Monday, December 7, 2015
We are closing AAPL and SPY longs in premarket. Both the positions updated in the
Closing SPY @ 209.9
AAPL @ 119.3
We are leaving GDX long position open
Regarding closing AAPL and SPY: It doesn't mean that AAPL and SPY are going to go lower from here or crash. It only means we are bringing the money home.
What if you are unable to close in premarket?
We suggest to close at market open as you will still be in profits. May be higher or lower?
Friday, December 4, 2015
Thursday, December 3, 2015
Tuesday, December 1, 2015
Wednesday, November 18, 2015
Tuesday, November 17, 2015
Friday, November 13, 2015
We sold SPY short at $206.4 on a ST basis (added to the 100k trading portfolio challenge). Stop is at ~ $1.5 (break even) now that the position has returned $1.5 in our favour since started.
Been a while since the previous market update but there hasn't been any updates as such.
ST - Sell/ Short
IT/ LT - Buy
Pundits are blaring now (as usual) that this is a continuation of a bear market started in Aug 2015. While we have many tools to look at that point of view, we are highlighting one of the gauges in the chart below:
Market hasn't entered a correction or was never in a bear market (in the last 15 years or so) when GE (General electric Inc.) hit new highs.
While we are short on our ST positions, we don't see this as a IT/ LT sell (/short) yet. Atleast the evidence doesn't point to that yet.
Thursday, November 12, 2015
Monday, October 26, 2015
We will not take any ST positions before FOMC meeting announcement on 10/28 - may be we will stay in cash 1 - 2 days later as well.
The market exceeded the bullish expectations we had at this time . This was at a time when everyone and their mother including, were bearish and short the market. Everybody was clamoring for providing a good bearish number, most of them around SPX 1500 - 1600. So, where are these bearish pundits now after that breath taking rally in the last 2 - 3 weeks? Are they still short? ;)
Many pundits are talking about this being the market top for the IT frame - we are trend followers, so we don't see any sell signal at this time. We will post when there is change in the update.
Let's be honest, we were also not expecting this huge rally from /ES 1950. But, our stance is different = We do not have predictions usually, the above one is a rare instance. Hence, we are not shocked about this rally. Usually we check our charts and take bullish/ bearish positions with an objective of scaling out in profit.
Some of the positions taken previously (please updated "SilverVen's 100k portfolio for details):
Short $AAPL @ 110.22 - stopped out 2%
Short $SPY @ 200.3 - stopped out 2%
Long $TSLA @ 229.3 - Stopped out 2%
= Currently no positions
The 100k portfolio reflects all the above ST trades - does n't include the IT/ LT positions.
Current market update
ST - Buy
LT/ IT - Buy
We were stopped out of LT/ IT short $SPY positions in our fund @ /ES 2035 as mentioned in our blogspot several times, the last time being here . Even now our line of sand for IT/ LT positions is /ES 2035.
In IT/ LT positions for our fund, we flipped from sell to buy $SPY.
Our indicator remained bullish throughout, from ~ SPX 1950 or so - please see chart below:
The blue arrow is where we took a ST short position previous week = false signal
Thursday, October 15, 2015
Monday, October 12, 2015
Recently we have launched a $100k trading portfolio. Please click the link, titled "SilverVen's 100k trading portfolio", on the right side of this post. The trades are revealed to the public in real time on twitter or stocktwits ; The spreadsheet in the link will reveal the same, and track the previous trades.
Closed SPY from $192 to $199; closed XIV from $24.6 to $27.85
Previous market update here
Current market update
ST - Buy since Oct. 2nd
IT/ LT - Sell
Current market update
ST - Buy since Oct. 2nd
IT/ LT - Sell
The market has been on a ST buy since Oct. 2nd. The market still is on a ST buy. We closed the ST long positions merely to avoid volatility before the FOMC on 10/08. The liquidity (based on our charts) is considerably better compared to June - Sept. We are about almost to get a buy signal on the IT as well.
