Position Update

$COF

Still hanging in there.  I have a solid profit locked up here, so I’m willing to wait and see how this latest pause resolves itself.  I’m inclined to think that prices are going to be relatively range bound between 53 and 58 (at the very extreme) in the coming weeks.  54 is a key level I’ll be watching to the downside.

cof 2012-04-05

$CTXS

This range between 76.5 and 81 is going to resolve itself shortly.  This is a favorable looking long pattern, so I’m comfortable holding what I have right now.  As mentioned, watching how price acts in the 76-76.5 area is going to be key for me.

CTXS 2012-04-05

$CVS

Dubious.  A profitable trade is one quick move to the upside away…so I’m hanging in there with this one.  Time decay is not yet a major factor and I don’t foresee prices remaining in the 44-46 range for much longer.  I’ll either be bailing for a loss or taking profits pretty soon here.

CVS 2012-04-05

$NWL

Teetering on the edge.  This is why I hate out-of-the-money options…time decay has destroyed any chance at a profitable trade here.  I’m probably going to just ride this one out for the last 2 weeks…surely to close worthless after the fortnight.  But what the hell?

NWL 2012-04-05

$RENN

Following the $RENN stream is always amusing.  I can’t tell you how many times this one was “ready to go” or “breaking out” in the past 2-3 weeks…yet here we are right back in the 5.50 area again.  This one has been repulsed at 6 three times since the start of March.  There is a strong line of defense there.  Price needs that clean air above 6 (i.e. short squeeze), a break could quickly lead to price in the high 6’s.

RENN 2012-04-05

$SKS

On the “chopping block”.

SKS 2012-04-05

$STX

See commentary for: $SKS.

STX 2012-04-05

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Midday Update

It really feels like a Saturday.  Fridays have a feel.  Mondays have a feel.  Thursday, not as much.  Anyway.

I’m looking at my now out-of-the money $NWL position and am seriously considering liquidation.  The chart doesn’t look horrible, but it’s in a place that makes me uncomfortable.  This is a small position, so that makes me hesitate a moment before culling it completely.  These will expire worthless below 18, two weeks from Friday.  Time decay has also eaten away significantly from my current cost-basis of 0.85.  I’d be salvaging a few bucks with the sale, but even if they expire worthless, it’s still less than my original risk profile.

$MSFT (July 31 Call) is another position that may be ejected before the day is through.

One thing that sours me on a stock is when price closes below the lower Bollinger Band.  I realize that this goes against conventional wisdom, seeing that a close outside of the BB should be viewed as ‘abnormal’ and to expect mean reversion soon.  Over time I have come to find that often the opposite is true, and price tends to continue in the direction of the band-break.  This is especially true when the bands start to expand in width along with the drop in price.  The chart below of $MSFT is a good example of what I’m talking about.

MSFT 2012-04-05

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Back from R&R

San Diego.

It’s easy to understand why it costs so much to live in that damn town.  I’m the type of person that prefers a little more variability in my weather patterns…maybe that’s from growing up in the rust belt?  There will be no complaints about 75 and sunny on vacation.

Always having a beautiful home to visit in Point Loma doesn’t hurt either.

Having a kid makes even the most ordinary experiences into an adventure.  Tuesday morning/afternoon my wife, son and brother-in-law decided to take to the mean streets of Coronado.  The previous night, the local PBS station flashed a picture of the “Hotel Del” across the screen and I ignorantly  proclaimed: “wait, that’s in San Diego?”

Originally, we planned to head to the Children’s Museum, however those plans were abruptly scrapped.  I quickly suggested that we go to Coronado and check out that hotel.

We decided to park on Orange by the Von’s and walk the rest of the way to the hotel because of traffic.  The brother-in-law said the Chamber of Commerce liked to use a lot of superlatives in their description of the property…after walking around and through, I can understand why.  I was waiting for the Day Manager to summon Pemberton to “escort the riff-raff from the premises”.  Ok, it’s not that fancy, and we aren’t white trash, but that’s a hell of a lot of wood for a part of the country that doesn’t have easy access to structural or decorative wood.

