Markets rallied today after Friday's sell-off- I think up some 1%. When i checked my current remaining PJP- it barely moved up .25% XBI was also a very modest +.20%- OIH up just .27% FXI- China growthi is the subject with market regulation a concern- FXI losing it's recent momentum. Always makes me concerned when a position does not move as well as the market. HACK gained 1.72%. Cyber security near an all-time high-Potential breakout range higher. SPY +.91% In order for the SPY to jump almost 1% - Where did the momentum come from? It certainly was not from healthcare or biotech..... Let's take the value fund- Warren's - BRKB up almost 1%. "after a decent steady decline and lack of participation .......even BRK.B has a PE of 17.62" QQQ +1.5% . Goldman Sachs recently recommended a higher cash position . Earnings are coming in this week- I think this Bull run well exceeds the Averages in duration & % gain. This gives me a bearish bias- We are likely over valued- and ultimately the market gets back to the basics- eventually. Earnings and valuations. To me , this reinforces the idea that a faster time frame strategy can have less downside and capture some upside- But one can also reduce exposure by becoming more conservative in the position size one takes. If the territory becomes unfamiliar- don't make the same assumptions as in the past..... The market responds to Policy interpretation- There is a man- or Men behind the curtain- and they are uncertain .....It would seem that the market is assessing what the FED interpretation might be of the present Data- Consider the RISK - and also the Reward- Maybe we are no longer in Kansas Without Inflation being a large concern- a larger cash position does not gain, but does not lose value- and offers an opportunity for the value buyer to take advantage of a market decline- IF & when one should occur. If one is fully invested presently, it will be difficult to take advantage of a possible decline. I wish i had something of substance to share here- but I'm not even trying to push a new trade in any direction- I'm holding some PJP with a stop to take a profit- but ultimately want to expand this narrow universe- but today- Now- is not the time to make such a move. Just take a deep breath- is what i tell myself- I do not have to be fully Invested- or Trading - with my full position. This is important that a trader not feel pressured to be active 100% of the time. It is OK to sit on the sidelines- and not force a trade. Even if the market rallies this week. I have th entire year to look forward to. This attitude also works with my present schedule & it's limitations. This is a very simplistic view- but the OWNER (the Market) is why we are here to begin with- There is no logic in trying to Fight with the Owner. The owner always wins-eventually. We schedule our trades to work WITH the Owner's direction. Even with a fair amount of available cash now on hand- I'm not pushing any trades tonight- i want to evaluate a new defined way to determine asset allocation- Where do i want exposure outside of Pharma & Biotech? With the larger cash infusion in the Roth, I need to make some decisions as to what this account represents, how it is allocated.
Crud, There's also a time limit on getting a response posted- Go figure- I'm out of time this pm- but did the chart earlier- Hack is a very low volume sub sector ETF on Cyber Security that just broke out above a past high- resistance- I will take a small position- based on it's 2 day outperformance in this tepid market- also- perhaps in XBI- Looking to expand the trading universe to wider horizons though- ETF screener at stockcharts may be a good starting point-
Thank you for the suggestion- I will check them out- I am also just starting to look at the stockcharts ETF SCTR screener. Momentum, Direction, Volume, and relative strength will all be factors worth looking into. I'm looking at a Buy-Stop for HEDJ as a small entry -Europe is lower this am- I am not sure how this is hedged-Coming back up after a few days decline in an overall uptrend. I think that is in your territory....
Hack filled at the open $30.39- declined the first 2 hr and then rallied higher the remainder of the day- closing up .5% from yesterday- also at the exact price i purchased. The positives for the trade is the higher open, and succeeding making a higher close- It is right at the top trend line- It is well above the horizontal breakout line- and there is plenty of space back to the lower trend channel line- Typically, - in the 2 hr chart or the daily chart- If price makes a closing bar below the ema, it is a sign of potential weakness- drop in momentum- The slower the ema one may employ, the wider the ema will be from price action. In this trade,- I think I had set a $1.00 stop-loss -which is below the resistance line- and below the swing lows. Markets all rallied higher today! All up .5% HEDJ did not fill- XBI did not fill, and PJP put up a tepid.08% gain- The Buy-stops on HEDJ & XBI were not touched- I think I'm repeating myself- But - Healthcare & Biotech just are not taking leadership roles-during these rallies- It could just be that sector rotation is following better momentum areas in the market- But even Warren's BRKB- the 'value' investor's fund is not putting in much of a performance. Why is this not occurring? Bring up a chart of the alternative-solar ETF- TAN- This looks to be having a very minor pullback and attempt to move higher- up 10% this month alone-40% IN JUST 2 MONTHS! Is this trade over? Too large a run up- in too short a period of time-Right? Right at recent resistance- How does oil prices factor in ? I thought cheap oil is bad for alternative energy stocks- Here's the set-up- We don't know when a momentum move will break down and roll over and start the big decline- So, an extended move that has to be related to the energy/oil sector- It looks extended - but so do other markets that make large momentum moves in a short period of time. Smaller position- smaller Risk Loss % wise. Looking at the bigger picture- takes time- a precious commodity - Learning to find ways to make effective use to narrow the ETF universe is a goal that becomes a priority for me over the next week-10 days- The weekend looks like a possible work event.
Have a look at the 60 day performance of these Europe theme etfs. Fxe. -5% Fez 4% Hedj 9% HEDJ is roughly the net of long FEZ and short FXE. To an IB account with USD base currency it is effectively two directional positions, not a hedge. You have no currency risk. If you did the following, which we do not have to do since HEDJ is on our stock exchanges.... 1) in an IB account with base currency USD, using Idealpro , buy 10,000 Euros. You are now long Euros and short USD. Now you have currency risk.(long euro down) 2) buy HEDJ with your Euros on a European stock . 3) you hold for 30 days and HEDJ and the price of HEDJ went from 50 tp 55 for +10% gain. 4) Sell your HEDJ for 11,000 euros. Still have open currency risk 5) Buy as many dollars as you can with 11,000 euros through Idealpro. Done. To hedge the currency risk of the long 10,000 euro vs usd you hedge with 5,000 usd position In EUO (2x short euro). If the euro falls during your 30 day holding period then the conversion loss back to base USD will be offset by your EUO hedge. Conversly, if the euro gains during the 30 day hold then the conversion gain to USD will be offset with a loss in EUO. Anytime you take the risk of converting to anothers currency to buy stocks on their exchanges you do not want that currency to depreciate during your holding time as this will net negative with the return of the stock after the conversion to close the trade. These mechanics are for guys trading their 401k type accounts that may not use futures, forex or options. Anyway, the main thing is that there is a built in short EUR.USD in HEDJ , equal in value to the stock position. (if you bought 10k HEDJ you are short 10k EUR.USD as well.) But, we dont need the hedge so its a directional play on "i think the euro is going down" and "Eurostox50 is going up" The other major market is Japan hedged etf, DXY, and is the same as above only with EWJ and FXY.
Yes, bullish and TMV (bullish rate trade) may be worth a look. Pretty strong PA today. People point to the positive surprise in housing data to explain this. Long rates and stocks for follow through seems to line up.
Wow- Thanks for the in depth explanation-and ways to trade it. Definitely points out my lack of understanding how these actually work- I will keep the trade order open, based on the chart- but will look to increase my understanding.