Monday, October 5, 2015
Sunday, October 4, 2015
After we posted our market update before the Sept jobs report, the pre-market tanked to /ES 1890 on Oct. 2nd. At that time, as posted in our blog, we were long on short term. Haven't been stopped out or we didn't add any longs to our position. But, should you have followed our post, you would have benefited from the dip.
ST - Buy
IT/ LT - Sell
We have closed 50% of our ST long position, since scaling out is our strategy. That way if we are stopped out lower, we wouldn't be in loss. Rest of the ST position will be stopped out (lower) or closed when the turn comes (higher).
IT - Short from SPX 2078
LT - Short from SPX 2050
Saturday, October 3, 2015
We have some interesting stuff about the market update, that is for tomorrow.
Out there in the www world, we have seen that the forecast of a bear market bottoming at SPX 1550 - 1600 is very popular. Now, everybody is 100% sure that this is a bear market. Nobody is doubtful abouut this. There are no questions about it. The focus is on forecasting the bottom and the time of bottom now. The number of experts with the forecast of bottom at SPX 1500 - 1600 is increasing.
Does the stock market actually take the pundits's permission to bottom at XYZ number? We have no idea how they can come to a conclusion of market bottom when neither the market top or bear market is confirmed by them.
Let us focus on the title here. Chart below, click the chart to enlarge:
We use the US real estate index as one of the metrics to guage the stock market pulse from time to time.
- US real estate index made a lower high in June 2015 when the market topped - comparison to 2007 when the US real estate index made a lower high in Oct. 2007 when the market topped
- This assumption will be invalid if the US real estate index breaks higher than Jan 2015 high, then expect the market to break higher - comarison to 2011 when the US real estate index broke higher in 2012 invalidating the market topping speculations in 2011.
- Caveat: The US real estate index actually bottomed in 2000 when the stock market topped. The US real estate index is tracked in stockcharts.com from 2000 (no prior data) but if you are not a kid then, you would certainly know the US real estate in the real world topped in 1997 - 1998 while the stock market bubbles blew into the year 2000. We are not ruling out the same happening now as well.
How do we trade this?
Like we said above, this is only one of the guages that we look at. We do not trade based on it. But, these comparisons provide confidence to the long term outlook.
Almost all of the guages have confirmed US stock indices topping in July 2015. Our line in sand for the long term outlook is SPX ~ 2050. If the monthly chart closes above it, then the market topping theory is off.
Good luck to all!
Friday, October 2, 2015
What did we say in the previous update?
At SPX ~ 1978 on Sept 15th, we said "The odds of the market becoming bearish again have increased as our guage indicates below and primed for the market to move south. "
Here we are today at SPX 1923 after a low of SPX 1871 2 days back. I hope you made the best of the market going down.
What did we do after the previous update?
At the time of previous update, we were positioned all bearish in all time frames. The market spiked up in FOMC's bullishness to > SPX 2000 and then went down for the last 2 weeks. We covered the ST short positions on the downturn. Not at the bottom but on the rebound at SPX 1890.
I hope you got the summary of my post and traded the same way! When in doubt, ask questions. Simple.
Why was this blog quiet for 15 days?
When there is no change in the update, no posts are done.
Traders are often frenzy aiming for 100% in 10 days or 1000% returns in 90 days. Come on, people. Be modest in your expectations. And then trade calmly. You don't have to flipflop your positions every single minute to score big annually.
You get the outlook correct. You get in the positions. If you are wrong, get stopped out. Otherwise you have a chance to score 2 - 3% on the ST. Few scores like this will take your account to 20 - 30% up annually. Trading every minute takes your account to zero in no time, Believe me.
Current market update
As the chart below indicates, the market is primed for ST (short term) neutral to bullish. We use other guages as well to position ourselves, which currently indicate for a bounce short term.
ST - Buy
IT/ LT - Sell
This is a counter trend ST move against IT/ LT bearish outlook. Usually we position 50% of our account in ST, 20% in IT, 30% in LT. Since this is a counter trend move, we position only 30% of our account in ST.
Always remember, we are mostly right. We are not always right. When we are wrong, that is when stops are useful for us, stops are useful for you as well.
Good luck trading to all!
