THE FACEBOOK (Mea Culpa/A Lesson Learned)

It was with tremendous excitement that I greeted the Option Addict to the fold here at iBC.  He planted the seeds for my delving into volume pocket analysis and I respect his work in technical analysis and options trading tremendously.  With that in mind the stocks that he was interested in, I am usually interested in.

The Facebook caught my fancy from one of his weekly watchlist videos and I decided that this would be the trade I would “follow” him on.

You can probably figure out where this is going.

Objectively, I look at the $FB chart and I see nothing that would lead me to get long the stock, even before this most unfortunate turn of events.  This was pure gambling based on the analysis of someone other than myself.

Look, I can deal with losses on trades that I initiate, but when I ignore my own analysis and ideas and follow along with someone else, I deserve to have my face punched in.  And that is exactly what happened.

The lesson, as always: come up with your own fucking ideas.  You know when to buy and, most importantly, when to sell.  I went into this trade blinded by the outstanding performance of another trader, fueled by greed and I got served.

Lesson learned.

Now I feel better.  Thanks.

-EM

Vince Lombardi Says it Best

Now that iBC has (re)introduced 248 new bloggers, I figured it was time to crack my knuckles and start banging on these here keys again to regularly express my thoughts regarding everyone’s favourite (sic) tale of whimsy: yes, I’m talking about the stock exchange.

It’s all about the levitation at this point.  The ether is flowing and everyone is in a constant state of bliss.  Losses cannot and WILL NOT be tolerated.  Unchanged is the new DOW -300.

The best part was that time when the market plummeted over 100 points in 40 minutes on a (excuse my language) fucking rumor about teh Bernank cutting off the crack rock.

Seriously, what the hell IS going on out there?

Hell, even everyone’s favorite “hedge”, $VXX, is positively correlated with the market (ok, not really).

My portfolio stands at 52% cash.  This scenario is exactly why I have allocated 30% of my capital to a broad market ETF.  Even though I’m scared as hell to get long here, I still have a decent amount of exposure to the broad market that I’m continually making (albeit muted) new highs each and every day.

Yes, yes, it’s true, my gains pale in comparison to even the broad market (and, yes, for that I feel like a retarded monkey).  It sucks being  in a place where I’m trailing by so much, but am also extremely leery of the rug being pulled out from under us.

Aside: I feel that prospect is more real than ever before.  the AP account is hacked and Prezident O’bama is hurt, next thing you know, bids disappear from the market.  As mentioned earlier, allegedly a mere rumor of Bernanke cutting off QE caused a minor panic.  I have no confidence in this “rally”…it’s all fantasy…play money.

Thus, I have basically closed up shop in looking for multi-week/month trades like I was earlier this year.  I’m letting what remains of those positions ride for the time being and am focused on very short term extreme oversold trades.

I have developed a system, and it has been very successful so far.  @eliza_mae_ibc #knifecatcher is where you can tune in for the play-by-play.  More details to follow around here.

Until then, lever up those accounts to as great of an extent as possible and buy as much of everything as you can, you cannot and will not be allowed to lose.

-EM

 

It’s as if…

…nothing has changed…

My apologies for the lack of content of late…but really, what is there to comment on?  We have essentially gone nowhere since my last post almost three weeks ago.

Additionally, I have not made any (as in ZERO) adjustments to the core holdings of my portfolio, letting the ebb and flow of the market take these positions where it wants to.  (which, coincidentally, was briefly into the red for the year and is now bumping back against all-time highs).

Now that we have made the roundtrip into the depths of hell (aka a 4% SPY “correction”), I am back to provide some thoughts on where I believe this market is headed.

The money to be made on this latest surge was discovered by growing a pair and buying when things looked worst.  Just think, two weeks ago, we had a pair of retarded Chechen brothers setting off explosives in crowded streets in order to kill/maim hundreds of innocent civilians, fertilizer plants blowing up, and the aforementioned Chechen asshats on the loose and shutting down a major northeast city.

The market had all the makings of a sinister and swift more lower.

Please…don’t be naïve, this shit is never that easy.

