Saturday March 14, 2015

$SPY, $STUDY, life is good albeit in fits and spurts.  The past week saw the holdings of the Alpha One Model reduce in number to 8 or 33.5% long versus 66.5% Cash.  The gain Year-to-date is holding up very nicely at 58.62%.  The gains are consistently coming from both the portfolio holdings up 11.4% thus far in the first quarter.  With the lion share of the profits continues to come from the day trading or hedging activities which I under take using the $SPY.  Those activities have contributed $28,331.08 to the portfolio.  While not for everyone, nor should it be, learning to trade options can certainly provide both piece of mind and profitability to one’s portfolio.  See the “Closed Options Trades” tab included in the Alpha One Model, found by clicking the first item on the menu bar above, for details of the trades. 

Remember that the model is just that a model, scaled from my accounts, to a proportion that in my opinion would be suitable for an investor to begin thinking of trading in this manner. The price detail of each transaction booked in the model is derived from real time trades in my accounts. This modeling is being done solely as an educational service.

Three portfolio positions were closed over the past week $VRX, $ORAN and $DAN all as the result of opinion downgrades. Given the volatility in the market driven by the ever changing speaking faces needing to sell sound bites to survive and the short calendar remaining before we approach earnings season again, I chose not to fill the void created by the sales and focus on trading options.  There are three names on the Watch list for your perusal, but here again I advise to measure twice and cut once.  The coming weeks will be highly volatile with little to move them in either direction than news mongers.

Friday wasn’t a pretty day in the stock market but irrespective of the larger indexes small cap stocks continued to outperform. The short term momentum of the Russell 2000 index remained bullish, suggesting that the force behind the recent drop in stock prices was mostly the rise of the dollar. All eyes will be on Janet Yellin and the Fed in the coming week to see whether together they can help the market by releasing some pressure from the dollar. An indication of a June rate hike will probably send stocks into correction territory while keeping the “patient” in its statement will likely put an end to the current down leg in the stock market. Expect volatility to remain high until we get a good picture from the Fed on Wednesday.

As shown below the Asset Allocation Model is recommending 62.5% Long and 37.5% Cash.  This recommendation is confirmed by the 67.5% Long status taken from the individual daily analysis of the names included on the various personal lists which I maintain.  The short Term Market Model is at 75% Bearish, 25% Bullish.  That Bullish call is on the Russell 2000 by the way.  Caution should be the tone of the day!

Remember that the daily posting has been discontinued for the time being, weekend updates will continue at my convenience.