Tuesday, September 15, 2015
We were eerily quiet for the last 2 weeks, right? When the market does nothing, it is better for us to not do anything as well. If you try too much, you will get chopped up and you will lose heart to play the market when it matters the most.
Last 2 weeks = chop
We = stayed out
Blog = no posts :)
We do have ST, IT, LT short positions but we stayed out of trading, all right? We did the same thing for the 1st 6 months of this year. Market chopped all the participants on a regular basis, we stayed out till we saw signs of movement.
Anyway, previous update here
I mentioned we go bullish VST before driving south. We did go bullish by 40 - 50 /ES points since that post and then came down, but not much. At that time, we too did not expect this boring. We thought the market will show its hand right after. As we checked our charts everyday, it was obvious that nothing was there. We remained quiet.
Current update (chart below)
The odds of the market becoming bearish again have increased as our guage indicates below and primed for the market to move south.
VST - No recommendation
ST/ IT/ LT - Bearish
We hold 25% of our positions in the ST/ IT/ LT time frame as we closed the remaining 75% on that plunge around Aug. 25th = gains $$$$$$$$...........
If you don't have positions now, it is not time to open because this is stupid (FOMC) meeting week. You cannot afford to open a new position this week. If you have positions, be nimble should the trade go against you. GLTA!
Wednesday, September 2, 2015
We will go on to discuss oil (/CL) but let's start with the general market (/ES / SPX) update briefly. In our previous post, we mentioned that we were surprised to see market tank down 2% yesterday morning. Because the market internals were poised for sideways/ bullish posture. Well, we were positioned short; we still are positioned short (ST/ IT/ LT) with trimmed positions.
Our outlook for 1-3 days (VST) was neutral/ bullish. The futures market (/ES) is up ~ 1% as of now. For the next 1 - 3 days, we remain neutral. We would not be surprised if we see /ES ~ 1980 one more time before driving south.
But, we remain flexible as always. Opinions do change with the market changes.
VST - Neutral
ST/ IT/ LT - Bearish
Previous oil update here (please see chart in this post)
This is where we stand today (chart below):
/CL rallied ~ 28% bottom to top. We do not have positions in /CL = none. But, based on our trading methodology, we would have taken 50% off the position on a good rally like that one. And ride the rest with the house's money.
The chart was obviously aimed at IT/ LT traders but if you score 25% profit in 3 days, would you say no? :)
Anyways, the outlook for oil is
VST/ ST - neutral = get stopped out while you are still profitable
IT/ LT - Bearish ( we don't see any change in the outlook even after the rally) until next turn
Tuesday, September 1, 2015
Oil update coming in the next post :)
There is no change in the current market update:
ST/ IT/ LT - All on sell signals
As mentioned in our previous market update, we have taken 50% off on 08/21 at ~ SPX 2000 on .
On 08/26, at SPX 1925, another 25% off ST position has been taken off.
25% of ST position (will close on signal turn)
50% of IT position (will close on signal turn)
100% of LT position (will close above /ES 2035 and turn into a "buy")
We have taken good profits into this slide since 08/20. There is no way we are going into red on these positions.
Currently market futures (Emini /ES) are down 41 points. We are positioned short and the signal turn has not come to buy yet. But, the current structure doesn't support this 2% down today = surprise. Hence, we anticipated that the market rally towards SPX 1987 - 2030.
One of the reasons is chart below, our guage was in neutral mode as of close yesterday:
We anticipate the guage into bearish mode if the market closes in big red today, as futures indicate now. The chart is not a holy grail. But, based on the chart, we expected the VST rally to continue or at least sideways. Even though our positions are all short. The last time we posted this chart was here .
Either way, let the market work its way downward. A change can be anticipated in the VST if /ES 1943 is broken to the upside.
There is a long time for this slide to go. May be we have seen the bottom on 08/24, we have no idea of telling. But, that slide has created a situation that the market should work its way up slowly rather than make a immediate V shaped rally.
Trend is down till proved otherwise. If /ES 2035 is broken up, then we will evaluate if the market may see new highs.