As mentioned, we are now back to having our mugs filled with the finest ambrosia, gleefully bidding up the price of any and everything we can get our hands on.  Just wait until those stops in the high 159’s are run on $SPY, this market is going to 1700 in short order.

Do I really think that will happen?

Answer: no, I do not.

I think we are likely going to take out the all-time high on the S&P, but I have little doubt that we will run out of gas soon afterward.

Then the selling will begin.

The selling will continue for a few days, ripping to shreds anyone who was bold (read: stupid) enough to go long at the very top, thus leading to everyone getting all crazy and scared and the doomsday theorists will all crawl (back) out of the woodwork and proclaim about how THIS is the real one, the big one, and we had better make preparations for DOW 9,000.  Then things will look extremely bleak, like, if one more bad news item hits the wires, the market will be headed to a -1,000 day…oh wait, we have already covered this scenario earlier in the post.

Basically what I am getting at is this:  I believe the upward momentum in the market has reached a peak for the time being and we have entered a range-bound trade.  Right now, the upside is known…I think the downside will expand in the coming weeks.

I will continue to tread VERY lightly here with my cash levels hovering around 55%.  #Knifecatcher continues to make system based trades (currently long only WHX), but those are completely unaffected by my opinion and other useless subjective measures.

Until next time.

-EM

 

Portfolio 04/10/13

Though my contributions over the past few weeks have been fewer, throughout this time I have maintained is that there was not enough froth/euphoria to see a meaningful “correction” in equity prices.

Last week, the frail were frightened by the stock exchange, the headlines all turned dour, and the markets began to slide.  On a personal note, my account took on significant fire as 2/3 of my March gains were quickly eliminated.  I sold out of a few names that I was growing leery with, but committed to the remaining names in my portfolio.

I have said several times ‘we are going to blast higher, and that will be a more meaningful sign that we are going to top’ (at least on an intermediate term timeframe…i.e., months).

Lo and behold, yesterday we are greeted with a massive meltup in just about every sector of the market.  Except for the most stubborn of realists (extra Bleier), once again we are sipping from diamond (and sapphire) encrusted mugs filled to the brim with cocaine laced ambrosia.

I’m not calling a top here (vis a vis going short), but my positioning as of the close yesterday would indicate that I have very little confidence in the sustainability of this rally.

Every single one of my positions (save my “system” holdings in IWM) has been reduced by at least half.  My cash position sits at 53%, and I have locked in meaningful gains in many names.  I was determined to not let this opportunity to sell at higher prices slip through my fingers.

My sales yesterday were as follows:

BX at 20.85 (19.98)

CVD 73.44 (70.26)

MGA 58.36 (55.39)

MRH 26.45 (25.34)

PCL 51.76 (47.79)

RWT 23.33 (21.00).

What remains of these stocks is still game to make some profit should the rally continue.  If the market turns south, I can close them out without taking on too much damage.

With these sales, I am in the process of shifting my focus from longer term trades (in terms of a quarter+) to trades that are less than a week in duration.

How do I plan on implementing this transition?

Good question.

Answer: via employing a strategy I’m calling the “knife catcher”.  Yes, the title is self explanatory.  Beta testing is complete, and now I shall employ it in real time via my Twitter feed, so tune in if you like, things are about to get more “exciting”.

Here is where I stand:

2013-04-11perf 2013-04-11-EM

MORE COWBELL:

Portfolio Update

My most sincere apologies in the lack of postings the past couple of days.

There has been familial drama aplenty (in addition to an increased workload, courtesy of my employer) in the world of “ElizaMae” that has precluded my ability to post as frequently as I would like.  Nevertheless, I am still chugging away here…refining old ideas and developing new.

As would be expected, I took a few on the chin into the correction last week.  I sold off a few laggards (CNO and CMLT) but held on to most everything else, because I knew, deep down in the core of my being, that we were not going to sell off with any sort of tenacity or vigor (in this latest downturn).

Like I have maintained for a couple of weeks now, I am looking for a break higher from this recent range to suck in longs that are looking for a breakout.  Regardless of what the stupid VIX is reading, volatility is on the rise.

