
Energy (XLE, XOP): Strong 10 and 21-day momentum. Oil grinding up steadily. Today confirmed.
Gold (GLD, IAU): 63-day trend still healthy. 10-day is consolidating. Not rotating out, just resting.
Silver (SLV): This is the cautionary tale. 63-day window looks great. 21-day says the move stalled three weeks ago. Classic case of a slow signal lagging a real change.
SPY / QQQ: Choppy. Great days followed immediately by bad ones. Regime-level signal: not trending, rotating.
Copper, Regional Banks: Consolidating. Potential next movers, not yet confirmed.
The rotation pattern is real. The question is how to build positions that acknowledge it without chasing every daily move.
Sharpe & Steady
The core positions
I’m not making dramatic changes to core holdings during rotational regimes. Core stays core. What I’m adjusting is the size of satellite positions and the tilt I’m adding each day at the margins.
The insight I’ve been developing: monthly rebalancing means you’re stuck in last month’s allocation while the market does something completely different. Daily adjustment means you’re only ever one day wrong instead of one month wrong. In a volatile rotational environment, that’s the difference between adapting and watching.
Al Dente Alpha
Cooked just right — not overdone
Here’s the framework I’m building toward, pulling from recent research and conversations with people who’ve been doing this longer than I have:
Signal 1: Multi-Timeframe Momentum
I use three lookback windows: 10-day, 21-day, 84-day. Short catches regime shifts fast. Medium confirms they’re sticking. Long says this isn’t just noise. Silver right now: the 84-day still says bullish. The 10 and 21-day say the momentum died three weeks ago. That’s the signal to stop leaning in — not to sell everything, but to size down.
All three timeframes pointing the same direction = high confidence. Divergence = caution.
Signal 2: Sortino-Based Position Sizing
This is the piece I hadn’t fully formalized until recently.
Research by Moreira and Muir showed that when you scale position size inversely to recent realized volatility, you don’t just reduce risk — you actually improve risk-adjusted returns. The reason is counterintuitive: volatility is persistent in the short term, but expected returns aren’t proportionally higher when volatility spikes. When things get choppy, you’re taking more risk for the same return.
I specifically use downside deviation rather than total standard deviation — i.e., Sortino logic rather than Sharpe. A stock that rips 3% one day and 5% the next isn’t doing the kind of volatility I’m trying to avoid. I only want to penalize the bad kind of bouncing around. So: high return, low downside deviation = size up. High return, chaotic whipsawing = size down.
Practical formula: take the last 20 days of daily returns, calculate downside deviation, use that to determine your position weight. It’s not a black box. It’s just asking: how much has this thing been bouncing around in the wrong direction lately?
Signal 3: Sector Rotation Patterns
When energy peaks, what typically rotates in next? When metals consolidate, where is money moving? I’m building a rotation pattern matrix from historical data to answer exactly this — not to predict, but to narrow the watch list. Instead of scanning everything when one sector stalls, I’ve got a short list of likely next movers to monitor.
The Reduction
Patience creates intensity
The mean reversion vs. momentum tension is real, and I want to be honest about it.
My current take: in a rotational market, if momentum is confirmed on all three timeframes, a two-day rip probably isn’t the whole move. There’s still runway. You can wait for an intraday or next-day pullback within a confirmed trend and still catch most of it. That’s not chasing, and it’s not bagholding. It’s entering an established trend at a sensible price.
For those of us with ADHD who watch charts compulsively: there’s also a psychological argument here. If your first move after entry is green, it changes your relationship to the position. You hold it differently. Buying confirmed momentum on a small dip gives you that. It matters more than people admit.
Resting the Portfolio
When doing nothing is the move
The exposure question — how much of your capital should even be in the market right now — is separate from position sizing. Dave Johnson (30 years of backtesting, very smart guy) frames it this way: if you’re not seeing great setups, you shouldn’t be 100% invested. Cash is a position.
In a rotational, volatile environment, I’m thinking about two layers of risk control simultaneously:
Portfolio level: What percentage of capital is deployed vs. in cash? If conditions are sketchy overall, I’m not 95% in.
Position level: Within what’s deployed, each asset gets sized by its own recent downside volatility.
These work independently but reinforce each other. The whole system is asking the same question at two levels: am I being paid enough to take this risk right now?