Sunday, August 23, 2015
Current market rating here
I am posting 3 scenarios on what to do if you are short, long, neutral right now.
We took 50% off the ST and IT positions on 08/21 at market close, explanation below. I will let the other 50% of the positions stop themselves, higher or lower, when the turn signal is initiated. LT positions will be stopped on a close of > /ES 2035.
Anyway, where does the market go from here. As I posted in my previous post, I have no clue. Up? Down? Sideways for several days? No idea. Everyone out there is throwing darts at the market, one of the darts will hit the bulls eye. My experience tells me that instead of guesstimating what the market does next, it is best to have plans on how to manage the positions.
- Have a plan to do if XYZ happens
- It doesn't matter if that doesn't happen, you still have a plan B if PQR happens
In other words, be flexible in this market. If you are chopped by market whipsaws, that is still ok. Take a walk and come back to trade another time. I do have suggestions on what to do if you are:
- Short right now: If you are short from ~ 100 SPX points above like us, take some off the table. That way, your profits will be ensured. Because what if the markets rally straight up from here? You have profits, so take some off the positions. Then, there are 2 scenarios. Market goes up or down. If market goes down, wait for the turn. Close the positions when the market turns. If the market goes up from here, have a stop at about SPX 2065. You still end up profitable being in short positions on this "mini crash" because you scaled out already.
- Long right now: Depends on what level you were long from. We sure hope that you didn't enter long positions at SPX 2100. If you did, you should have been stopped out before 6% down. If you entered long somewhere around, 2025 - 2050, you still should have been stopped by now. If you didn't close the longs on friday at market close and are expecting a rally next, we cannot help. Because there is no guarantee rally is going to come next. May be it will rally. May be it will not. We don't see the rally yet. Without any buying in the market in the last 3 days, how can you expect the market to rally? There are no indications right now that market will rally. That may change come Monday, but we have to see the evidence.
- No positions right now: This is the best place to be in. :) Cash is King!!! Traders who are in cash are at a huge advantage. Traders who are short right now, have to close their short positions and then take longs - in other words, they have to be ultraflexible about 2 moves; There is a high chance that this group may miss the next up move. If you are in cash now, you are obviusly relaxed and will see the next turn better without getting whipsawed.
Do not try to trade counter trend moves, you will lose the opportunity. We were short on ST, IT, LT positions prior to market open on 08/21. But, we were "expecting" VST counter trend move upwards. We knew for sure that the market did not bottom, hence clearly mentioned this was a VST move. But, the VST move did not materialize and we got stopped at /ES 2005. As a result, we were down 0.6% on the VST move AND we lost the opportunity to profit on the VST short positions from /ES 2021 to 1970. May be VST, but still 50 points is a big move.
Hence, do not try to trade counter trend moves.
Do not guess the up moves.
Saturday, August 22, 2015
Yesterday we tried something foolish , more on that foolishness in the next blog post. But, let's try to understand where we stand in this market "crash" and what is next.
Ivanoff suggests this is a market bottom like Oct. 2014. Technical trader says puts haven't been this high since March 2007, hence this is THE BOTTOM. Is it? May be both are right. What if they aren't right? Are we trying to playing a guessing game on who is right or wrong? Are we gambling with our money on guessing?
I am going to post tomorrow what our game plan is. Hence, watch out!
1st let's look the current situation from my perspective. Last market update was this. Our market guage suggested a decline. We got a 3% decline. So, what is the next scenario? Chart below.
1) Market bottom like Ivanoff suggests and bear crushing rally!
2) What if market declines further for 1-2 days and then rally for few days and further decline?
3) Who knows what happens? And why exactly are we trying to guess!
This post is about perspective, so let's just do that. Chart below.
More puts have been bought in several instances before. And does more puts bought = harder the market crash? I don't think there is a linear relationship between extent of market decline vs puts. It is not wise to guess based on "VIX hasn't risen more ever" or "puts are high" this time.
So, what do we do? That is for tomorrow. Thanks...........
