Jan 252013
 

POSITION

Big changes the last few days.  Got walloped on AAPL and lost $464 after the 10% dive post earnings.  I eventually sold out at $460.67 midday.  By the end of the day the stock slid another $10 to $450.

I also shorted the S&P500 by buying 350 shares of SDS at $48.83 for a net leverage of ~300% on the index.

RATIONAL TRADE

I blew AAPL big time, but I sold the trade and moved on.  I should have sold after earnings release in the after hours when my thesis of a pop failed to materialize and I would have cut my loss in half.

I shorted the index at 1500 under the thinking that the market needs a little rest.  This was a premature short and I need to keep it on a short leash.  I need to look at buying it back around 1505 if it looks like the rally is continuing.  I also need to close it out if the market is finding support near 1500 and building a base for the next rally leg.

EMOTIONAL TRADE

My mistake on AAPL was looking at the weakness on the chart and assuming the sentiment was overly bearish.  Had I ignored the chart and instead listened to the crowd, everyone was saying AAPL was a bargin and was a good buy.  This means everyone was buying the dip and no one was left to buy earnings.  I also messed up the after-hours trade by not getting out as soon as my trade failed to work out.  I was holding on hoping for some good news out of the earnings call related to the dividend or a share buy-back, but it never happened and the stock tanked another $30.  I need to get a lot better at pulling the plug quickly after my original thesis fails.

My SDS short was impulsive and trying to pick a top at expected resistance after breaking 1500.  This is not a sound trade and I need to keep a close eye on it and bail quickly if it isn’t working out.  Today the market regained 1500, but  diped underneath it, but rather than cascade lower, it is finding a floor and making another assult on 1500.

A close above 1500 tonight and trade above 1505 means I need to get out and consider going long.

 Posted by at 4:52 pm
Jan 232013
 

POSITION

Out of SPX, 50% in AAPL (12 shares @ $499.15) and 50% in cash.  Approx $110 profit in AAPL today, a day before earnings.

RATIONAL TRADE

Sold out of SPX to take ~8% profits on Friday.  This freed up money to put on AAPL this morning.   SPX had a good run and I wanted to lock in profits.  I’ve been promoting the AAPL trade and I am glad I had some money freed up to put on this trade.

If the SPX trades flat, I will look to reenter the position.  If it pulls back  I will either look to short, or buy at new support.  If it continues surging, I’ll look for a climax to short.  As for AAPL, I will hold through earnings.  If it pops, I will hold for the follow on rally.  If it tanks, I will wait a little to see if some of the initial loss comes back when value investors jump in.  And if it stays flat, I’ll exit the trade.

EMOTIONAL TRADE

There was a tinge of regret selling ouf of the SPX today as it surged higher and I missed those extra profits.  Maybe I pulled the plug too early since many of the up days have been fairly modest and not substantial capitulation days.  But even after today’s rally, I still think this is a better time to get out than adding new money.

Far and a way my greatest weakness is taking profits and I need to practice taking profits early and often.  My account can attest to how well holding on for more profits is working out.  2013 is the year to take this to the next level and push for an 80% year, 5% at a time.  I need to trust my plan and that includes taking profits early.

My AAPL trade was positive and gave me a little cushion before earnings tomorrow and helped offset some of the money I gave up in the SPX trade.

An option with the SPX trade would have been to sell half.  I tend to plunge in and plunge out, which wouldn’t be half bad if I actually got out when I should.

No matter what happens here, selling early was the right move and I will have a very, very good year if I manage 8% profit each month.  (~150% gain)  It really helps to look at the big picture and how important these small gains are.

 Posted by at 12:20 am
Jan 222013
 

POSITION

I initiated a 12 share position on AAPL @ $499.15 this morning ahead of tomorrow’s earnings.

RATIONAL TRADE

AAPL is 30% off of recent highs and a large wave of pessimism hit the stock.  $700 was obviously overdone, but $500 also seems to be an overreaction on the downside.  A lot of the recent selling was locking in lower LTCG rates ahead of Obama’s tax hike on the rich.  Now that artificial pressure is behind us, there are a lot of people who can buy back into AAPL.

News reports are out that iPhone5 manufacturing has been cut in half.  While not good news for the company, for the stock that means this negative expectation is already priced in and there will be little reaction once the news is official.  With expectations so dramatically lowered, it will be far easier for the stock to beat and  jump in price.

Options market is predicting a 7% move, so my $6k trade is putting ~$420 at risk or about 3.5% of my account value.  While a significant trade, it is not overly risky even if the stock sellsoff more than expected.

If AAPL dips tomorrow, I will wait to see if value investors jump in and buy discounted shares.  If the stock pops I will hold for a continuation at least up through $550.  If the stock doesn’t do much after earnings, then I will get out and move on.

EMOTIONAL TRADE

This is the analysis I’ve been talking about on the blog for weeks and I need to put my money where my mouth is.  I closed out my SPX trade on Friday and had money available to put on this trade.  I feel good about the trade, but maybe that should be a warning flag.  Of course you cannot make money in the the market without taking risk and rationally I feel this is a good risk.  Even if the trade doesn’t work out tomorrow, it was still a good trade.

 Posted by at 4:29 pm
Jan 222013
 

POSITION

Closed SSO trade at $65.27 for a $873 profit in after hours trade on Friday.  100% in cash.

