12.23.15 Market rallied with a big move in energy spiking the move- Let's see if this can at least last through the short day tomorrow-based on a possible-temporary oversold & short covering rally. Viewing the market late afternoon- took late day positions in xle, USO,fcx, and dtn holding pjp, xbi,uup. I heard today that one basis for this rally is that the restriction on exporting oil is being lifted- Also-locking in tax loss for 2015, portfolio adjustments- etc,etc,etc. The only prior planned trade was an existing Buy-stop I had for DTN on a higher move for over a week, only after it moved above the recent higher swings. Might get a few minutes at the open -but loads to do to get ready for Christmas day. Merry Christmas! Balmy 75 degrees!
Hmmm. I tend to forget that this is a predominantly short term trading approach website- not a day trader- my trades normally exceed 1-2% moves and i do not comprehend the forces at work for those that trade intraday. the remainder of this post has been post poned until After the holidays!
Dec 31`-2015 Last thoughts for the past year-Haven't gelled any for the next year yet-No Rush. A Friend asked if i had made any New resolutions yet- I simply am playing catch up- resolutions will evolve -perhaps later...... A losing year. A time of market transition from trending to non-trending and wider volatility chewed the lazy retail trader's approach up. That was me this year- A lot of external forces-Day job- Home Project- I would have simply been better off to take a total vacation than trying to implement trades. Since i am an EOD trader- I would grade myself with an F on numerous levels-despite the secondary excuses of limited time and other priorities. I guess this would be resolution #1- Don't make a trading decision if I am not prepared to take ownership of the WHY I took the trade to begin with- Was it an intended-planned and strategic- trade- or just an impulse trade. I chose to open this thread a year + ago because i had enough Hubris to think i should contribute- and perhaps demonstrate- and along comes a year of reality that proves that success will require a better application of effort than I put forth., i Do think i put forth some worthwhile suggestions this past year- primarily reinforcing the concept of position Sizing as developing -and all traders need to start with. I also think that is the market's lesson-One has to understand and be able to adapt to a changing environment. Or to have enough $$$ to be able to hold through a market cycle until your position comes back into favor- i think Carl Icahan is experiencing that very painful experience this year- as well as several Hedge Fund s This year- For the retail trader-self included- with limited cash for allocation- we need to realize our personal limits of the price of being right- and being wrong-Our position sizing will protect us from being too over exposed- In the final comment- I think I- and other traders- Fail to understand how large an impact the overall market environment influences our specific trades., successful- and failing. We can look to the individual charts- but that should be superseded with the correlation of the larger index- Which way is the Market Tide Flowing?> The individual stock may be the out performer- and this year - only a few stocks delivered exceptional gains- while the majority under-performed. i am not sure at this point that i will continue this thread into 2016- Still much to do outside of trading-that will consume my free time. Reduces my focus on the markets- i think the 1 contribution I would like to leave this2015 thread with- is that for aspiring traders- You have to be able to survive the learning curve- and learning to adapt your approach. If you are actually trading real $$$ and not sim. If you will apply a position sizing approach to your trades- - You will likely survive the learning curve and be the stronger for the experience- Good Luck!-SD "To a Safe and Happy -New Year"- Final 2015 screenshot of accountability:
I simply had to take that snapshot- MY XBI position had stopped out for a loss and the USO position had shown a nice gain earlier- only to close lower. All of this market movement occurred due to the macro environment- and the market's negative interpretation of what "might" be significant. This Monday open was not reflected in the Friday's close- Much of this Day's reaction occurred based on unexpected new information -perceived negatively by the market. Fears about Oil as the Saudi's execute 47 folks that didn't agree with their policies-and the opposing countries-also Oil producers. And China's market had circuit breakers halt trading on a 7% decline-crash. I think there was also some negative PMI- MFG numbers as well- Jobs report didn't look healthy- Wait until the after Christmas lay-offs get tallied- My Spouse's hours (retail) were significantly reduced after this week's 40 hrs- This is a good time to acknowledge that i lost money in my trading account this year- and some further reflections: Things i want to pass on to those few that might benefit- Insights of a financial advisor: subject for another day