Friday, August 21, 2015
We had to post the previous update to guide ST longs on when to close the position and what levels are important. The /ES futures market was down 15 handles, hence defining levels was important. As posted yesterday, market closed below /ES 2060 and /ES 2035 as well.
ST - changed from buy to sell
IT - had been a sell signal since July 26
LT - changed to sell from buy
Our options machine is in the "sell" zone, so exercise caution. Chart below. Could this sell move be a headfake? Well, may be, but let the market tell us that point. We are confident to read the charts when that happens.
I am a contrarian but I do follow the charts to identify the trend. I do not play counter trend moves though. Being a contrarian and a counter trend trader are quite different.
We will post an update when the ST trend changes.
Thursday, August 20, 2015
Was that update like 3 hours back? :) That is how much this market allowed me to sleep. :( Sometimes (FOMC/ OPEX), the market doesn't allow us to sleep. We are being used to working hard. We will catch up during the weekend, not to worry. Since I am sleepless anyway, I will present few interesting charts below.
Based on the market close, we will post updates.
Chart below: Since the cash markets are closed till 930 am EST, we will talk using the futures charts. A close of /ES (daily chart) below 2060 triggers the ST sell signal. A close above /ES 2060 is hold. A close above /ES 2072 reiterates a buy.
Next lower level to watch for /ES is 2035. A close below that will trigger a LT sell. Clear? Any questions please raise your hand.
Next up is FB - chart below. Yesterday's wild swings in the market did not influence this ticker a bit. FB held its nerve and closed +ve. Buy with a stop below the orange rectangle. A close below that rectangle will trigger a short position.
Next is Gold. My neighbor told me yesterday that Gold's bear market ended and it will never go below $1000. Well, there are no fixed claims in stock markets. We are very flexible to buy or sell. No fixed opinions here.
Chart below: Gold is up against some strong IT resistance. We reckon Gold is a sell here. The recent uptrend should end here. A close above that line is a IT buy with a stop 1% below that line. In simple terms, a daily close above ~ 1142 is a IT buy with a stop at ~ $1130. Got it?
We have seen some positives yesterday despite the sell off in the markets. LQD closed positive. Let us see how it will follow through. LQD has been a sell for more than 6 months but let us see if this ticker will turn a corner. No recommendation but thought this was interesting. Chart below.
We have a recommendation for you. This ticker is low volume, so you got to have a 10% stop. And please don't get heavy on this name as I said this is (relatively) new ticker to the market. Buy EROS with a stop @ ~ $35.
Wednesday, August 19, 2015
Before the market update, based on the question from a reader, we have a post for crude oil. Chart below.
If you already are short, right now it is hold. Close the short position on a close above /CL = $43.
If you have no position, then open a long position when the /CL bounces in the rectangle.
What instrument do you use to trade crude oil? ETFs are the way to go. Unfortunately, there is no "best" ETF as a direct play to crude oil. See chart below, while crude oil is down 54% YoY, other ETFs are down much more. USO is an ETF, OIL is an ETN; UCO and UWTI are leveraged plays for /CL. The best of the worst is USO though.
Now, let us discuss the market update. We flipped the sell to a buy on ST and the market went down 0.8% on the reading. Yesterday was a FOMC day. Nothing significant comes out of FOMC on most days, except once in a while. Yet the market swings a lot. That is never our problem, anyways. We have our own instruments, our own indicators to tackle all that noise.
No change in market update, we have a 2% stop on the ST.
Tuesday, August 18, 2015
Monday, August 17, 2015
First up, we have a buy recommendation for you. Buy Dominion resources with a 5% stop, chart below
No change in the market update as of now. We had a ST sell from 26th July @ SPX 2079.xx
I will post a change in signal as soon as we see it. But, let me post a warning to the bears. This is good for the shorts to close the position.
The circled turn marks the bottom of the market whereas the arrow confirms the turn. This indicator serves as a warning prior to the turn. But, the signal change is not there yet!
Friday, August 7, 2015
We do not have a change in the market update as of now
VST/ ST - Sell
IT - Sell
LT - Buy
We mentioned that we will take a short position should the market close below SPX 2095. The index did close below 2095 on 08/04 and we did open a short position. However, we closed the position the next day as the market closed above it.
