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Thursday, March 28, 2024

PSW January Trade Review (Part 2)

.NDX WEEKLYChristmastime!

This is where the Nasdaq was on Friday's (12/20) close (see also, Part 1).  Bullish sentiment was at record highs and the media frenzy could be summed up by my friendbuddypal Jim Cramer's declaration that:

"This is the year we went from the bear market with some bullish advances to an out and out full blown bull market. this was the year where we finally vanquished the demons that haunted this market since the nasdaq top at the beginning of the millennium.this was the year where things worked out where hard issueswere resolved positively and good news translated at the end to, yes, good news, right down to today's action where the stock market toasted a fantastic 4.1% gross domestic product game. with a darn good rally."

Cramer said we were in a "true bull market" and practically went out of his way to pull down each of my bullet points from Friday morning's post – where I warned our Members to cash out into what I thought was a very fake rally.  That brings us up to Monday, where I felt it necessary to counterpoint Cramer and stop him from sending some of his sheeple off a cliff:

Dec 23:  Merry Monday Markets – Apple Provides More Lift 

That(The CHL deal with AAPL)'s going to send our indexes all the way to VERY overbought, if Friday's action on Dave Fry's NYSE McClellan Oscillator is any indication.  Even if today adds less than Friday's 25 points, we're still going to be well above that 40 line but, once again, we don't really care – because we are mainly in CASH!!  

And why are we in cash in such an exciting market?  Here's a sobering snippet from the Consumer Metrics Institute's Analysis of the Economy: —–   (see the post for the rest, not worth repeating)  —–

This is no surprise to PSW Members, I've been pointing these defects out as the data was releasted but we all know what happens when the party hats come off and people take the time to actually read this kind of analysis.  So, we took an early exit into the uncertainty – it's not like we're going to miss much if the S&P is going to go up another 27% next year because we can, once again, outperform it by 20x with simple trades like our AAPL spread (and we put up 15 more like it for our Members last week!).

  • Oil (/CL) Futures short at $99, now $96.90 – up $2,100 per contract
  • Gold (/YG) Futures long at $1,195, now $1,270 – up $8,800 per contract 
  • Nikkei (/NKD) Futures short at 16,000, now 14,950 – up $5,250 per contract 
  • SPY Jan $175/180 bull call spread at $3.19, selling $130 puts for $1.80 for net $1.39, expired at $5 – up 259%
  • AAPL 2016 $400 puts sold for $30, now $25 – up 16%
  • GLL July $107/99 bear put spread at $5, selling FCX 2016 $28 puts for $3.15 for net $1.85, now $2.85 – up 54%
  • 100 Russell (/TF) Futures short at 1,150 out at 1,147 – up $30,000 ($400,000 margin play!)
  • TWTR 2016 $60/80 bull call spread at $6.20, selling 2016 $35 puts for $6.50 for a net .30 credit, now $1.17 – up 490%

CASH remains the theme into the close of 2013 despite the Fed surprising us with a very well-crafted statement.  We called it wrong (we were hoping for a sell-off) but that doesn't mean we are going to flip-flop bullish and chase what we missed. Even being COMPLETELY wrong about what would happen after the Fed (so far) because we have BALANCE, our Short-Term Portfolio is down $2,250 while our Long-Term Portfolio is up $1,255.

142113 600 Christmas Gifts cartoons

By the way, in case you are new, these are the featured trade ideas we post daily in either our morning post or our World-famous PSW Member Chat Room that were NOT tracked in one of our official virtual portfolios.  As with any trade idea, the end-points are arbitrary and it's VERY important to use proper entry and exit techniques (see our Strategy Section and Education Archives) as well as keeping generally BALANCED portfolios (see our series on Smart Portfolio Management).  

Trades may have done better or worse along the way but, unless I gave a specifit exit point, we're just reporting where they are as of today's date.  Of course we have bullish AND bearish picks – that's how we stay balanced so, obviously, they can't all be winners – though we do try!  As far as I'm concerned, once a trade idea makes 20% or more – it's done and we're then stopping with at least a 10% gain (again, see strategy) because – as you can see, we have HUNDREDS of them each month – there's no need to beat a dead horse!  

Dec 24:  Merry Christmas from Philstockworld!  