If the daily fluctuation of in P&L of my account is any indication, since the start of April (on the nose) we have been far more apt to experience violent price swings in both directions.  For example, yesterday (4/8) was my second largest gain ($-wise) of the year…with over 35% cash.

To sum things up, I am basically looking for better prices in which to unload a lot of risk.

A few weeks ago, I loaded up, thinking we were going to see another push higher.  Yes, I got caught leaning the wrong way.  The damage was not too significant, but I certainly was wrong.  Years ago, I would have panicked and unloaded almost everything right at the bottom, but my market-sense has improved over the years.  I most certainly would have capitulated after the hideous jobs number on Friday.

This time I saw opportunity to employ a new system I have been developing, which I have dubbed “The Knife Catcher”.  It looks for stocks that are oversold and which then switch to ridiculously oversold.  On Friday, it picked up on CPSS and LOCK.

I sold CPSS for nearly a 12% gain yesterday (10.75 from 9.6) and LOCK for almost 7.5% (8.99 from 8.36).

While these early returns are extremely favorable, the backtests I have compiled using this strategy have been even more impressive.  With this in mind, I am now implementing the strategy “live” using 10% of account equity.  The nuts and bolts I am going to keep to myself, but it wouldn’t be too difficult to reverse engineer the results to figure out how I got to where I am.  It’s nothing fancy, but I find there is often beauty in simplicity.

Here is how the portfolio looks, including the updates that I have missed the past couple of days.

2013-04-08perf 2013-04-08

-EM

Portfolio 04/03/13

Things have been quite busy around the office as of late, so I have not had my usual time in the morning to sip on a piping hot mug of coffee and write my pre-market performance updates, so I apologize for the delayed post once again.

The stock market is hilarious sometimes.  Whenever we get a few days of selling, I am amazed by how quickly not only sentiment but also news flow turns decidedly negative.  I am amazed by how quickly things can turn from ‘peachy’ to “OMGWTFFML!?!”

Just last week we were all banking coin, planning trips to exotic locales in which we could exploit all of our stock exchange winnings.  This week, those plans have been scrapped and we are now eating condensed canned soup and drinking Meisterbrau in order to be “prudent”.

I think this is a trap.  I believe that there was not nearly enough euphoria at the top for this to be any sort of sustained decline.  Yes, my P/L in April would beg to differ with that sentiment, but I am trying to hold the line here.

What concerns me most is the extreme decoupling of “riskier” assets as seen in recent performance in IWM and MDY as compared to DIA (presented to me via my market timing algorithm…and can be witnessed by anyone with 2 operational eyes).

IWM has been destroyed since 4/1.  DIA is less than 1% from all time highs.

Basically my thoughts are: we have a ripping run higher on the riskier assets (smaller market cap), which will signal the intermediate top.  I think bears are going to get “graped” by getting sucked into this recent selloff, only to see the same happen to late-comer bulls who think that a strong push to new highs is a signal to get in.

Several other items worth noting: Japan’s continued easing and destruction of the Yen.  Additionally, the inability of short term bonds (SHY) to rally vs. SPY.  This has been my key indicator for risk on/risk off, and it this ‘score’ still resides in “unequivocal bull market territory”.

If you are long, I say hang in there, I think we will bounce soon.  If you are short, take profits.

As for me, I sold out of CNO yesterday…I had enough.  Additionally, I cast off half of my RWT position to lock in gains and raise more cash.

I hate selling after a steep selloff, it cements the fact that my timing is waaaay off.  I should have high cash levels and be looking to buy when we sell off like this and be locking in gains when we rip.  I’ll eventually find that balance.

For now, I’ll have to live with watching almost all of my March gains go up in smoke.

Onward.

2013-04-03perf 2013-04-03-EM

Portfolio 04/02/13

I apologize for the delayed submission.

These results are a bit comical and meaningless seeing that I am down over 1% on today’s session.  Serves me right.  I am nothing more than a ball bouncing between break-even and new highs.

Right now I just happen to be accelerating (quickly) back to the former.

