Saturday June 27, 2015

$SPY, $STUDY With the Greeks set to meet with their creditors over the weekend, investors stayed cautious Friday.  A nearly 8% drop in the Shanghai stock market scared some investors, while a strong earnings report from NKE and a better than expected June Michigan Sentiment reading kept investors optimistic about our economic growth. Like Thursday, higher prices in the first hour were met by profit taking. Technology stocks weighed on the overall market after MU missed its earnings on poor PC sales.

Trading volume was unduly heavy Friday as the result of the Russell index rebalancing. There are a few factors which will likely keep the uncertainty relatively high in the market next week. The obvious one continues to be the Greek factor. Greece is due to make a payment to the IMF on Tuesday. Unless a deal is reached over the weekend, expect the anxiety to continue into Tuesday. Then, there is the usual quarter end window dressing which should bring a positive bias. Lastly, it is going to be a holiday-shortened week. Neither bulls nor bears are likely to make large trading commitments ahead of the holiday.

Technically, there are some increasing warning signs as the Major Market Model has reduced the Asset Allocation recommendation to 37.5% Long 62.5% Cash. I added AVGO, EW and GILD to the portfolio on June 22^nd and sold STZ on June 25^th due to an Opinion Downgrade.  Timing is everything and my timing over the past week left something to be desired.  Not only did I elect to add to the portfolio in front of the current weakening in Technology segment I barely broke even for the week with my options trading.  While there were two winning and two losing trades resulting in a nominal profit for the week I chose to trade on Friday not taking into account the probable impact of the Russell rebalancing activities.  Friday’s trade resulted in a -6.89% loss on the trade and while not the largest single loss for the year it is close.  And I have no one but myself to blame, as I neglected to take my own advice and take the time to check the calendar before trading.  This negligence resulted in my being locked into a positon after my Stop Loss alert was triggered and having to watch the Bid drop an additional dime before I could get executed.  My fault and a lesson learned. 

However the overall uptrend remains intact as the S&P 500 remains in a slight upward sloping/sideways channel, stock-picking is the way to go.

FactSet StreetAccount Summary - US Weekly Recap: Dow(0.38%), S&P (0.40%), Nasdaq (0.71%), Russell 2000 (0.38%)

Monday June 22, 2015

$SPY, $STUDY Todays trade SPY150821C212 entered @10:34 AM BTO #24 @$4.25, exited @11:23 AM STC #24 @$4.50.  Bracketed at $4.56 Up and $4.15 down.  Closed the trade @$4.50 as I have to leave the desk for a while and would not be able to monitor the position.  

Saturday June 20, 2015

$SPY, $STUDY, The markets were lower Friday after the record run by the NASDAQ and Russell 2000 on Thursday.  It was a broad based selloff as every sector was lower but small caps continued to outperform as the Russell 2000 finished flat. While next week has a negative bias a bailout for Greece could spark a relief rally. Expect headlines out of Europe to set the stage for Monday.

FactSetStreetAccount Summary - US Weekly Recap: Dow +0.64%, S&P +0.75%, Nasdaq+1.30%, Russell 2000 +1.55%

Thursday June 18, 2015

$SPY, $STUDY, Todays trade SPY150717C210 entered @10:04 AM BTO #28 @$3.56, exited @ 10:52 AM STC #28 @$3.81.  Bracketed Up $3.81 Down $3.46. This trade was originated with a carryover entry signal which I am wary of hence I established my limits on the conservative side today.

Tuesday June 16, 2015

$SPY, $STUDY, Todays Trade SPY150717C209 Entered @ 10:24 AM BTO #28 @$3.55 Avg. Price, Exited @ 11:15 STC #28 @$3.84 again Avg. Price. The trading volume is on the thin side and while I had a strong set up  and entry signal this was not a trade for the light hearted.  

Monday June 15, 2015

$SPY, $STUDY No Trade today, the market opened down very hard for the first twenty minutes or so than began to reverse and trade laterally.  I try not to trade into an indecisive market and that is what we have today.  With the FOMC meeting starting tomorrow we will most likely see more of this type of chart for the next few days.  Good time to go fishing or play golf if it is not too hot.

Saturday June 13, 2015

$SPY, $STUDY, Greece stole the headlines again this past week after the breakdown with the European Central Bank over debt repayment plans. Friday was a disappointing finish to a mostly positive week as investors stayed on the sidelines ahead of the next FOMC meeting. Improving economic data continues to campaign for a sooner than later hike in interest rates but its unlikely the Federal Reserve will do anything before September. Fed Chairperson Janet Yellen will have traders hanging on every word from the FOMC meeting minutes on Wednesday looking for hints on the rate hike timeline. Expect another volatile week as markets will also continue to trade off European headlines and the Greece debt debacle. This is beginning to sound like a broken record.

Not much has changed from the perspective of the Major Market Mode, neither the Asset Allocation Recommendation nor the overall analysis of the six watch lists which we track.  Middle of the road, not adding to the portfolio at this time and will remain cautious going into the week.  In general the trading volume was weak over the past week which will cause the news driven volatility to appear stronger than in reality it will be, trade slowly and cautiously in front of the FOMC release on Wednesday.