Started off 2016 by considering the tone of the market-took 2 small short positions earlier this week -SIJ, TVIX. Had some "open time" and not pressured too much with the day job the past week- SIJ shorts industrials, theme play there is that a global slowdown and higher dollar will be particularly difficult for the international industrials. Look at the drop in GE's stock the past few days. While TVIX tracks the Vix as an Ultra 2x. I didn't I closed both trades today at 3:50 pm. Unfortunately, the gains from the 2 trades were offset lower by stopping out in DTN. a conservative dividend fund that broke to new recent lows. China circuit breakers alarmed the markets- and added to the fear of the unknown- tonight - China is not implementing circuit breakers- So , a clean slate - In the past, volatility spikes have often been short lived-and I tended to hold thinking a larger move would occur- but perhaps we're indeed going back to a deeper correction this time- it certainly 'sounds' that we are in a more significant sell-off- and it's global as well. Getting defensive both in my trading - and in my investing. Smaller individual positions- and more focused on finding weak segments to take short positions in- not always try for the bullish side- and perhaps develop the stomach to withstand a wider volatility. Since All my trading is done with Roth accounts- I'm not allowed to short- but i can find plenty of inverse ETFs that allow that to occur. Thanks for the EEM short suggestion- I think that will also be in play - after any kind of EEM bounce. I have held a significantly larger cash position in my retirement accounts for the past year- Actually going to see a financial Adviser for a follow up on his review of my present situation and coming into retirement age over the course of this year + . Presently age 65- I'll use that as a lead-in for the remainder of this post . Hopefully I shorten this substantially from the initial draft I started a few days earlier-. I have a younger co-worker that spent over $15,000.00 in getting his trading education from a well-known teaching firm- and his focus is trading Forex and he is quite optimistic . He has decades ahead, and plenty of time. I asked him if he had an alternate plan- a Plan B- just in case his trading did not work out as he anticipated- and he did not- If the professional traders underperform the indexes by 85%- and they have plenty of cash, years of experience- That assumes that perhaps 10-15% may out perform in an average year. What would be the actual % of retail traders that actually outperform- not just over 1 trading year- but perhaps over 5-10 years? With 5 years of a bull market now behind us -and 2015 a transition market that had very little market participation across the broader market-led by a relatively few large caps - it appears we are on the verge of getting a PE Reset. Perhaps long overdue- and maybe even the Fed manipulation will no longer be all it takes to prop this market up. \ Maybe I'm too negative? We've had substantial market corrections over the past 15 years- and we are certainly past due for another- The past bull market from 2009 was one of the longest historically- thanks to the Fed propping it up with rate policy and massaging the market psychology with periodic supporting interim statements. There will have been a large number of newer market participants that have now found themselves on the down hill side of a market that has peaked. Environment has shifted- and different forces are in play. this is why traders/investors that have held a rigid approach may have issues with adapting to a changing environment - They have not experienced it- What is Plan B and WHY have a Plan B? Simply- that none of us know what the future may bring- So Trading gains in one period can fill one's belief's that everything is under control and the Future is rewarding- But the market- over decades brings changing environments and what works today may not work tomorrow- What has worked? Over the long term- a consistent and steady contribution into a retirement plan- Buying the investments during declining periods and also in rising periods- There comes a point as one approaches retirement- that those investments should be getting much more conservative, as large market swings (2008- 40%) can occur in a short period of time- Many of the readers on this site are likely not near approaching this age- and are understandably optimistic that they can successfully "succeed" in trading- but perhaps they should consider that the trading business is going to hold periods of -perhaps wide fluctuations- and- taking some of those profits- or new assets- and applying them into a Plan B separate approach to long term financial security is worth consideration. i will use myself as an example- While i had periods of both winning and losing trades over the many past years- I have found- for many personal reasons- that I lack consistency in my trading- Had i continued to support my trading- I might have simply taken progressively larger position sizes - with the end result that I had contributed much more to the market- Fortunately- i had a Plan B with an employer's 401k , and separate Roth contributions that i did not apply as