Part of me wants to hang on here, part of me wants to sell just about everything to salvage what little profits are left right before the close and wait.  I knew that I was leaning a hard into this last consolidation, figuring that the market had at least one push higher prior to a selloff.

Now, granted, this pullback is still relatively tame and it’s only been 3 days, but Q1 leaders have been getting ANNIHILATED since the start of Q2.  This might be profit taking, this might be a rotation out of risk and into safety.

Either way, it’s part of life on the stock exchange…so I suppose I should just sit back and enjoy the splendour (sic).

2013-04-02perf 2013-04-02-EM

Portfolio 04/01/13

I apologize in advance, but there is little time for pleasantries this fine morning.

Yesterday was “quaint”, as my portfolio shed over three quarters of a percentage point.  What a great way to start off quarter number two!

Anyway, I see that the futures are “up” as of this writing, so it would appear that our horrendous 1 day bear market nightmare may finally be coming to a close.

Thank (insert deity here) for that.

2013-04-01perf 2013-04-01-EM

Portfolio 03/28/13

The first quarter is in the books and it was a profitable one.  As I stated when I first started this project, I am looking for 2% monthly returns.  So far, January and February fell short of that goal, but March was satisfactory.  Yes, I could have gone long SPY, forgot about everything and doubled my returns, but hell, that’s no fun, now is it?

The new year brought about an interest in volume at price analysis.  In my short time delving into this method of analysis, I have started to see how this tool can be used to identify stocks that have the potential to “run”.  Stocks like TPX, CBI, RWT, WGO, PCL and MGA have been mainstays in my analysis and portfolio.

Now, their appreciation since the start of 2013 may be the result of a market high on fine white powdered drugs, but they also have exhibited a certain ‘slipperiness’ in their ascent that has added to my conviction in using Price by Volume as a means of analysis.

I believe that charts provide a visual representation of investor psychology.  Price by Volume allows you to delve deeper into the rabbit hole to find where levels of supply and demand are in harmony and where there is an imbalance.

To this point, my collection of companies “on watch” has come from running a couple screens and populating my list as I find new stocks that meet the criteria I am looking for.  Over the past few weeks I have been plowing through a list of almost 2000 stocks (those which trade more than 400k shares/day and are over $1/share) in order to create a volume void database.  The process is tedious, but I now have built a list of 170 stocks that currently exhibit significant volume voids.

I am really excited about how this is coming together and I look forward to sharing how I use this information to trade these stocks.

As for the portfolio, on Thursday, I raised some cash by selling off half of my laggard AEIS and BX positions and trimming a bit more from PCL.  Cash is now up to 23%.

Final thought: I am looking forward to some volatility.

2013-03-28perf 2013-03-28

-EM

Portfolio 03/27/13

I really do not know what to make of the market at this juncture.

Yesterday, at one point, my account had dropped by nearly 1%.  With this development, my initial reaction was nervousness, but was soon quelled by trying to not get overly emotional (I could feel the frustration starting to build), thus I decided to stop watching my holdings and let things play out.  As you will see in the results, I finished the day up a smidge, continuing with the ‘highwatermarking’ that has taken place in March.

I keep reading traders that I really respect talking about how this is a “topping process” we are going through.  While part of my consciousness believes that to be true, my time-tested “risk on/risk off” indicator is looking moderately to extremely bullish.

Sure the dynamics of this system are always evolving, but it has been fairly accurate in recognizing “chop” and bearish segments in the market since I started monitoring it.  It is signaling nothing close to either right now.  Additionally, the small cap ETF (IWM) is still the top ranked as the ‘market’ ETF (followed closely by MDY).  This, IMO, is another bullish indicator.

This is objective data.  Though most of my discretionary trades are made based on “gut feeling”, my market-centric analysis revolves around the computation of price data, that which cannot be argued.  Well, *how* I analyze this data is a subjective interpretation, but the content is not something that can be disputed; therefore I have to trust what this is telling me and cast emotions aside as best I can.

Thus, I am positioned for another leg higher and there are also a number of stocks I want to buy (a few of which I highlighted here).