FactSet StreetAccount Summary - USWeekly Recap: Dow +0.28%, S&P +0.06%, Nasdaq (0.34%), Russell 2000 +0.32%

Friday June 12, 2015

$SPY, $STUDY, Todays trade SPY050717P211, Entered (BTO) @ 10:10 AM,  #26, @$3.80.  Exited (STC) @10:34 AM, #26, @$4.10.  Bracketed at Up $4.05 – Down $3.70.  Again I targeted at the Mid-range of forecast.

Thursday June 11, 2015

$SPY, $STUDY, Todays trade SPY150717C211, Entered @ 9:32 AM BTO #33 @$3.00, 10:43 AM STC #33 @$2.92.  Had bracketed the trade Up $3.25 and Down $2.90, staying at the low end of the range for the day.  The down alert triggered at 10:30 and it took both patience and time for me to work out of the position today.  Small loss, but I am on the sidelines for the day and ready to come back Friday conditions warranting it.

Wednesday June 10, 2015

$SPY, $STUDY Todays trade BTO SPY150717C209 @ 9:34 AM #31 @$3.26, STC 9:53 AM #31 @$3.42. Again today I was looking for the mid-range target between $3.40 and $3.44.  Market opened strong but for now apparent reason, not comfortable in being too aggressive at this time.

Saturday June 6, 2015

$SPY, $STUDY, Friday’s strong non-farm payroll and pickup in wages bolstered chances for an interest rate hike at the October FOMC meeting and stocks traded mixed on the report. Despite a 14% jump in 10-year Treasury yields this week, stocks held up pretty well. Traders seem to be open to the fact that rates will be rising and next week will shift their focus back to Greece and the U.S. dollar. Although the Greek economy has little to do with a global economic recovery, failure to repay its debt to the International Monetary Fund will temporarily hit the Euro and cause the U.S. dollar to surge. That would cut into third and fourth quarter earnings and could have a negative effect on GDP for the remainder of the year.

While the overall Alpha Model Portfolio’s performed well over the past week the Major Market Model did weaken somewhat.  While the Asset Allocation recommendation remained at 50% Long and 50% Cash the Buy/Sell calls went to 75% Buy and the Opinion shifted to 3 Neutral and 1 Bullish down from a 50/50 split over the past several weeks.  The underlying lists weakened somewhat also with the Long calls dropping to 46% of total from 49% the prior week.

We sold UA on June 1^st and replaced the position with IDTI which added to the overall gain for the week.

Personally I am just not getting overly Bullish at this time, there are a few names on the Watch List which I find interesting, particularly   AVAGO TECHNOLOGIES (AVGO) and STARBUCKS CORP (SBUX).  But it will take a little bit of positive news before I commit to a new position.

Fact Set StreetAccount Summary - US Weekly Recap: Dow (0.90%), S&P (0.69%), NASDAQ(0.03%), Russell 2000 +1.16%

Wednesday June 3, 2015

Can I put that trade into a few words?  Today the overall market was moving in an upward direction as indicated by the crossing of the SMA on the SPY Chart which was posted to the FaceBook group earlier.  This is my go forward signal. 

I do not trade against the market direction. Calls (BTO) in a rising market and Puts (BTO) in a falling market.  My strategy relies solely on Buying to Open (BTO) and Selling to Close (STC).  I do not, repeat do not write either Calls or Puts.

1)      With the go ahead signal I then calculate the number of contracts that will be traded based upon my capital allocation to this activity which is $10,000.00 per trade.

2)      Calculate the exit price and the stop loss price based upon spreadsheet which was posted.  The range values are derived by looking at the pivot points, delta and entry price.  I select the appropriate margin by reviewing this data in conjunction with the actual position of the entry price within the range.  Admittedly more subject than quantitative.

3)      Alert brackets are placed on the trade and when triggered I exit the trade. 

This is a day trading strategy, no overnight positions and no adjusting if the trade is moving in the wrong direction.  Exit and come back another day.

How Long do you usually hold before exit?  I have not averaged the length of time that the position is held, but a SWAG would be about three hours maximum.

When the trade does not go your way do you adjust or exit?  Exit, tried adjusting when I first got started trading this way and learned that I just needed to take my loss and move on.  I do not like to lose money but would rather take a calculated loss, lick my wounds and come back another day.  Nor do I chase the top, I exit when my target is touched and put my profits in the bank, here to I always remember that I have never lost money taking a profit, for me this piece of the portfolio is all about income.  It is an active trading strategy geared to provide income so that the remainder of the portfolio can continue to grow in a more conservative manner.

How do you place the trades?   Our personal accounts are kept at T.D.Ameritrade and I use their ThinkorSwim trading platform exclusively.  After years of using other platforms I fell in love with this one for ease of use and spot on support from the help desk. 

Within the platform I use the Active Trader utility to place my orders which enables me to execute trades quickly when the alerts levels are triggered.  You can use automated order entry here as well and I have from time to time but my preference in the manual mode.