RATIONAL TRADE

Had some profits and needed to take them.  The goal is 5% per month and I easily exceeded that this month.  There is a chance the market could keep climbing, but if it does in a sustainable way it will be slow enough for me to jump back in.  If the market races ahead, it is not sustainable and I need to stay out.

If the market does pullback, I will look to buy in when it finds support at 1450 or 1400.  If it doesn’t pullback and finds support here for a couple more days, I will also buy back in.

EMOTIONAL TRADE

Selling is always hard because it means I am giving up on a trade and that is an attitude I need to overcome because that is my single biggest weakness. Take profits and move on.  And while it was hard to sell on Friday, it felt really good when I locked in those profits.  Buying well takes practice as does selling well.

 Posted by at 4:15 pm
Jan 172013
 

POSITION

I’m still holding as stocks continue struggling with 1473.

RATIONAL TRADE

So far the trade is constructive.  Each early selloff rebounds into the close.  But the market just can’t break 1473.  Stocks are magnetically attracted to this level, but just can’t push past because buying evaporates at this level.  Is this support or resistance?  Good question.

The trend is clearly higher, so the benefit of the doubt goes to a continuation.

EMOTIONAL TRADE

I’m still haing on, hoping for more gains.  But if we don’t breakout tomorrow, I need to lock in my $500 profits.

 Posted by at 5:29 am
Jan 152013
 

RATIONAL TRADE

I’m still holding and waiting for more upside.  The market tried selling off three times and bounced back each time.  Today we gaped lower at the open and then finished with modes gains.  CM analysis says the high probability trade remains higher and so far that analysis has been spot on.

EMOTIONAL TRADE

Each selloff brings a ting of regret.  I could have sold that first breakout in the after hour and I would have missed most of this choppiness.  Will I be able to sell fo rreat this time when we make new highs?  That is the question.  This trading style isn’t about homerunning hitting, but just getting on base as often as possible.  So I need to be really careful about letting these profits evaporate.

I”m back above $500 in profits.  The market needs just one piece of good news to send us through all the stop-losses above the market.  From there I can move up my stop from breakeven to something closer to my 5% goal and then let it ride a bit.  Although I cannot let myself get greedy.

 Posted by at 11:51 pm
Jan 112013
 

RATIONAL TRADE

I continued holding after yesterday’s breakout to new highs and today’s flat trade.  The market dipped in early trade, but recovered into the close.  While yesterday’s breakout to new highs was on high volume, the size of the move didn’t scream of a near-term top and it is safer to hold when going with the trend.

I expect the market will make a new 52-week high before turning lower, but I will have to reevaluate after Monday’s price action.  I wouldn’t be unreasonable to see some weakness before going higher.

I have $511 in unrealized profits.  I cannot let this trade turn into a loss at this point.

EMOTIONAL TRADE

It is tempting to hold and it is tempting to sell.  I have my 5% gain for January ready to harvest and to be honest I am getting a little greedy holding out for more.  The smart thing would be to sell here and get practice locking in profits, by far my weakest trading skill.  But here I am still holding out for more…………..

 Posted by at 11:25 pm
Jan 102013
 

RATIONAL TRADE

I bought 320 shares of SSO at $62.54 on Jan 10th, synthesizing ~340% leverage to the SPX.

The market dipped to 1450 and my analysis indicated the high probability trade was to the upside, not downside.  Markets often correct from overbought conditions quickly, so holding the Fiscal Cliff gains for several days signaled the market was finding support and not in imminent danger of correcting.  The dip to 1450 provided a good entry point for the expected break above resistance at 1470.  It wasn’t an easy trade to make, but I made myself do it so my portfolio would be consistent with my analysis on CM.

Today the market closed above 1472 and set a new four-year closing high, giving me ~$556 in unrealized profits on my trade.  This reached my 5% goal for January and now I need to start looking to lock in my profits.

The hard question is if this rally is done or if there is more squeezing left.  It really depends on how the ensuing rally develops.  If it goes big and fast, that will signal taking profits early.  A more methodical rally will take more time, but could cover more distance.

EMOTIONAL TRADE

It felt good to see the trade work out like I predicted.  I am happy with the result, but not overly confident yet.  The market could easily pullback tomorrow and wipe out my recent gains.  Selling is always the most difficult part of trading for me and I need to keep these profits on a short leash so I don’t keep making the same mistake.

Do I sell here, or lock in profits and look for the next trade?  I can’t count the number of times I over-held.  Do I need to force myself to sell early just so I can get practice at it?  Do I sell right now in after hours, or wait for further squeezing tomorrow morning?  Rationally I don’t think the rally has climaxed yet, so my inclination to sell might just be a fear of losing these profits.  When in doubt, follow the analysis.

Sell early and often

 Posted by at 10:33 pm
Oct 182012
 

I created this website to share my personal journey of exploration and discovery through the world of trading.  Eighty percent isn’t a promise, but a goal.  We are all in this to make money and I wanted to set an audacious target worthy of my time and effort.  But as ambitious as eighty percent sounds, when you break it down and realize five percent per month compounds to eighty percent per year, it seems more plausible.

There are countless ways to trade and profit in the market, but I want to chart my own course and create a unique approach for beating the market.  Over the years I developed a feel for the market’s ebb and flow of sentiment; my goal is to exploit this insight with swing trades on the indexes.  I’m starting with a ten thousand dollar account and soon we will all know how successful this experiment is.  Maybe it doesn’t work right away, but as long as I continue learning, improving, and moving forward, I will keep at it.  And all of you are invited to follow me on this journey.

 Posted by at 12:19 am