2013-03-27perf 2013-03-27

-EM

THE FACEBOOK (Mea Culpa/A Lesson Learned)

It was with tremendous excitement that I greeted the Option Addict to the fold here at iBC.  He planted the seeds for my delving into volume pocket analysis and I respect his work in technical analysis and options trading tremendously.  With that in mind the stocks that he was interested in, I am usually interested in.

The Facebook caught my fancy from one of his weekly watchlist videos and I decided that this would be the trade I would “follow” him on.

You can probably figure out where this is going.

Objectively, I look at the $FB chart and I see nothing that would lead me to get long the stock, even before this most unfortunate turn of events.  This was pure gambling based on the analysis of someone other than myself.

Look, I can deal with losses on trades that I initiate, but when I ignore my own analysis and ideas and follow along with someone else, I deserve to have my face punched in.  And that is exactly what happened.

The lesson, as always: come up with your own fucking ideas.  You know when to buy and, most importantly, when to sell.  I went into this trade blinded by the outstanding performance of another trader, fueled by greed and I got served.

Lesson learned.

Now I feel better.  Thanks.

-EM

Vince Lombardi Says it Best

Now that iBC has (re)introduced 248 new bloggers, I figured it was time to crack my knuckles and start banging on these here keys again to regularly express my thoughts regarding everyone’s favourite (sic) tale of whimsy: yes, I’m talking about the stock exchange.

It’s all about the levitation at this point.  The ether is flowing and everyone is in a constant state of bliss.  Losses cannot and WILL NOT be tolerated.  Unchanged is the new DOW -300.

The best part was that time when the market plummeted over 100 points in 40 minutes on a (excuse my language) fucking rumor about teh Bernank cutting off the crack rock.

Seriously, what the hell IS going on out there?

Hell, even everyone’s favorite “hedge”, $VXX, is positively correlated with the market (ok, not really).

My portfolio stands at 52% cash.  This scenario is exactly why I have allocated 30% of my capital to a broad market ETF.  Even though I’m scared as hell to get long here, I still have a decent amount of exposure to the broad market that I’m continually making (albeit muted) new highs each and every day.

Yes, yes, it’s true, my gains pale in comparison to even the broad market (and, yes, for that I feel like a retarded monkey).  It sucks being  in a place where I’m trailing by so much, but am also extremely leery of the rug being pulled out from under us.

Aside: I feel that prospect is more real than ever before.  the AP account is hacked and Prezident O’bama is hurt, next thing you know, bids disappear from the market.  As mentioned earlier, allegedly a mere rumor of Bernanke cutting off QE caused a minor panic.  I have no confidence in this “rally”…it’s all fantasy…play money.

Thus, I have basically closed up shop in looking for multi-week/month trades like I was earlier this year.  I’m letting what remains of those positions ride for the time being and am focused on very short term extreme oversold trades.

I have developed a system, and it has been very successful so far.  @eliza_mae_ibc #knifecatcher is where you can tune in for the play-by-play.  More details to follow around here.

Until then, lever up those accounts to as great of an extent as possible and buy as much of everything as you can, you cannot and will not be allowed to lose.

-EM

 

It’s as if…

…nothing has changed…

My apologies for the lack of content of late…but really, what is there to comment on?  We have essentially gone nowhere since my last post almost three weeks ago.

Additionally, I have not made any (as in ZERO) adjustments to the core holdings of my portfolio, letting the ebb and flow of the market take these positions where it wants to.  (which, coincidentally, was briefly into the red for the year and is now bumping back against all-time highs).

Now that we have made the roundtrip into the depths of hell (aka a 4% SPY “correction”), I am back to provide some thoughts on where I believe this market is headed.

The money to be made on this latest surge was discovered by growing a pair and buying when things looked worst.  Just think, two weeks ago, we had a pair of retarded Chechen brothers setting off explosives in crowded streets in order to kill/maim hundreds of innocent civilians, fertilizer plants blowing up, and the aforementioned Chechen asshats on the loose and shutting down a major northeast city.

The market had all the makings of a sinister and swift more lower.

Please…don’t be naïve, this shit is never that easy.

