Ugh...out of CMG on the chart pattern...rough week. $1.22 debit. 20% loss. GPS isn't far behind if it doesn't recover in the next 2 hours.
Out of PM for .70 for 60% loss....FML! And SPX for 1.70 for an 8% loss. Really rough week this week. Can't recover from these losses in this week. The worst part about PM is I don't even believe it will be ITM by the end of the week...
TGT is also looking like a total loss. So time to dissect the week again. Rule breaking abounded this week, and I was punished for it. About 27% in losses this week. I'll go through this chronologically, and pretty much duplicate the thought process as I realized what went wrong and how. I'll start here: I was playing off my radar this week because I didn't see much. My rules are pretty clear on sitting the week out when I don't see signals. Additionally, I put on additional positions with the winnings from previous weeks, but with the same sentiment bias that I had over the rest of my portfolio. These should be sector neutral positions, with a sector hedge. In this case, I was bullish on EA and NVDA, and used ADBE as a hedge. But this wasn't the cause of losses that I originally had believed as I closed those three positions. In reality, had I stuck to my rule (but still broken the first one), I'd have a put debit spread on NVDA, call debit spread on ADBE, and possibly a long condor over EA or something else techy. That would actually have been a bigger loser. So back to my first rule, not opening positions when I don't see the signals. By the time the tech positions were closed, I had noticed an almost perfect 1-to-1 move between TGT and GPS. Totally unsurprising in hindsight because I saw the exact same signal and interpreted it differently. Not necessarily a problem since TGT was a hedge (and it's losses were less than GPS gains). But this underscored something I've know for a long time. I'm missing the forest through the trees. My signal reading wasn't bad this week, and the fact my favorite horses in the stable weren't up for the race this week should have been all I needed to know. But no, I felt the need to stay exposed to the market. In spite of the fact I was looking for the SPX to ping off 2450 this week (when opened, it was mid 2430s, and bounced around the 2440s through the bulk of my positions being open), but didn't see signals on my go-to stocks should have tipped me off. We'll call this week the opposite to my 6/9 expiry week (tech correction). That week, I was bullish on tech, exited early across the board but held a hedge speculatively on a chart patter. I saw the bear in real time on each individual stock, and didn't put together this was sector systemic. I had been given warnings by people whose opinions I find reputable about the impending tech correction, but nevertheless missed it entirely. I made it out in time, and to great profit, and realized after the fact how clear and pervasive the signals were. My chickens came home to roost this week. I saw all the signals in my stocks, had a reasonable spectrum of opinions I read here that supported what I saw in individual stocks, and just didn't make the connection. This has been a problem of mine for some time. I've commented before that I don't see the same signals in indexes or ETFs that I do for individual stocks. That's because I rely heavily on volume and what creates my 'signal', is the presumption that other market participants are reacting to the same data I see, so I'm 2 degrees separated from the spot market (my observation of the market's reaction to the spot market activity). Why this falls apart painfully in aggregated instruments should be pretty obvious. But since I also need a market-wide sentiment to inform my position formation, I tend to be purely reactive to this. Much like Denver weather, for the S&P I have two forecasts: It's going to be like last week, or it's going to be warm and sunny--and there you have why I'm a perma-bull. Where I need to get better is seeing similar wishy-washy patterns (or outright bearish patterns) across a sector and connecting it to the sector. I see this often in consumer defensive because I watch those sectors closely as an investor and what they can inform on market health. I miss it a lot in other sectors. I might look to sort my list by sector rather than alphabetically. I think as I click through charts, seeing the same sector in sequence may help this. I may also put time aside specifically each week to inspect each sector until I am confident in sector direction AND see enough positions to fill my portfolio for the week...I'll keep working at this. In conclusion, I broke rule number 1, which is only entering trades on good signals and only when those signals are coming fast enough to fill a 5-8 position portfolio. I wasn't even close this week and because of that ended up in sectors I don't care to play (brick and mortar real estate based / retail--CMG, TGT, GPS, CMG, and WYNN--none in my stable). For my go-to stocks, I still didn't see good entries, so I was clutching at straws to open crappy positions on NVDA and EA (EA isn't in my normal stable), and took a hedge I didn't really care for either (ADBE--also not in stable). And underscoring this all is that my winner this week was GPS, which I was cursing within minutes of opening having overlooked a dividend (this was a secondary effect being out of my stable). So I was right on the market (rare enough in its own right), right in passing up the sickly horsies in my stable, and wrong only in trying to make bad signals work. All lessons I've learned before, all I hope not to have to learn again. As for next month, I hate short weeks anyway as I have yet to have a profitable one so I'm out for next week, and that's followed by another short week for me as I begin a vacation, followed by another week of beach and beer. Unfortunately that takes me through the July monthlies. So I'll try a few experimental positions over this period (check out the vacations spreads thread)...mostly long 'file-and-forget' type positions. I may or may not post my positions--probably not in real time if I do. At the moment I'm looking at 8/18 expiries with good liquidity--considering the calendar spreads and butterflies mostly, but also a few small long put / call positions too...we'll see how that goes. Edit: damn...that's a long post. I feel like I should have learned more than old lessons if I have that much to say about a week.
Back from Vacation today, so time to pick this one back up (sorta). Vacation was a rousing success, both in my relaxation, and in my account. A monkey with a buy button could have made money the last two weeks, and I was that monkey! (there was also a really good bearish position on CMG which was actually my number 1). So that puts me back to my superstition that two good weeks cannot precede a third good week. As silly as this sounds from a rational standpoint, I think it affects me psychologically because it's been true of every instance during the last 3 years since I started taking notice (which was obviously based on me seeing that pattern preceding those 3 years). Also, this is another good place to pause because it's another earnings week, and at least 3 good setups have earnings this week. I am looking at a few experimental positions (for example a Calendar spread suggested by @tommcginnis ), just to see how they work. Specifically SPX 2450 puts with 7/26 short and 7/28 long for 1.15 debit. I expect this one to lose money, but any increase in volatility should send this one north. See the Vacation Spreads thread I started here: https://www.elitetrader.com/et/threads/vacation-spreads.310769/ That also shows the rationale for why I did so well while gone with long put options. Beyond that, I'm bullish through early October (no coincidentally just before next earnings season) after we past 2450 as I described in the linked thread above. So, I'll probably be transitioning to Diagonal spreads with 8/20 expiry for the longs. And finally, I have a cash crunch with some tenants moving out of a property, and that might send me quiet while I make ends meet with my trading account balance in the short term.
Some new positions today. Closed the SPX option for a loss--being experimental in nature, it was a large percentage but small dollars. Currently opened positions are: PM diagonal. Short 8/4 $118, long 9/15 $120 for .80 debit. VIX call ratio spread. Short 1x 9/16 $9 call; long 2x $10 call for .45 debit Currently legging into a MSFT diagon--the long is already open for 10/20 $75 call.