I do in my trading account- Those accounts continued to consistently grow- Simply went into mostly all-cash in them this past 1 year. I'm mentioning this because- as the song says- "just blink" and 20 years goes by. Back in 2,000, i thought trading was the lottery path to a secure financial future- Glad i kept the Day Job! Sadly- perhaps i lacked many of the combination of traits that are required to be a trading success over anything but in trending bull markets. Back in 2000 i made what was a lot of money for me- and gave it all back with Interest! I had- at that time- no other plan B because just trading appeared to be all i needed for the future i desired. I don't want to be too negative here- just passing on a cautionary note to those that are overly optimistic that their trading success is just a matter of time- Summing this up- The Financial adviser informs me that 49% of American's have Nothing saved for their retirement- That Social Security for working Americans will barely keep you at the poverty level if you have nothing else to rely on- nothing else saved- or invested- and -Thanks to improvements in Healthcare- the average Male will live to age 83- women a few years longer. Tough to plan early on in life for the ending years of your life- but starting early- with the 8th wonder of the world- compounding on your investment dollars over decades- will surprise you - but you have to be willing to start. Even if it's small at 1st- Tough to do if you're scrambling to put 2 k into a trading account to build your future. But, we all have to make a start somewheres- Plan B -worth your consideration. I will eventually share what the Fiduciary Adviser I see tomorrow suggests- I think sharing that perspective may be informative- but i will try to focus on the trading account on this thread- 2016 looks to be shaping up to be a challenging year! Should we get a China rally tonight- and following US market rally Friday- it will likely be worth taking a short position on any rally-Just my Bias-
Adviser cancelled the appointment due to catching the flu- postponed it for another 1 week-As he refers to himself as acting as a "Fiduciary" means he ideally is putting my best interests ahead of his own- an example would be recommending low cost no load investments as opposed to similar load investments where he gets a back door commission from . Comparing where my retirement monies are now- through the employer sponsored plan- Edward jones manages the account, and the offerings within the account are mostly those available through American Funds- and while the account is no longer charged a load fee (due to the combined net value of all of the company contributors) the individual would be charged a 5.75% load, and the expense ratios are not listed as less than 1%- some .66 Vanguard has similar funds with an ER of .09- .25- And there are perhaps undisclosed fees 12-b-1 may be included in the ER- and perhaps it is seperate. Another individual with another company had a similar company sponsored fund -also with American Funds- and when we reviewed his Share type - it was not a class A - but some other designation- like - H - and his Expense ratio was 1.35% and who knows what the 12-b-1 fees might have been. Since many -like my friend- do not want to get involved in what seems a confusing financial arena they have been told they need to trust in , they want to trust the "professionals" to guide their asset contributions so they will have a profitable retirement nest egg waiting for them. Most would be surprised to learn that even if their accounts go down and they "lose money" in a year or two or three- their plan executors continue to charge them the same fees- and the funds they are invested in also collect all of their fees as well- even if these funds declined in value. "Fees" are what keeps these funds in business- even when they are not providing exceptional or winning results- Another misconception- that somehow the professionals are "watching" over your account- and will protect you from a substantial market decline- They get paid regardless- It is not in their best interests to put an individual in conservative lower cost positions. The EJ manager actually called me last January - very concerned that I had moved my investments into a substantial % in cash. I explained that the market was considered to be mostly fully valued- and that the greater Risk was not that I would miss out on a big upside move- but that i felt that the Risk was to the downside- He was not concerned about my missing out- He was concerned because he was unable to charge my account the higher fees that are their bread and butter. I also mentioned i was considering shifting into some low cost ETF's. He has not called me back since. I wanted to mention this aspect to those that indeed have monies in a retirement account- Be aware- and Wary of the total fees that you are being charged- Aside from getting the % the employer will match - that is free money and an immediate return on your investment- consider the remainder of Plan B might be aside from the employer's plan and his adviser- Those fees could eat 25-40% of your long term investment value-while