As mentioned, we are now back to having our mugs filled with the finest ambrosia, gleefully bidding up the price of any and everything we can get our hands on.  Just wait until those stops in the high 159’s are run on $SPY, this market is going to 1700 in short order.

Do I really think that will happen?

Answer: no, I do not.

I think we are likely going to take out the all-time high on the S&P, but I have little doubt that we will run out of gas soon afterward.

Then the selling will begin.

The selling will continue for a few days, ripping to shreds anyone who was bold (read: stupid) enough to go long at the very top, thus leading to everyone getting all crazy and scared and the doomsday theorists will all crawl (back) out of the woodwork and proclaim about how THIS is the real one, the big one, and we had better make preparations for DOW 9,000.  Then things will look extremely bleak, like, if one more bad news item hits the wires, the market will be headed to a -1,000 day…oh wait, we have already covered this scenario earlier in the post.

Basically what I am getting at is this:  I believe the upward momentum in the market has reached a peak for the time being and we have entered a range-bound trade.  Right now, the upside is known…I think the downside will expand in the coming weeks.

I will continue to tread VERY lightly here with my cash levels hovering around 55%.  #Knifecatcher continues to make system based trades (currently long only WHX), but those are completely unaffected by my opinion and other useless subjective measures.

Until next time.

-EM

 

Portfolio 04/10/13

Though my contributions over the past few weeks have been fewer, throughout this time I have maintained is that there was not enough froth/euphoria to see a meaningful “correction” in equity prices.

Last week, the frail were frightened by the stock exchange, the headlines all turned dour, and the markets began to slide.  On a personal note, my account took on significant fire as 2/3 of my March gains were quickly eliminated.  I sold out of a few names that I was growing leery with, but committed to the remaining names in my portfolio.

I have said several times ‘we are going to blast higher, and that will be a more meaningful sign that we are going to top’ (at least on an intermediate term timeframe…i.e., months).

Lo and behold, yesterday we are greeted with a massive meltup in just about every sector of the market.  Except for the most stubborn of realists (extra Bleier), once again we are sipping from diamond (and sapphire) encrusted mugs filled to the brim with cocaine laced ambrosia.

I’m not calling a top here (vis a vis going short), but my positioning as of the close yesterday would indicate that I have very little confidence in the sustainability of this rally.

Every single one of my positions (save my “system” holdings in IWM) has been reduced by at least half.  My cash position sits at 53%, and I have locked in meaningful gains in many names.  I was determined to not let this opportunity to sell at higher prices slip through my fingers.

My sales yesterday were as follows:

BX at 20.85 (19.98)

CVD 73.44 (70.26)

MGA 58.36 (55.39)

MRH 26.45 (25.34)

PCL 51.76 (47.79)

RWT 23.33 (21.00).

What remains of these stocks is still game to make some profit should the rally continue.  If the market turns south, I can close them out without taking on too much damage.

With these sales, I am in the process of shifting my focus from longer term trades (in terms of a quarter+) to trades that are less than a week in duration.

How do I plan on implementing this transition?

Good question.

Answer: via employing a strategy I’m calling the “knife catcher”.  Yes, the title is self explanatory.  Beta testing is complete, and now I shall employ it in real time via my Twitter feed, so tune in if you like, things are about to get more “exciting”.

Here is where I stand:

2013-04-11perf 2013-04-11-EM

MORE COWBELL:

Portfolio Update

My most sincere apologies in the lack of postings the past couple of days.

There has been familial drama aplenty (in addition to an increased workload, courtesy of my employer) in the world of “ElizaMae” that has precluded my ability to post as frequently as I would like.  Nevertheless, I am still chugging away here…refining old ideas and developing new.

As would be expected, I took a few on the chin into the correction last week.  I sold off a few laggards (CNO and CMLT) but held on to most everything else, because I knew, deep down in the core of my being, that we were not going to sell off with any sort of tenacity or vigor (in this latest downturn).

Like I have maintained for a couple of weeks now, I am looking for a break higher from this recent range to suck in longs that are looking for a breakout.  Regardless of what the stupid VIX is reading, volatility is on the rise.

