So for our live example, we're assuming that we've got a top down worldview, all the data points, as part of the broader course that we follow is given us the indication that we're still in expansion territory, right? So we want to be long. And we probably want to be long, maybe discretionary, maybe financials, maybe something like that. That gives us some sort of alpha on our portfolio. The next thing is to have a look at the bottom of economic appraisal and figure out what sectors and industries that we want to belong right now, which ones are performing and which ones are not performing. Now, we're late in December of 2019.

As this is being recorded, and at the beginning of each month, the first day of the month, we have the manufacturing reports that come out and we have the non manufacturing service sectors that come out as well the reports on each industry and essentially when we break it down or when we broke it down this month, what we found is that upper el the upper l industry, certainly in December is performing extremely well. So earlier this month, we were Want to have been focusing on oper l for argument's sake in the manufacturing space so what we do is we build out our spreadsheet here with all the companies that fit our profile liquidity, all that sort of stuff that we're looking for. We build it out for those of you that are wondering where this came from, it's part of the idea generation lesson within the within the course.

So where we are right now is we're looking for referral companies click on industry we want to filter on we want to find oper l A, pp. Anything that comes up upper l not household appliance, retail apparel, shoes, yes. shoes and retail apparel. Yes. textile apparel. Yes.

And what we want to do is we want to filter this out over here and we want to find so right now we were in December. So we're going to be careful the month the fiscal end. As you guys know, if you went through the idea generation lesson, each one of these signals which meant the end of fiscal year is for these companies. So 12 is December. So what we're going to do is we're going to find out who has the highest growth for fiscal year one, which would be December right now 2019 into December 2020. So we'll go largest to smallest.

Start off with the largest we go across and the biggest one is Stitch Fix. So what we need to do is we need to figure out should we be long or short so this one is not December so we are still in a negative year here for s fix. So we do not want to be long not because they report on July not December, so we absolutely 100% do not want to be long. These guys, Abercrombie and Fitch, they report in January, the fiscal year into January that's finished is expected to be minus 30%. So that's maybe something that we could consider because we'll start to discount fiscal year one, which will be January 2020 into January 2021 would be expecting an 80% growth in earnings. So that's something that we could have a look on.

The next one down is Under Armour ua as you can see, and this is reporting in December. So we need to focus on this Number here. So this is the first company that I would suggest is the best one to look at why? Because we're expecting 42.8% growth. And if we look at the liquidity matrix, which I already previously have done, we can see that the balance sheet has plenty of liquidity. So we're expecting earnings growth, we are seeing declining PMR PS, which is fantastic, because if we assume that this remains at a 53.8 price needs to rally quite dramatically in the next year, in the next year to bring it from 35.56 up to that 50 mark.

So we would expect the high probability growth situation for Under Armour. So Under Armour is right now what we're going to look out for our long position. So what we want to do now I'm actually going to change the color of that to green we're going to go long this company, and we're going to go short and other company remember we're taking away industry or sector risk here. So we're looking for specific companies to short inoperable now just in case we end up with a system In our situation like we did in the poultry example, with both Sanderson farm and Tyson Foods, so we're looking very short now. And what we would want to see is maybe decent growth in fiscal year one, it's coming to an end and maybe a flat year here where most of the growth is already in the stock. So what we want to do is scroll down here.

And what we want to look for is something along those lines. So here you can see Colombia reports, Colombia reports on December as well, right. So right now we're ending a year where they had a 32.69% earnings growth, and we're going into a fiscal year one where it's only 7%. Right. So most of the growth we should have already seen in Colombia. These guys have a lower PE and it's expected to stay lower because the earnings are expected to decline.

So we'd be looking at something like Columbia sports, I believe in it sportswear company, we'd be looking at something like this to go short, right. So we'd be going live Under Armour, and we'll be shorting Columbia Sportswear against that. And what we'll be doing is looking to make the spread. So we're looking for much more adoption or much more investment to to occur within Under Armour because we're expecting 42.86% earnings growth. And we're expecting a pretty much we're expecting growth, we're expecting it to sort of finish off and move that started in the prior year. So it's long Under Armour short Columbia.

So next, we're going to go over and we're going to have a look at Under Armour chart. And what we want to do is we want to overlay our chart pattern on this just to make sure that it's looking like a growth story here. Now, I've took the initiative to already build out the chart structure on this chart. And lo and behold, it's bullish, right. So the expectation here would be that this is moving higher for a C wave. So based on our Elliott Wave structures on our technical analysis, again, which is part of the technical analysis course, essentially what what we're expecting here is a rally up for a wave c We've got our A or B and our CEO for a wave a, we've got our w x and our y wave down here for wave B, and we'd be expecting a rally up here for wave C. And as you guys know, if you enter the Elliott Wave course, the extension for a wave C is usually one to one with wave a, but it often it can and it often does extend up to 1.3, a two extension.

So that's their two targets that we're looking for. That's all we need to know that it's a bullish outcome here for Under Armour with the potential to definitely exceed 100% on the upside over the next 12 months or so. And certainly the earnings expectations and the fact that this industry is a little bit hot right now, in terms of the manufacturing reports, which we've already analyzed, it gives us the indication that this will be a high probability long opportunity. Next, we'll slide over to Columbia Sportswear and again, what we want to do is we want to map out what does the chart structure say? And is there a probability here that based on the earnings expectation for Under Armour is Columbia sports going to underperform Under Armour So as you can see, last year, we had fantastic growth 30 to 33%. And it was definitely not for most of the year, just one straight up.

So the last couple of years have been fantastic for home via sports. Now it's looking like the earnings are going to go flat. So where do we go from here? So as you can see, again, based on Elliott Wave, we can see that we have a wave 1234 and five. And the idea behind mitigating sector or industry risk is not necessarily to short companies that are going to go down, but more so to take out the risk. So you want to buy a company that's expected to outperform your short, not necessarily, both of them are going to make a profit.

The idea is to smooth out that returns curve. So remember, we're looking for returns curve or something like this on track the year and not necessarily something like this trait the year. So we're looking to smooth out that returns curve. So we want to go long underarmor and short Colombia and as we can see from the chart structure, we have a wave one and wave 234 and we're on the final fifth wave here and the fifth wave usually equals the way One. Now just a moment ago, we seen with Under Armour, there's expectation to make 100 to 120% on the upside and Under Armour, and here we'd be expecting about a 44% return. So by going along Under Armour, shorting Columbia sports over time over the next 12 months, we should make the arbitrage on that the difference between both of them.

And that's what we're looking to pocket. So we're looking for slow, consistent returns over the next 12 months, in order to take the volatility out of our portfolio. That's two positions over 20 positions on a diversified so we've reduced balance sheet risk in doing so. So we have anywhere from 1012 to 20 positions. And again, depending on your portfolio size in terms of capital, what we're doing is we're taking balance sheet risk out of the equation, because we've got diversification. So that's the idea behind it.

So right now, we've got Under Armour, and we've got Columbia sports has two potential ideas long and short over the next 12 months in order to give us a decent return over time.