not delivering higher returns. Before paying higher commissions for par or sub par results- compare your investment positions with the broker's recommended companies performance- and compare to a low cost comparative investment- like Vanguard- How does one get to plan for a decades away retirement? Raising a family? Paying a mortgage? Paying too much in college debt? Car loans? Car repairs? OOOH- I almost forgot- the friendly credit card debt- just kept growing slowly- OUCH! That retirement date is coming up- but superceded by Life's many other financial demands . I'll just make all of these debts disappear with my trading gains! I'm not making Fun of anyone- As I've been there and done most of all of these things that upset the financial apple cart. Including opening the credit card bill and realizing that the debt was not $1500.00 but held an additional 0 - $15,000.00 Had i set aside a Plan B 20 or 30 years earlier- the impact of those life learning experiences would not have been quite as traumatic. Fortunately these things occurred as I was younger and was able to use these as stepping stones to a different life style./but only in the past 14 years. Late in life. Had i started on a more responsible path- Earlier - and larger focus- and took a greater responsibility to consider financial planning as something that would become a large focus later in life-I would be in a better place- by far- for today's reality. Perhaps at age 30 - planning the Family- by 40- Kids are here-By 50-Kids are starting to leave- By 60- Honey- it's you and me- By 65- Oh Shit- what are we doing still paying for the college education consummated that night 22 years ago at 7.5% interest? Honey- what do we have left to put towards next week's retirement? Let's call the Kids - maybe they can HELP!. NO Joke- Blink and it arrives -much faster than anyone envisions., So- Consider that if you are 20 you totally ignore anything I've even considered here- If you are 30 - you might be able to relate - After all- that expensive degree with the very high funded interest rate and the inability to find the job to pay it off in 4 years......maybe 15 or 20 years- and if you are 40- The loves of your life Need to have the benefits-and opportunities you can provide-as they grow and develop into individuals headed into their own future- You did your best.....and college is their greatest opportunity- and the great debt medallion hung around your and their throats- perhaps this occurs when you are in your 50's? And once that life experience of taking on ever greater life responsibilities starts to subside- you look at the person that has shared these pAst decades with you- and you realize it is time for You and I.... Aside from memories - Of what We have done and accomplished together- What lies ahead???? What did we plan for? What was plan B? Were we too busy in Life to plan for Plan B? In the end - it will be You and I- It has always been You and i. So- a touch of Introspection I'm willing to share - Life does not always proceed as we expect. Good stopping point on a website that the focus is not decades long-or years long- but i thought it was worth mentioning . As Traders- and also as Investors- I think it is important that one keeps a view of the Forest- the larger picture - presently looks negative., The more Nimble traders will adapt & position themselves to respond to the market's reactions. Some will guess right- some will guess wrong- based on a day's outcome.
http://thefelderreport.com/blog/ 1.7.16 - Note the portfolio analysis - also the link to Mebane Faber- books if anyone is interested in such concepts- I have read some of Faber's earlier stuff- IVY Portfolio- and found it to be an easy read and something of an eye opener. http://thefelderreport.com/greatest-hits/ Not only for Investing advocates- A chart is a chart- but it is indeed influenced by external factors- Depending on one's time frame for trading- those factors may be crucial- Like upcoming earnings or the Fed speaking about a rate increase- or the US congress failing to extend the budget- Or- one may be relatively isolated from those events and their impacts-essentially by taking shorter term trades- None-the-less- The larger environment carries over and has a downstream impact. A chart purist might proclaim that everything one needs to know is included in the chart.Not absolutely correct because all future events-trader's reactions are not yet known- While the market is forward looking- the market is not seeing all- and will react to a new unexpected event. Over night news - China- or Korea or Iran may move the stock market, the Oil market , the global fear market- and each of these reactions ripple across the global trading markets- get interpreted and assimilated as expected and priced in - or reacted to. Lot's of undecided volatility may ensue. Call that the MACRO Environment-In this closely interlinked world we live in today- such influences may only result in a temporary market reaction- and the more stable view may prevail- in an hour or two- or a DAY OR TWO- Or perhaps longer- Who would have thought that the markets could only rally when Oil would go higher due to some market breakdown? Cheap Oil is a gain to the consumer and mfg. Go Figure that cheap oil is seen in the larger picture as a lack of Global demand and thus a decline in the world's economies. Market is happier with Oil at $40.00. So, when the MACRO Environment gets plugged in- One has to have the ability to step outside of the chart and see the larger picture- and get an understanding of the influences at change in the environment-
