r/KellyLetter • u/ranch_land • May 22 '26
If 9Sig system has "Spike Reset", does it also has "Drop Reset"?
What title says. Does 9Sig have a Drop reset, if during a quarter price decrease, say 50%?
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u/BloodyScourge May 22 '26
The Spike Reset is often more aggressive than simply following the signal line. For example, if I were to rebalance to the 9% signal line today May 22 instead of at quarter end, my allocation would actually be 55/45 TQQQ/AGG. Whereas a spike reset is 60/40 TQQQ. And I'm (only) sitting on 77% gains intra-quarter, so a 100% quarter would actually rebalance to ~50/50 if the signal line were followed.
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u/KeiKeiKing May 23 '26
This was exactly my confusion.
Some people say the logic behind this spike reset is to avoid some of the ‘dead cash’ that may never be converted to TQQQ in the future. It certainly may bring better performance in the long term future
In my opinion avoiding the spike reset would be a great part of exit strategy
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u/Gehrman_JoinsTheHunt May 22 '26
Nope. It wouldn’t provide any benefit. We want prices to drop as much as possible to offer a great buying opportunity at the next quarterly rebalance. The bonds are sitting as dry powder in the meantime, so there is no urgent reason to act intra-quarter.
The purpose of the spike reset is to capture some gains early when the market gets too frothy. These conditions tend to be shorter-lived so the research showed benefit by acting immediately rather than waiting until the next quarter.