If the daily fluctuation of in P&L of my account is any indication, since the start of April (on the nose) we have been far more apt to experience violent price swings in both directions.  For example, yesterday (4/8) was my second largest gain ($-wise) of the year…with over 35% cash.

To sum things up, I am basically looking for better prices in which to unload a lot of risk.

A few weeks ago, I loaded up, thinking we were going to see another push higher.  Yes, I got caught leaning the wrong way.  The damage was not too significant, but I certainly was wrong.  Years ago, I would have panicked and unloaded almost everything right at the bottom, but my market-sense has improved over the years.  I most certainly would have capitulated after the hideous jobs number on Friday.

This time I saw opportunity to employ a new system I have been developing, which I have dubbed “The Knife Catcher”.  It looks for stocks that are oversold and which then switch to ridiculously oversold.  On Friday, it picked up on CPSS and LOCK.

I sold CPSS for nearly a 12% gain yesterday (10.75 from 9.6) and LOCK for almost 7.5% (8.99 from 8.36).

While these early returns are extremely favorable, the backtests I have compiled using this strategy have been even more impressive.  With this in mind, I am now implementing the strategy “live” using 10% of account equity.  The nuts and bolts I am going to keep to myself, but it wouldn’t be too difficult to reverse engineer the results to figure out how I got to where I am.  It’s nothing fancy, but I find there is often beauty in simplicity.

Here is how the portfolio looks, including the updates that I have missed the past couple of days.

2013-04-08perf 2013-04-08

-EM

Portfolio 04/03/13

Things have been quite busy around the office as of late, so I have not had my usual time in the morning to sip on a piping hot mug of coffee and write my pre-market performance updates, so I apologize for the delayed post once again.

The stock market is hilarious sometimes.  Whenever we get a few days of selling, I am amazed by how quickly not only sentiment but also news flow turns decidedly negative.  I am amazed by how quickly things can turn from ‘peachy’ to “OMGWTFFML!?!”

Just last week we were all banking coin, planning trips to exotic locales in which we could exploit all of our stock exchange winnings.  This week, those plans have been scrapped and we are now eating condensed canned soup and drinking Meisterbrau in order to be “prudent”.

I think this is a trap.  I believe that there was not nearly enough euphoria at the top for this to be any sort of sustained decline.  Yes, my P/L in April would beg to differ with that sentiment, but I am trying to hold the line here.

What concerns me most is the extreme decoupling of “riskier” assets as seen in recent performance in IWM and MDY as compared to DIA (presented to me via my market timing algorithm…and can be witnessed by anyone with 2 operational eyes).

IWM has been destroyed since 4/1.  DIA is less than 1% from all time highs.

Basically my thoughts are: we have a ripping run higher on the riskier assets (smaller market cap), which will signal the intermediate top.  I think bears are going to get “graped” by getting sucked into this recent selloff, only to see the same happen to late-comer bulls who think that a strong push to new highs is a signal to get in.

Several other items worth noting: Japan’s continued easing and destruction of the Yen.  Additionally, the inability of short term bonds (SHY) to rally vs. SPY.  This has been my key indicator for risk on/risk off, and it this ‘score’ still resides in “unequivocal bull market territory”.

If you are long, I say hang in there, I think we will bounce soon.  If you are short, take profits.

As for me, I sold out of CNO yesterday…I had enough.  Additionally, I cast off half of my RWT position to lock in gains and raise more cash.

I hate selling after a steep selloff, it cements the fact that my timing is waaaay off.  I should have high cash levels and be looking to buy when we sell off like this and be locking in gains when we rip.  I’ll eventually find that balance.

For now, I’ll have to live with watching almost all of my March gains go up in smoke.

Onward.

2013-04-03perf 2013-04-03-EM

Portfolio 04/02/13

I apologize for the delayed submission.

These results are a bit comical and meaningless seeing that I am down over 1% on today’s session.  Serves me right.  I am nothing more than a ball bouncing between break-even and new highs.

Right now I just happen to be accelerating (quickly) back to the former.