In short, we do not hold a ST position now. The above update holds good until the next signal comes in. But, we did enter the warning (for the bears) territory already (see chart below). The confirmation would be a turn below the blue line that the turn (to buy) is in place. As long as the indicator is above the blue line, then the bears don't need to worry. I don't rue a missed chance to be short now, sometimes it happens. This stance is for the ST position only. We do hold a IT short position though.
If I were holding short positions now, I would not close the position. Coz we only gained like ~ 1% + with this sell signal , but I would have stops above SPX 2105.
We will keep you posted, GLTA!
Thursday, August 6, 2015
Tuesday, August 4, 2015
No change in the current market update from the previous one, but we do have a warning (chart below). To be honest, there are several warnings in all time frames, some of the warnings being extreme. But, this market wouldn't budge down. It continues to amaze us.
We don't hold any ST positions as the market did not close below SPX 2095. One of the good things for me personally was that I did not trade much from Dec. 2014 - June 2015 for ~ 6 months, luckily. The last 1 month has been super whipsawy, hence I can understand how it must have felt to have traded during that period. I did not trade, but our staff have traded and I easily understand them.
Usually we do not do much political/ fundamental commentary 'coz:
1) Trading is not about talking, it is an art in itself which is based 70% on a) putting the right risk size on the table and b) being flexible to close positions
2) If we start to talk, then we will have to dish out some criticism on someone out there - which is not our wont.
Out there, I am reading reviews suggesting that the "fear seen among investors now is same as the fear at the 2009 market lows" Oh, really?
How do you measure fear in the markets? Objectively or subjectively?
If you poll 100 people on fear about markets, that is subjective. If you look at the data from the market exchanges and derive fear that is objective.
If investors are fearful of the markets, they should either buy puts or get out of the market, right? We simply don't see any extreme levels of "fear" among investors. If you say there is extreme fear among market participants only 2% off the all time highs, you must be kidding!
Anyway, we do not subscribe to the notion that we are seeing extreme fear currently. Atleast, it is not simply seen in the data. In fact, it is opposite of what is being reported in the interweb.
This is only a warning that top is probably in (or close) for this ST frame. This is not a signal, however. Especially in this market where every indicator and signal has been mercilessly trashed.
It still pays to watch for the warnings, as it allows us to be prepared of the risk that is in the markets out there. Nothing more, nothing less.....
Wednesday, July 29, 2015
VST - Buy
ST - Sell
IT - Sell
LT - Buy
ST is on the border of sell & buy. No change yet! Our ST positions were stopped at 2% up from where we opened the position...phew! Should the market drop below SPX 2095, we will open the short sell market ST position again. Should the market continue upward, we will take the signal.
The problem is FOMC day. Things are not straight both before & after FOMC day. Never mind as we can wait.....
We got a warning sign yesterday from our options tool, hardly 2 days into this "buy" signal. But, no sign of VST/ ST signal change yet. So, we remain put. Especially considering it is a FOMC day. We reiterate again that we don't trade around FOMC. We do have 2% and 5% stops for ST and IT frames.
I am all ears on what the Fed chief will say about our economy. It is just that we don't trade what they say.....GLTA!
Sunday, July 26, 2015
ST - changed to sell from buy as of close on 07/24
IT - changed to sell from buy as of close on 07/24
LT - buy
ST position: In our previous market update, we posted that we are taking 50% of our position off at 2.5% profit and 25% stopped at 2100. There are times when scaling off seems dumb, for example when the swing trade results in 10% or so. But, that's the reason why we have some left on the table. If the market conntinues in the same direction of our trade, so be it, we will have our chips there. Also, we were not scaling off for no reason. We had this warning sign (chart below) on 07/21.
IT: IT changed to sell from buy. Previous signal was on 07/17 at SPX 2126. Which is a ~ 2.2% loss of our position. IT loss eats away our ST profits. Ah, humbug!
Anyway, good luck to all!