Vino & Sortino
Pairings and reflections
I don’t have a clean week of P&L to report — this is more of a framework-in-progress than a completed trade. What I can tell you is that adding volatility as a formal sizing input, rather than gut feel, feels like the right direction.
The gut feel was always there. I was already sizing up when things looked stable and sizing down when things felt chaotic. Now I’m translating that into something measurable: downside deviation over 20 days. The instinct was correct. The system just needed to catch up to it.
Next step: build this into the Python backtester and see what the numbers actually say. I’ll report back.
See you next week. Don’t burn anything.
Tonight’s Pairing: Risotto ai Porcini
You can’t walk away. The patience IS the alpha.
There’s a reason risotto has a reputation for being difficult. It’s not the ingredients — they’re simple. It’s that it demands 18 minutes of continuous, calibrated attention. Too much liquid at once and you get mush. Walk away to check your phone and it seizes. Add the wrong thing because you got impatient and you’ve wrecked it.
This is exactly what daily portfolio management feels like when you’re doing it right. Not frantic. Not passive. Actively present, making small adjustments, watching for signs that the regime is shifting, never dumping everything in at once.
The risotto doesn’t reward aggression. It rewards attention.
The Recipe
Ingredients (serves 4):
1.5 cups Arborio or Carnaroli rice
1 oz dried porcini mushrooms, rehydrated in 2 cups warm water (reserve the liquid)
4 cups good chicken or vegetable stock, kept warm
1 small yellow onion, finely diced
3 cloves garlic, minced
½ cup dry white wine
4 tbsp unsalted butter, divided
½ cup Parmigiano-Reggiano, finely grated
2 tbsp olive oil
Salt and white pepper
Fresh thyme (optional)
Method:
Strain your porcini soaking liquid through a coffee filter or fine mesh — the sediment will ruin the texture. Combine with warm stock and keep it all hot in a separate pot. Cold liquid is the enemy.
In a wide, heavy pan, heat 2 tbsp butter and the olive oil over medium heat. Add onion, cook 5–7 minutes until soft and translucent. Add garlic, cook 1 more minute. Don’t rush this — the base determines everything.
Add the rice. Toast it for 2 minutes, stirring constantly, until the edges go slightly translucent. This step is non-negotiable.
Add the wine and stir until absorbed completely.
Begin adding the warm stock-porcini liquid mixture one ladle at a time. Stir almost continuously. Wait until each addition is nearly absorbed before adding the next. This takes 18–20 minutes. You don’t get to multitask.
In the last two minutes, stir in your rehydrated porcini, roughly chopped.
Remove from heat. Add the remaining 2 tbsp butter and the Parmigiano. Stir vigorously — this is called mantecatura, and it’s what makes it creamy without cream. Rest for 2 minutes. Serve immediately in warm bowls.
Where people fail:
Adding stock too fast (you get soup, not risotto)
Using cold stock (kills the starch release)
Adding the Parmesan over heat (it breaks and clumps)
Walking away (the window closes fast)
Not using warm bowls (it seizes on a cold plate)
The mistake is always impatience or distraction. Which, if you’ve been reading this newsletter, will sound familiar.
Wine Pairings
For a Tuesday night (under $20): Arneis (Ceretto or Bruno Giacosa) — Light-bodied Piedmontese white, slightly floral, clean acidity. It doesn’t compete with the earthy porcini, it frames them. About $16–18 at most wine shops.
For a Friday night ($25–40): Langhe Chardonnay (Gaja Rossj-Bass or Marchesi di Barolo) — More body, subtle oak, still restrained enough to let the mushroom flavor lead. This is the wine for when the week went well but not exceptionally.
For when you finally ship the backtested system that beats the benchmark ($50+): Barolo (anything by Mascarello, Giacomo Conterno, or Vietti) — The king of Piedmont, the region where porcini and wine were made for each other. Big, complex, needs air. Decant it an hour before you sit down. This is the bottle you open when patience paid off.
Sortino’s Kitchen documents my personal trading journey — what I’m doing with my own money and why. This is not financial advice. I’m not your advisor. I do not provide personalized recommendations. Past performance doesn’t guarantee future results. Do your own research. Make your own decisions.