We cashed out for the holidays, just in case it's not, and it will be a Christmas Miracle if these levels hold up through New Year's Eve as we already have a headline in the WSJ that reads:  Retail Sales Plummet.  This is no particular surprise to PSW Members, as our annual Holiday Shopping Survey has indicated a poor shopping season from the start.  

  • TSLA Jan $155/145 bear put spread at $4.50, expired worthless – down 100%
  • Russell (/TF) Futures short at 1,160, out at 1,158 – up $200 per contract

If we are not in Euphoria, then possibly we are merely at Optimism, with a very long way to go (like 1999 seemed ridiculous for a whole year before crashing) and, as I've been saying for a while, I am willing to play that way in 2014 if we survive into earnings.  However, if this is, as I suspect, already Euphoria, then it's a long, long way down for the next cycle.  Best thing for all of us to do is keep open minds but, when I see values like NFLX, AMZN, TSLA, WYNN – it's very hard to rationally imagine another year of 40% gains.

Dec 26:  Thursday Thoughts for the End of the Year

The Fed’s balance sheet exceeds the gross domestic product of Germany, the world’s fourth-largest economy. It’s enough to cover all U.S. federal government spending for more than a year. It could pay off all student and auto loans in the country with $2 trillion to spare, Fed data show. The central bank’s assets are set to exceed the $4.1 trillion held by BlackRock Inc. (BLK), the world’s largest asset manager.

At 22 percent of the $16.9 trillion U.S. economy, the balance sheet is surpassed by those of other major central banks as a percentage of gross domestic product, according to third-quarter data compiled by Haver Analytics in New York. In the euro zone, the figure is 24 percent, and in Japan, it’s about 44 percent.  The risk for the Fed is that rising interest rates reduce the value of its bond holdings, potentially causing losses if the central bank had to sell the securities back into the open market.

“QE turned out to be a safety net, a floor, a way to catch the economy to keep it from crashing,” said Steve Blitz, chief economist at ITG Investment Research Inc. in New York. “A safety net to catch a falling economy is not the same thing that can springboard the economy to a higher rate of growth.”

So, for as long as it lasts, we'll just have to hold our noses and BUYBUYBUY based on the sole premise that, no matter how poorly the actual economy is performing, the Central Banksters will paper it over until they get the charts they desire.  Our trading "advantage" is going to have to be our skepticism, as we certainly don't want to be the last ones to leave this party!  

  • XRT Feb $85 puts at $1.05, now $4.20 – up 300%
  • Oil (/CL) Futures short at $99.50, out even
  • Russell (/TF) Futures short at 1,160, out even 
  • Dow (/YM) Futures short at 16,350, out even 
  • Nikkei (/NKD) Futures short at 16,300, out even 
  • CTB 2016 $20 puts sold for $3.40, now $2.45 – up 28%

Dec 27:  Final Friday of 2013 – No Worries? 

1.3M US Citizens get cut off tomorrow

That's right, we're finally pulling the plug on those lazy, unemployed leeches that have been draining $300M a week from us job creators(though, obviously, we didn't create jobs for them!).  That's $15.6Bn a year – enough money to pay for 3 nuclear submarines!  And what's more important to America – feeding 1.3M families (1% of the workforce) the week after Christmas or having 1% more submarines in our fleet?  The choices couldn't be more clear for our Congress!  

This is a real, substantial victory for our Repbulican way of life.  Clearly a lack of jobs is not the fault of the system that has exported over 3M jobs overseas in the last decade alone but a failure of the weak, who didn't work hard enough or pray hard enough to make the cut.  Come on, we all know one of them, the so-called "unemployed," who have been sucking at the Government teat for too long, when all they have to do is get off the couch and go back to work! 

  • NFLX 2015 $400/350 bear put spread at $30, selling March $375 calls for $32.50 for net $2.50 credit, now .58 credit – up 76%
  • Oil (/CL) Futures short at $100.50, out at $100.25 – up $250 per contract

Not a bad way to finish off 2013.  It was, of course, a very slow week but we managed to find 13 out of 14 (92%) winning trade ideas with 4 evens (in and out on Futures).  Nice when we can amuse ourselves over the holidays.  We'll pick up the next two weeks later today and then we'll be all caught up – as it's never worth it to reveiw things until at least a couple of weeks have passed

Looking back on what was happening when we made our trade selections in retrospect, gives us better perspective and helps us make better decisions next time around (part of our 10,000-hours of practice).  It also reminds us not to EVER believe anything we hear from the MSM:

 

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