by phil - February 23rd, 2014 7:53 am
OK, let's see if we can finish January off!
Actually, I hate to see it go as our Trade Ideas in Parts, 1, 2 & 3 have had 51 winners and just 8 losers (87.6%) so far, not bad in a choppy market! Now it's crunch time (or crash time) as we left off at the top, on Jan 10th and it's all downhill from here for the rest of the month.
Keep in mind that timing is fairly arbitrary, of course, between the review and when the trade was made so our short trade idea on the Russell Futures at 1,160 from 1/10, made $6,000 per contract by 1/28 but is down $320 per contact as of Friday's close. Whether we specifially called a stop to that trade or not – if you rode the contract from a $6,000 gain to a $320 loss, you are an idiot. That's right – I'm not going to sugar-coat it – that is idiotic and you need to seek help!
Hopefully, this is not your case and you have reasonable expectations and set reasonable stops on your trades. My rule of thumb for Futures is, if we specifically call a stop (we usually do) then I count that total but if we make a general call, like we did on 1/10 in the main post, then I will put down the total gain on the trade with a reasonable stop (the /TF Futures went to 1,180 for an $8,000 gain before turning back up) based on our normal trading rules (see Strategy Section).
We had been playing the top of the rally "Cashy and Cautious," with means we should be CONSERVATIVELY taking pofits off the table (and that's what we switched back to this week as well). Unfortunately, as the old saying goes: "You can lead a trader to profits, but you can't make him take them off the table."
Jan 13: Merger Monday – Suntory Buys Beam for 25% Premium ($16Bn)
by phil - February 9th, 2014 6:41 am
Finally we get to January!
Of course, it's silly to review trades less than two weeks after we initiate them. which is why these reviews are perpetually behind. In fact, we still have the last two days of December to get to but now we'll finally, actually get to January in Part 3. We left off in Part 2 with 13 of our 14 (92%) trade ideas for the holiday weeks coming up winners and Part 1 had just two trades – also winners (ABX and SSO) – back from Dec 7th, when we were still bullish.
Without any further ado (than the first two parts, of course), let's get into the first week of January and see how we did:
I was still feeling like Chicken Little because my warnings to get to cash into the Holidays still seemed to be baseless but I pointed out how FAKE I thought the rally was and how FAKE all the media cheerleading about strong holiday sales was – using this fantastic example of Corporate Contralled Media Manipulation from Conan. As I noted:
The news is nothing more than a script written by the powers that be as we prepare to celebrate New Year's Eve of 1984+30 and, of course, the so-called "Financial Media" is nothing more than a propaganda machine aimed at whipping viewers into a buying frenzy that retailers can only wish for.
From an index standpoint, we have easy warning lines to watch like Dow 16,000, S&P 1,800, Nasdaq 4,000, NYSE 10,000 and Russell 1,100 – all very much in the clear now and we'll put new, more aggressive levels on as they move up – so we'll always know when to pull the plug on our long plays.
- GOOG June $900 puts at $9, out at $11.50 - up 22%
- Oil (/CL) short
by phil - January 23rd, 2014 6:14 pm
Just a quick look at our 5 virtual portfolios as they stand as of Jan 23rd (mid-day):
Our Short-term Portfolio spent no cash with put sales and credit spreads and currently has about a $2,035 net credit, of which $1,420 is profit (69.7% on cash). This portfolio is balanced bearish as we anticipated a market sell-off and now we're in the middle of one!
Our Long-Term Portfolio is, of course, much more conservative and we collected $13,710 more than we spent and, so far, our gain on cash is $3,845, a 28% return on those positions. We have only deployed about 20% of our margin BECAUSE we anticipated a sell-off and we PATIENTLY waited for a correction so we could do some bargain-hunting.
Now we will wait for the music to stop before we jump in for some bottom-fishing but, for the first time since October, we're actually excited about getting some buying opportunities!
Those are our two "Webcast Portfolios." Every Tuesday at 1pm we do a broadcast with the Darwin Investing Network in their Fundamental Profit Room and, of course, we have dozens of other trade ideas each week we discuss in our Daily Member Chat at www.philstockworld.com, where we teach you to BE THE HOUSE – Not the Gambler!
At PSW, we keep these 3 additional portfolios but, not having the pressure of HAVING to make weekly picks for the Webcast, we have generally elected to stay in Cash as we waited for the inevitable correction now in progress.
NOW comes the fun part as we get to deploy some of that sideline cash but PATIENCE is still the first major lesson of 2014!
Just the one trade (we closed one unsuccessful put play on NFLX) so far. Still a very nice $320 gain on a net $1,575 spread is 20% in 2 weeks – we can live with those sort of returns!
by phil - December 15th, 2013 7:16 am
We had a Hell of a start to the month.