Part of me wants to hang on here, part of me wants to sell just about everything to salvage what little profits are left right before the close and wait.  I knew that I was leaning a hard into this last consolidation, figuring that the market had at least one push higher prior to a selloff.

Now, granted, this pullback is still relatively tame and it’s only been 3 days, but Q1 leaders have been getting ANNIHILATED since the start of Q2.  This might be profit taking, this might be a rotation out of risk and into safety.

Either way, it’s part of life on the stock exchange…so I suppose I should just sit back and enjoy the splendour (sic).

2013-04-02perf 2013-04-02-EM

Portfolio 04/01/13

I apologize in advance, but there is little time for pleasantries this fine morning.

Yesterday was “quaint”, as my portfolio shed over three quarters of a percentage point.  What a great way to start off quarter number two!

Anyway, I see that the futures are “up” as of this writing, so it would appear that our horrendous 1 day bear market nightmare may finally be coming to a close.

Thank (insert deity here) for that.

2013-04-01perf 2013-04-01-EM

Portfolio 03/28/13

The first quarter is in the books and it was a profitable one.  As I stated when I first started this project, I am looking for 2% monthly returns.  So far, January and February fell short of that goal, but March was satisfactory.  Yes, I could have gone long SPY, forgot about everything and doubled my returns, but hell, that’s no fun, now is it?

The new year brought about an interest in volume at price analysis.  In my short time delving into this method of analysis, I have started to see how this tool can be used to identify stocks that have the potential to “run”.  Stocks like TPX, CBI, RWT, WGO, PCL and MGA have been mainstays in my analysis and portfolio.

Now, their appreciation since the start of 2013 may be the result of a market high on fine white powdered drugs, but they also have exhibited a certain ‘slipperiness’ in their ascent that has added to my conviction in using Price by Volume as a means of analysis.

I believe that charts provide a visual representation of investor psychology.  Price by Volume allows you to delve deeper into the rabbit hole to find where levels of supply and demand are in harmony and where there is an imbalance.

To this point, my collection of companies “on watch” has come from running a couple screens and populating my list as I find new stocks that meet the criteria I am looking for.  Over the past few weeks I have been plowing through a list of almost 2000 stocks (those which trade more than 400k shares/day and are over $1/share) in order to create a volume void database.  The process is tedious, but I now have built a list of 170 stocks that currently exhibit significant volume voids.

I am really excited about how this is coming together and I look forward to sharing how I use this information to trade these stocks.

As for the portfolio, on Thursday, I raised some cash by selling off half of my laggard AEIS and BX positions and trimming a bit more from PCL.  Cash is now up to 23%.

Final thought: I am looking forward to some volatility.

2013-03-28perf 2013-03-28

-EM

Portfolio 03/27/13

I really do not know what to make of the market at this juncture.

Yesterday, at one point, my account had dropped by nearly 1%.  With this development, my initial reaction was nervousness, but was soon quelled by trying to not get overly emotional (I could feel the frustration starting to build), thus I decided to stop watching my holdings and let things play out.  As you will see in the results, I finished the day up a smidge, continuing with the ‘highwatermarking’ that has taken place in March.

I keep reading traders that I really respect talking about how this is a “topping process” we are going through.  While part of my consciousness believes that to be true, my time-tested “risk on/risk off” indicator is looking moderately to extremely bullish.

Sure the dynamics of this system are always evolving, but it has been fairly accurate in recognizing “chop” and bearish segments in the market since I started monitoring it.  It is signaling nothing close to either right now.  Additionally, the small cap ETF (IWM) is still the top ranked as the ‘market’ ETF (followed closely by MDY).  This, IMO, is another bullish indicator.

This is objective data.  Though most of my discretionary trades are made based on “gut feeling”, my market-centric analysis revolves around the computation of price data, that which cannot be argued.  Well, *how* I analyze this data is a subjective interpretation, but the content is not something that can be disputed; therefore I have to trust what this is telling me and cast emotions aside as best I can.

Thus, I am positioned for another leg higher and there are also a number of stocks I want to buy (a few of which I highlighted here).

2013-03-27perf 2013-03-27

-EM

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