Wednesday, July 29, 2015

Market update

Previous market update here

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.....

market update

Previous market update here

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

Market update

Previous market update here

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

Market update

Previous market update here

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

Market update

Previous update here

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

Q & A

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

Market update

Previous market update here

VST/ ST - changed to Buy on market close - July 10th
IT - Sell
LT/ VLT - Buy

Wednesday, July 8, 2015

Close but no cigar - Market update

Previous market update here

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

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