Tuesday, July 21, 2015
ST - Buy
IT - Buy
LT - Buy
All my positions are on buy signal, no change in trend yet, though I am seeing warning signals on the ST and LT. I am taking off 50% off of my ST position (here)with a 2.5% profit in ticker SPY, as 2.5% in ~ 10 days is kind of nice. Stop for 25% of this position is at SPX 2100 - to ensure the profits don't slip away. The other 25% will be flipped when the sell short signal comes on. This small blogpost sums up my strategy = scale out of profitable positions = always win!
Saturday, July 18, 2015
ST - Buy
IT - changed to Buy
LT - Buy
As we noted many times in the past on this blog, we simply hate IT trading. Especially this market since the bull market began in 2009. This market swings almost every month up and down. That is ideal for ST trading. But, at the same time, not so good for IT trading. LT investing on the other hand is good as the trend has been up except in 2011. IT trading was excellent prior to 2006.
Anyways, we were down 2.5% on the previous IT trade. We have a stop of 5% should the stop hit our trade before the signal comes. Which means our portfolio is okay getting a hit of 5% on this trade. We wouldn't say "fine" but just "okay". If not for these IT chops, our portfolio would be in much better shape.
Good luck next week!
Thursday, July 16, 2015
Current market update here
Our market updates are very simple. We post buy/ sell signals when we see change in the market direction. There is no ambiguity, there are no ifs and buts. However, trading is a different theme. It involves diffferent strategies. Hence, there are bound to be many questions to our stakeholders and to the readers of this blog. We will try to answer some of those questions sent to us below but please read here if possible:
1) Why don't you post VST updates regularly?
ST updates are based on daily charts - posted at the end of the day or beginning of next trading day.
IT updates are based on weekly charts - posted at the end of the week
LT/ VLT updates are based on monthly charts - posted at the end of the month/ quarter/ year etc
But, VST updates are based on change in the direction on an hourly basis. During the day, we are busy with trading. We take time to continue our work. Seldom do we have time to post VST updates. If this were a fee based subscription service, then yes, we would post VST updates.
2) How much % do you collect in a swing trade?
It depends on the swing. There is no fixed %. During the last sell signal (please click on the last 3 blogposts to review) that was issued on June 3rd, SPX was 2114. we clearly marked the supports for SPX in my previous posts. Based on the supports, we closed 25% of the position on June 15th at SPX 2075, 25% of the position on June 29th at SPX 2070, 25% of the position on July 7th at 2060 and final close of the remaining 25% of the position on July 10th at SPX 2075 when the signal flipped to buy.
We believe in scaling out of positions, if you understood our trading methodology. We collected 2% during that swing trade.
3) So, your portfolio performance is?
YTD, we are up by 11% in our accounts. IT/ LT positions did not collect much. Most of the profits are due to ST trades, some due to VST trades. We couldn't post regular updates during the early part of the year but we had enough staff to continue trading/ investing.
Past years portfolio performance here
4) During June 2015, the market was swinging between SPX 2010 to SPX 2050. You posted sell signal only but you could have played the upmoves as well.
Our trading is based on certain indicators and guages, 90% of them technical. Our indicators were heavily leaned towards a sell even though in hindsight we can call the market's direction during the last 45 days as "chop" or "box". Using our scaling out methodology, however, we were able to take advantage of the chops and posted good gains. Hence, no regrets about not playing the upmoves inside the box.
5) What position size do you use?
We have answered this question elsewhere on this blog.
Ideally, it is suggested that we should invest only 5% of the capital in one ticker (eg: AAPL or NFLX). So, for every $ 100,000 invested, the position size in one ticker should never be more than $5,000.
However, we trade individual stocks very few times. Most of our concentration is on market ETFs like SPY, QQQ, DIA. Hence, we use 75% of the allotted capital to SPY. The remaining 25% is either used as standby capital or sometimes traded on individual tickers with capital control.
We have 30% of our capital in LT positions.
We have 20% of our capital in IT positions.
We have 40% of our capital in ST positions, and 10% in VST positions.
6) For individual investors who have $ 5,000 - 10,000 as capital, what do you suggest?