As the market bottomed at the end of September, we had 59 trade ideas in two weeks and only 8 of them were misses for a very nice 86% success rate. That only took us through October 4th, when the S&P was at 1,675 and on the way down to 1,646 on the 9th so here comes a tricks couple of weeks (hopefully we get to 3) where we start on a downturn and finish making new highs. This is always exciting for me as these are our untracked trade ideas, so I always wonder how they turned out!
Keep in mind, these are fairly arbitrary snapshots and we make both bullish and bearish bets on a regular basis and the trick is to keep a generally balanced portfolio so you can take advantage of moves in either direction. When we are bearish, it's 60/40 bearish or 70/30 bearish but not 80/20 bearish! BALANCE is very important in trading, and in life…
Remember, our core philosophy is to BE THE HOUSE – Not the Gambler (which was, in fact, the subject of our October 6th post), so we sell premium on both sides and that means we will win some and we will lose some and then we try to work out of our losers while continuing to sell premium on the other side of them. Over time, that puts the odds well in our favor and USUALLY markets go up AND down, and we profit on both ends. This year's market has been a lot more up than down – so far.
October, however, was marred in the beginning by the Government shut-down.
Oct 7: Monday Market Meltdown
Sometimes, all it takes to end a wicked bull run in the markets is a nice, cold splash of reality and what can be more real than the idiocy of the US Government? This is a country where almost 25% of the World's GDP takes place! When you
by phil - December 3rd, 2013 2:22 am
And the madness continues!
We had our fabulous Las Vegas Conference last weekend so we're a bit behind this month and we ended the week at record highs. Our September Trade Review (Part 2) wasn't done until 11/2 anyway and Part 1 of September was completed on Oct 13th, when the market was just beginning to fly. (Chart by Dave Fry) We called the September action almost perfectly and, out of 112 trade ideas for the month, 96 (85%) were winners – an incredible percentage that actually improved upon August's 81%!
For some reason, people think I'm too bearish but that's because our SHORT-TERM Portfolio is full of bearish offsets to the bulk of our positions, which are NOT tracked until the reviews, because they are longer-term trades or day trades. Also, if we tried to track 112 additional trade ideas per month, we'd be just about getting to February now!
Options are not like stocks, we don't want 1,000 people all following the same trade (as I noted last month as well). That's why PSW is an educational site where our goal is to teach you to identify your own opportunities to BE THE HOUSE, Not the Gambler. By putting up an average of 5 trade ideas every trading day – we give our Members a huge variety of trade ideas that can fill in any portfolio. These trade ideas are highlighted daily in our Member Chat Room at PSW! Keep in mind that this is an arbitrary point in time and some trades could have had better (or worse) exits in between – we're not doing this to keep score, just to get an idea of what worked and what didn't in the past month so, hopefully, we can make better decisions this month.
by phil - November 2nd, 2013 7:35 am
Now things get interesting!
We made a good bottom call in late August and, in Part 1 of our Trade Review, we had 46 trade ideas in two weeks (the last week of Aug and the first week of Sept) and 36 of them (78%) were winners. I predicted at the close of that post that it was not very likely we'd repeat that in Part 2 and now we'll see how things went during 3 weeks where the Dow went from 14,900 to 15,700 and back to 15,200.
I never know how these things will go until I do the reveiw so this is exciting for me. These are the trades we don't track in our virtual portfolios (which are highlighted daily in our Member Chat Room) so it's a bit arbitrary to pick a certain day to see how they are doing but, as I always say during these reviews, if you use good stop and scaling disciplines, you only have to be right half the time to do very, very well.
We left on on Friday, Sept 6th with "Non-Farm Friday – It's Next Week that Matters" and we had one of our losers that day, shorting oil at $109.50 (/CL). Too bad we didn't stick with that one, right? That's OK, there were plenty more… We also had a bullish play on TSLA, of all things, the Jan $130/160 bull call spread – but that was one of many covers we used along the way up to protect our longer, short positions.
As you can see from Dave Fry's SPY chart, we went nowhere on moderate, churning volume and that's no surprise actually when you have a look at this very helpful summary from theWSJ (via Barry) that summarizes our 4-year recovery in the economy:
by phil - October 13th, 2013 7:56 am
What a wild month!
Things went so crazy at the end of September that it's already October 13th and I'm just getting to the September review. Our August Review (Part 2) was done on 9/22 but part one but Part 1 of August was completed on September 1st, when the market was at the low of this cycle. We called the August action almost perfectly and, out of 106 trade ideas for the month, 86 (81%) were winners – an incredible percentage I don't expect we repeated in crazy September.
We don't track our virtual portfolio trades in these reviews – this is for all the trades we don't track – which is most of them – as it simply wouldn't be practical to track every trade idea (which are highlighted daily in our Member Chat Room) we have for you at PSW! Of coruse, this is an arbitrary point in time and some trades could have had better (or worse) exits in between – we're not doing this to keep score, just to get an idea of what worked and what didn't in the past month so, hopefully, we can make better decisions this month.