It being lunch, we needed to eat.  Serendipitously, there was a little sandwich shop in a liquor store on the same block as Von’s (on Orange), that makes some really great (and inexpensive, for Coronado) stuff.  The picture of the “Super Italian” sold me.  It’s usually the little things like this walk, the hotel and lunch that I take out of a trip that make it truly memorable.

As for the financial markets, I’ve been following lightly.  Keeping track of my holdings and reading a few blogs that I like to keep up on…but no evening research or anything.

From the looks of it, another dip is upon us.  Now is the time when I need to prepare myself and be ready to strike.  The question I’m asking myself is this: do I want to concentrate my cash toward buying a diversified basket of stocks making favorable patterns in top performing industries (my current strategy).  Or should I simplify and go for a heavily traded market proxy ETF (i.e. $QQQ, $SPY, $IWM) and play for a directional move in the general market?

Tonight I’m leaning toward the latter as I already have a portfolio of positions in a number of industries.  Speaking of my portfolio, I liquidated my $XRX July 8 call position on Tuesday…details are shown below.

XRX 2012-04-03

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A Reduction in Exposure

This was a “grin and bear it” kind of day in the stock market for yours truly.  The morning started, appropriately enough, with my only short position ($MCD) as the lone stock in my entire portfolio in the black.  I promptly cut my position in half 10 minutes into the session, taking a small loss and lowering my exposure. 

Watching the account bleed money at month/quarter end makes for a humbling experience.  Nevertheless, I have my rules and I have my instincts (admittedly, as of late, they are off), which I methodically followed throughout the day. 

Next, I cut my latest $MSFT position in half, taking another small loss.  There is no doubt, I’m being very cautious here.  I’d rather trim my positions and miss a rebound than to sit on them and watch their value quickly deteriorate.  This is especially true when on the wrong side of simple directional option trades, as not only do you have the price of the stock going against you, but also time and volatility. 

The fire sale was almost over when I reduced my only other “full” positions by half, selling $NWL and $XRX for modest losses. 

Lastly, I decided to liquidate my remaining $DIS calls for a small profit…I think the official scorer ruled it a ‘bunt single’…though the first baseman did appear to bobble the throw.  This was an “instinctual” sell…and it looks like I was mistaken, yet again. 

My family and I are taking a Spring Break trip south to (sunny?) San Diego for a few days…I’m hoping that time away might help me to regain some of my mojo, because another week of this pitiful performance and I’d consider myself to be officially ‘slumping’. 

I grit my teeth a bit and flush when I read bloggers talking about how this was the “easiest quarter” in over a decade.  I have, undoubtedly, SUCKED ASS since the start of the year.  My lull in January can be attributed to a lack of energy/effort toward the market, but I have been strapped into this shitty office chair since mid-late February and I’m just not hitting my stride. 

The frustrating part is that I have missed out on a fantastic bull move.  Sure, the parts of my portfolio that are in a market ETF and geared toward dividend reinvestment are doing just fine…but no one comes to Stocktwits and this blog to hear about my broker reinvesting the $0.41/share dividend from my $MO holdings. 

I pride myself (and make the most money) on my discretionary trades, and right now is a rough patch.  Time to sack up, keep grinding and stay vigilant on keeping losses small.  This fever will break sooner or later, and when it does, I plan on making back everything I lost AND MORE. 

Here are some charts highlighting my latest trades.

$MCD

MCD 2012-03-29

$MSFT

MSFT 2012-03-29

$NWL

NWL 2012-03-29

$XRX

XRX 2012-03-29

$DIS

DIS 2012-03-29

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On Losing

Of late, I just keep driving in neutral with my trading.  My account balance just keeps trading water…I’ll appear to make some headway only to find myself (stupidly) holding through an earnings miss or an analyst downgrade.  I’m hitting a lot of singles and doubles, but a handful of trades-gone-wrong have kept me from making any sort of headway.

I have no doubt that trading is the most rewarding AND frustrating profession on Earth.

I am a firm believer in streaks.  Sometimes, every order I place turns to gold, other times, like now, I’m just churning…I’m not losing much money, but I’m not getting ahead either.  I have gone through periods like this before, and as long as I continue to trade, I will go through them again.