With only $ 5,000 to invest, how can you manage a single ticker and still be profitable. I would say you are better off trading ETFs on a ST basis but be very nimble.
7) What if your signal is wrong?
This is a very good question. We humbly accept that there are no guarantees in this market. We believe that our signals are mostly correct. But, if we are wrong, then we do have stops in place at 2% for the ST signal and 5% for the IT signal.
8) Do you change strategies during earnings season?
Earnings are reported 4 times a year for all US exchange listed companies. As you might already know, predicting the direction of the ticker based on earnings is a very very risky business. Hence, we would not rather trade the earnings of individual tickers. If we must not trade during earnings, we should be in and out of the position during earnings which does not seem ideal for trading.
To answer your question, we do not change strategy during earnings.
Hence, we feel that it is prudent to invest on ETFs like SPY rather than be in and out of individual tickers during earnings, and other events.
If you have more questions, feel free to send them to me. GLTA!
Monday, July 13, 2015
Wednesday, July 8, 2015
After that ~ 50 point SPX swing from bottom to top, it is easy to assume that all term signals have changed to "buy". No, not yet, from my analysis. VST signal changed to buy, but ST and IT remain on a sell. Our options indicator suggests that we are close to a turn but we will wait for our other signals to confirm.
I have closed all but 25% of my ST short position. The 25% will remain till the time to flip to buy signal comes over.
If you are short on the ST, this options indicator should be a warning to you that you should pare your positions on plunges.
VST - Buy
ST/ IT - Sell
LT/ VLT - Buy
Tuesday, June 30, 2015
Monday, June 29, 2015
My ST signals have been on a sell since 3 weeks. No change yet and we didn't get a buy signal yet. Since something "greek" is going on, let us look at one simple chart. The support for the $SPX lies in the ~ 2065 - 2070 area. A flush below this strong level, there is thin support at the ~ 2040 level. Below that, at the ~ 1980 level. The US market futures are down about 1.5% at this time but remember that it is only the daily close on the actual indices that matter.
We were on a "sell" signal since 3 weeks based on our indicators (one of them below in the chart). You might be wondering what we did in the last 3 weeks. We don't trade only the buy and sell signals. In addition to the flipping of positions during these signals, we take advantage of the dips and rips by scaling in and out. In other words, if the market moves in the direction of our trade, we do take some chips off the table. That ensures that we book our profits. Please read our trading methodology. The market has indeed come to the ~ 2070 level twice in the last 3 weeks. Some of the positions were partially closed when that happened. This is the 3rd time we are about that level.
What happens tomorrow? I have no idea. Be careful out there. Use stops, and do not over trade on days like this. I am not necessarily saying we will crash tomorrow but some caution should be exerted. There is always another tomorrow!
Tuesday, June 16, 2015
The market was on a sell signal from the previous update. After 8 sessions, yet, the market is at the same point (SPX as barometer). However, we have not gotten a buy signal. For this swing trade (next few days), the signal is still on a sell. The market should see lower prices. This call is only for the IT/ Intermediate term.
Could this be the end of the bull market? May be an initiation. We have stops for the long term market charts much lower, so we cannot call this a sell signal on the long term yet. But, we will see higher prices and this swing trade is a buy the dip. My common sense indicators suggest that this will be a buy on the dip. One of the stocks that is an example of this raging bull market is NFLX. NFLX is near its all time highs. Bull markets don't end when the leaders are hitting all time highs. We will take note when the change happens.
Wednesday, June 3, 2015
Is the market all about puts and calls? The above chart says so. I have posted this chart on my blog countless times. I have had a success rate of >90% (remember that nothing is 100% sure) in calling tops and bottoms. 2015 April mid till now was a chopfest, so "my indicator" failed. But anyway coming back to the topic, the market swings according to how the puts and calls are traded?
Or is it that the MAJOR market participants do know the short term outcome and levitate accordingly?
Does it make a difference to know what is going on behind the scenes? Do we care political/ economic drama that goes behind? Not so much.
So, let's get back to business and call a top here. Good luck to all!