We left off on Friday, August 23rd and we were still bearish. It's a good thing, too as it turns out we dropped like a rock the next week! My note in the Friday morning post oulined our attitude into the weekend as I said: "If the news-flow changes (and it hasn't as of our morning review), we'll be thrilled to get more bullish but, at the moment – I'm sorry to have to keep being negative." We were looking to complete our 5% Rule™ pullbacks before there was a turn and we'd already begun to do a little bottom-fishing – but let's not get ahead of ourselves!
The Dow couldn't even put a good day together on Friday and finished off it's third down week in a row failing to take back the 200 dma at 15,100 while the S&P tested theirs at 1,635 with AAPL and MSFT giving the S&P and Nasdaq most of
by phil - September 22nd, 2013 6:35 am
We completed part one of this review on September 1st.
Now it's the 22nd, 3 weeks later and we've given our late August picks enough time to mature (like fine wines) and now we'll uncork them and see how they came out! The last day we reviewed was August 9th and we had begun shorting Russell Futures (/TF) at 1,050 and they were up $2,800 at the time of the review (9/1) but, since then, the market has recovered – A LOT – and the Russell is back to 1,069.
Hence the transient nature of any trade reviews – they work until they don't and they don't work until they do. The real trick is learning to take a profit – when and if they come along. In the first 10 trading days of August, we had 50 trade ideas that were NOT part of one of our virtual portfolios and 42 (84%) of them were winners as of Sept 1st. As you can see from the IWM chart above, the end of August was a choppy mess. We'll see how we did on those picks but it's hard to imagine such a strong average in that kind of chop.
From a Fundamental perspective – our expectations are higher because the market is higher and we have to look at this incoming data while asking ourselves the question: "Is this data good enough to justify all-time market highs?" Of course we know the market is "juicing" on Economic Steriods – that's not the point because it's not "illegal" and they're not going to have to stop using stimulus - but all-time highs are the big leagues. They are the playoffs, in fact, and now they have to be turning in performances that are the best of the best or else the fans (investors) can turn on the markets very quickly!
by phil - September 1st, 2013 5:58 pm
That about sums up our August as the indexes dropped all month long – down 800 points on the Dow (5%) and 80 points on the S&P (5%) and etc., etc… As long-term investors, we know we're going to get a little wet when the market turns down – the trick is to stay in the boat and be ready to ride the next profitable wave.
As I reminded readers on Friday, I never thought the summer would be worth playing in the first place – calling for our Members to cash out and taking a nice summer vacation way back in May. Many people took my advice and we've had a pretty quiet summer in chat but now it's time to go back to work – hopefully at the bottom of a bigger sell-off than the 5% we've had so far. The short story of the Summer is that we fell 5% into the end of June, gained 5% in July and fell 5% in August so here we are, back where we ended May.
That then, had barely any net effect on our long-term positions and, short-term, we were 97 right, 20 wrong and 3 even on our July Trade Ideas (see July Trade Review Part One and Part Two) but we've had little luck with the trade ideas we put in the Short-Term Portfolio, which is currently down a virtual $25,942 but, of course, our Long-Term Portfolio gained back $150,000 over the same time period – so, as a pair, they're actually doing exactly what they are supposed to do (offset each other).
We don't track our virtual portfolio trades in these reviews – this is for all the trades we don't track – which is most of them, of course. Of coruse, this is an arbitrary point in time and some trades could have had better (or worse) exits in between – we're not doing this to keep score, just to get an idea of what worked and what didn't in the past month so, hopefully, we can make better decisions this month.
by phil - August 18th, 2013 11:29 am
Now to wrap up July.
We had a great start to the month (see Part 1) with 42 trade ideas and only 2 that didn't work but, ahead of the review, I doubt we did so well in the last few weeks as the extent of the run-up took us by surprise. Let's see how the rest of July played out:
What's happening is the Corporations have gotten ruthlessly efficient at scooping up the profits as they move operations to countries where they can pay the least and pollute the most – shifting those costs to future generations while the American sheeple head off to Wal-Mart and buy items that ultimately cost them more jobs and even more money over the long-haul.
- LTP and STP trades were made but a watch and wait day otherwise.
July 9: Testy Tuesday – NYSE 9,300 or Bust!
The NYSE gives us a clearer picture of the market and we need to take it's lagging performance very seriously but, on the other hand – we cannot ignore the glory that is Russell 1,010 either. The Russell (see Dave Fry's chart) is another broad index of 2,000 small-cap companies (under $2.6Bn, over $130M) and they add up to just $1.9Tn – much easier to push around!
But, faked or no, we have to play the cards we're dealt and this is day two of Russell 1,000+ and now we have 3 of our 5 Must Hold lines green on the Big Chart, which means we need to get more bullish. Both the Dow and the NYSE have a very long