In order to keep myself in check, I need to scale back and trade smaller.  If I’m going to continue to pick duds, I’d rather do so with less risk on the line.  I’m doing what I have done in the past to be successful…in fact, I’d say that when I’m on a roll, I tend to do less work than when I’m cold.

Maybe I’m pressing instead of letting trades come to me?

In looking at my biggest losers over the past month, there is no doubt that I made some stupid and hasty decisions that could have been averted with a little more foresight.  The other night I spoke of how I think my trading improves when I’m writing.  Through writing out my ideas, I’m certainly able to view them more objectively.  Sometimes taking that step back can provide a different perspective and allow me to make better decisions.

Now for a review of the trades that I made today.

$CVS

CVS 2012-03-28

I wouldn’t put this into the “bad trade” category.  The setup looked promising, price was advancing to my liking, and then fell right back into the range it has sat in for over a month.  On the weakness today I decided to lighten up on my position in order to lessen my risk.  No doubt, $CVS is now officially on liquidation watch…there are better places for my money if the price of this stock continues to crater.

$SWY

SWY 2012-03-28

I get what I deserve with this.  One of my rules for long trades is: only buy stocks that are above their 3 month EMA.  There have been many instances over the years where I have broken this rule and usually end up muttering 4-letter words about my ignorance and stupidity afterward.  Well, look at that…I get to do it once again.  Unfortunately, the pattern that formed last week looked just too good to pass up so I decided to break my rule and get long.  A quaint analyst downgrade on Monday morning sent shares of $SWY plummeting and along with it, my June 20 Call options.  I took off half on that news and thought it would be prudent to hold the other half to “see what happens”.  Great idea…all I was doing was letting price AND time decrease the value of the option.  I put this position out of it’s misery this afternoon through liquidating my remaining contracts.  All I had to do was adhere to my rules and I would have avoided this land mine…lesson learned?  Fuck me.

$MCD

MCD 2012-03-28

I really like this pattern to initiate a short position here.  $MCD struggled around 100 for almost 3 months before gapping lower on March 8.  It has made two attempts to push higher but quickly ran out of steam both times.  Now price weakness has been confirmed with a second failed attempt to move higher, so I feel pretty comfortable going short.  My ‘stop’ is pretty wide, so I’ll be liquidating this on a break of the 63 EMA with minimal damage.  I don’t make decisions to go short for a long duration.  Therefore if price slides back to the lows of last week, I’ll probably take my money and get the hell out of here.

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Trade Progress Report: $RENN, $SKS, $STX, $SWY, $XRX

I’m going to save the narratives about these trades for when I sell contracts/close them out.  For now, I just wanted to get my current positions out there for the sake of transparency.

$RENN

RENN 2012-03-27

$SKS

 SKS 2012-03-27

$STX

 STX 2012-03-27

$SWY

 SWY 2012-03-27

$XRX

 XRX 2012-03-27

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Trade Progress Report: $DIS, $MSFT, $NWL

$DIS

DIS 2012-03-27

This was one of the first discretionary positions I opened after returning to the market.  I was reaching a bit and tried to force my way into this trade by buying at the end of that ‘flattish’ base that transpired during most of February.  This is not a typical pattern that I trade, but so far it has worked well enough.  Since my entry into the trade was atypical, I was kind of at a loss as to where I should take profits.  Obviously my timing was a little premature as this one broke out the day after I took some off.  Hey, at least I didn’t sell everything.

$MSFT

MSFT 2012-03-27

I opened this position at the start of the day on 2/28, so I was able to pick up that breakout prior to it taking place.  Like $DIS, my entry into this trade was not my usual style, so my sale of contracts on 3/6 was also made in a state of confusion/uncertainty.  Now, the setup that formed last week was right up my alley, so I jumped into the July calls at the 31 strike.  At this point I’m content to watch and make liquidation decisions based on price action in the coming days, but so far, so good.

$NWL

NWL 2012-03-27

I just opened this position last Friday.  I rarely buy out-of-the-money options (which this was at the time of purchase), but this pattern was just too tempting and there weren’t really many other alternatives.  This one is starting to make me a little nervous, so it’s on watch for a trimming.

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