Market update

Previous market update here 

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.

GLTA!

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! 

Portfolio performance 2013

Please read Introduction 1st.

For the year 2013, net profit at Silver Ven is 23.5%. I am not impressed at all, considering the shame of getting beaten big by the general market ( SPY up by 31.89%), other peers in 2013 and our own performance from previous years. That goes on to reiterate the fact that past performance is no predictor of the future. Our winners for the year were AAPL, FB, NFLX, TSLA, LNKD, ISRG, RAX, TWTR, Index via SPX while we had small net losses in PCLN, GDX, AMZN, CREE, FSLR. I am only mentioning the top winners and losers, we have a big list out here. Our trading involved much more than the above mentioned tickers. One of the problems why we were not up big like the previous years was that the market swings  have become small and quicker. We had a great beginning with the buy-and-hold mentality till April/ May. Considering that we are positioned as a swing trader to maximize gains both up and down, many of these later swings turned into whipsaws cutting into the gains earned prior.

Few good and clean things that we wish to maintain into 2014:

• Position sizing and risk - We are good at proper risk maintenance and proper position sizing.
• Bias - When the market remains irrational for longer than we think it will be, the good thing about us is to sit out when we are in disbelief. Means we do not take opposite trades based on our beliefs. If we do not have good belief in the market conditions, we sit out but not take the opposite trade.
• Stops - While I agree too many swings can cut into profits when we have stops, we do not mind getting stopped out. Belief is eventually one of those swings will turn into a big one far exceeding the small stop losses.
• DCA - When there is a bad trade, cutting the trade is the best thing. We do not average on the trade digging a bigger ditch.
• Widow makers - Traders have a big list of widow makers like UNG, VXX. We do trade tickers like this but are aimed at very short term trading. Never buy/sell-and hold into these tickers.

I wish all our readers and fellow traders a Happy, Prosperous and a Wealthy New Year 2014. Keep up your good spirit, you will never lose!

Ringing the register - capital gain taxes

Investors have been puzzled why the (supposedly) best tech stock in the world AAPL has entered the bear market territory recently. One of the thesis that has been floating around is, long term investors are locking their profits after a tremendous 3 year run. On the other hand, stocks like RIMM, FB which have been on the losing end have gained in the last 2 months. How come? Investors who have been long the winning stocks are closing their positions by selling, while investors who have been short the losing stocks are closing their positions by covering. A strong reason to believe this is probably an increase in capital gains taxes next year. The 1st chart shows YTD run in all the highlighted names.

The 2nd chart shows the performance in the last 3 months.

So, should you be loading on the winners, after this 'sale' is over? If you believe the strong fundamentals are intact, you may do so with caution. But, I insist that you exhibit a fair bit of caution in buying stocks whose technicals have been severely damaged like this one. Damage to the technicals in a stock will skew the view of investors, no doubt. Till the time the technicals are corrected, you may stay away from those stocks.

I included Homedepot HD which has been up a good % in both the charts, despite selling seen in other names. HD is sound both technically as well as fundamentally. In ideal case, given the ongoing market correction, I am not suggesting you to go long any stock right away. But, should the market rally after the market internals rise, names like this would be the 1st on the radar.