I caught the market after 3 pm - and it appeared that the market tried to rally at the open - sold off, and tried to rally again- Perhaps a pause in the decline- because the selling has been relatively steady- might catch a bounce here - but i doubt that this is an actual bottom .But an attempt appears to be underway. I took 2 long trades - ITA- the defense sector index- and DTN- a managed Dividend 100 fund- at the close today. I'm "testing' my interpretation of what the larger market is doing- in taking these trades on a possible oversold bounce- meaning i hold a reasonably close stop under today's lows- and will sell into a rally attempt- ideally one that tries to move higher for more than just today. In this post i am including a Price Performance chart which compares the past year performance of Spy, Financials, BRKB- Warren's Berkshire Hathaway; DTN- Dividend 100 actively managed for both quality of earnings and dividend - and last ITA- the defense sector index fund- Until I did this performance chart- I held some wrong assumptions about how these performed relative to one another- For "Safety" I would have assumed a stoic Dividend fund- that had to meet set criteria for earnings performance would be the safer "bet". I would have been wrong on the face of the $$$ value performance. BRKB- Berkshire Hathaway- I have referred to this as the Canary in the Coal Mine- on past posts earlier in the year- How can the Oracle of Omaha's investments - since they are largely based on a premise of value investing- not hold up in a turbulent market- Since they are comprised of "safe" businesses- solid balance sheets- and not leading edge tech companies- They should represent "Safer" investments- but BRKB has been a solid underperformer for all of 2015- This is the Canary's warning about the US Economy- If these fundamentally conservative companies are considered overvalued- as seen in the year long declining share price in BRKB- what does that say about the majority of the other -less solid- American companies? Where were we as Traders - this past year- chasing the few market performers- when the solid value companies were being sold off? What is "Safe" ?- I think in 2011 we had a market correction of over -10%- but the Fed has done a magnificent job of reassuring and managing market participation in the following years- and a lot of wealth was generated. What if All of that Market Hubris was built on a false sense of security?- That the Fed- through it's monetary policy- would keep an even approach to the economy- with low rates supporting the business sector to gradually increase employment- and then to finally balance an improved economy and higher wage (costs) and inflation with a controlled uptick in rates- The Train conductor doing his job....... We forget- this is a global economy- and some countries performed better than the US of A the past year. I would mention that " Not taking a Position" and sitting on one's hands these days is indeed showing conservative judgement -and I likely should be doing the same and patiently waiting for a best trade to come to me as a swing trader. I somewhat got drawn in today as i think i have an understanding that we were oversold and will get a couple of day's reprieve- bounce- and plan to be "nimble": a very short term swing trade with stops raised if the trade works in my expectation. But, this is all based on a non-trending judgement/assumption- and has a high probability of being wrong. Might as well be in the Casino because i do not have a crystal ball. Overnight global news will dictate where these positions open Tuesday. If the EEM and China see a bounce, the US markets should see the same.
Tuesday follow-up- While the markets & my 2 positions gapped open higher- for what appeared to be a nice early gain- only to slide back as the day progressed-ITA held up better initially than DTN- but I waited for a reversal to the upside but decided i just got it wrong- raised my stops higher-late am and took the loss- approx -$30.00. Will see how the day closes-I have no open positions- You would expect that at some point- declining Oil prices would eventually not be enough to pull the market lower - but presently the Oil influence is still holding the reins. Perhaps we need a good old solid MidEast war and oil disruption to give the markets a boost? Not wishing that on anyone- It goes to illustrate the influence of some of the macro themes the market reacts to. As I stopped out on the trades- i was considering going after the rising volatility -but decided not to chase into what may be a market building a short term base- Today's move perhaps the 1st attempt reaction higher- Perhaps we'll muddle around sideways for a few days? Lunch is over- See what happens at the EOD