Category Archives: Portfolio
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?
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:
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.
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.
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).
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.
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.
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).
Things are busy this morning; therefore I do not have much time for discussion.
I will admit to being quite nervous about this market. The easiest trades should feel effortless, conversely I feel like I am reaching a bit by taking on my highest levels of risk this year. How this resolves is anyone’s guess, but I am positioned for another leg higher.
Yesterday built confidence through the 2+% appreciation of several of my positions. The advance was quite orderly, not a gap higher and do nothing kind of situation.
This morning I am seeing a lot of red, but premarket has not really been a very telling barometer for the remainder of the session of late, so I should probably just ignore what is going on there.
Lastly, as I have alluded to on several occasions, I decided to add (double) to my CNO position yesterday right before the close at 11.46.
We are back to 14% cash in a car made of dynamite sticks; however we have not yet set a course for the heart of the sun.
There is nothing quite like opening up the brokerage account window on your computer to see one of your positions down over 5%. The frantic keystrokes in the Firefox search window, banging out the characters: “earnings calendar” only to see that I did not obtain erroneous information…**whew**.
So what the hell happened to CLMT?
Evidently the company is wont to dilute the supply of their stock (via offering more shares) to buy more things. I cannot say that I blame them…though as a shareholder, in this merely for a trade (not an investment), I find their tactics to be a bit unsavory this hideous “spring” morning.
As I mentioned last night, I have been motivated to buy more shares by what I am seeing in a number of stocks.
In this vein, I added to BX late in the day, and really really wanted to pull the trigger on a double of my CNO position, but decided to set free my languishing GE position instead. I still like the intermediate to long term prospects of GE and will certainly keep it on watch, but there is just too much sideways churning (with nothing to show for it) at this point to warrant a 5% asset allocation.
So where do we stand? I believe that the market is currently correcting through time, allowing many individual names to set up (this is the action that I am seeing in a lot of “leading” stocks). I do not think that we see a swift move lower from here. If we do get a big move to the downside, the scenario I see transpiring is the following: there will be a breakout which lures a bunch of people into the market as it makes new highs, only to have those late-comers summoned to the city square for swift penis removal.
I am positioned in advance of this move and will look to take profits on any substantial move higher in my stocks.
In Friday’s update, I spoke of being timid in the face of deploying cash into new positions.
Hours (if not minutes) later, I changed my mind and started adding to my AEIS and CLMT positions. Both of those companies were originally breakout buys, but in this market, I feel like any retreat to the 20 day is screaming “BUY ME NOW”, so I obliged, effectively doubling my stake in both names.
After scaling profits in RWT a couple of weeks ago, I mentioned that I was looking to buy back if there was a pullback that interested me…well, that opportunity came on Friday afternoon. My purchase in the stock brings my position to slightly greater than it originally was, but this time (obviously) with a decent buffer of profits already in my satchel. I’m looking for much higher prices from here and an opportunity to repeat the process.
Lastly, I decided to start a position in SYMC. I thought about buying on the break above 23 a few weeks ago, but felt like it was already getting extended and decided to hold off for a better setup. Well, after two weeks of sideways trading, I figured “now this is a better setup” and pulled the trigger on a starter.
This is another of these “thin air” trades that I have been making recently. With a push above 25, there is very little in the way of resistance all the way to all-time highs (made in 2004) around 34. I will become much more skeptical about this position on a break below the 20 day. Keep your risk low and your profit potential high.
If this Costanza rally off of the cordial news out of Cyprus continues (and at this hour, it appears to be fading), with my cash levels now below 15%, I am looking at pushing back through all-time highs.