LOL!'s Market Timing Newsletter

[utrecht]

Earlier today when SPY spiked to 199.50, I doubled down on SDS as 21.40. I sold it about 30 mins later for 21.70. It lowered my cost basis on the SDS position Im still holding. I still believe the market is going to pull back soon.

[NW-Bound]

If you are still net long the market, then if the market surges against your expectation, your total portfolio still goes up, just not as much.

I use these short-term bets as a way to implement "Tactical AA", to reduce or increase my stock percentage temporarily if the market is crazier than what I think it should be. And I am not right all the time, but these short-term bets can reduce portfolio volatility despite what some people may think.

[utrecht]

Quote:

Originally Posted by NW-Bound If you are still net long the market, then if the market surges against your expectation, your total portfolio still goes up, just not as much. I use these short-term bets as a way to implement "Tactical AA", to reduce or increase my stock percentage temporarily if the market is crazier than what I think it should be. And I am not right all the time, but these short-term bets can reduce portfolio volatility despite what some people may think.

I agree but I also speak from experience when I say that when you're wrong, it sucks big time. I'm a bull and look for trades that take advantage of upswings in the market or a specific stock. Ive recently turned very bearish and have several bearish trades on. When Im wrong and the market spikes up which I love to see, but Im losing money on my trades, I want to punch someone in the throat. But you are correct, it does lower your overall volatility when you have some trades that are opposite of your over all AA.

[Fermion]

I am unsure of the direction of biotech. I traded in and out of Gilead the past few days, and also Amgen (although my last sale for a profit was at $140 which was evidently $5 or $6 too early).

I currently have some Gilead $95 Jan 2016 calls but am very uneasy. I would feel a lot better if everything just lifted off and Gilead went back to $110.

[LOL!]

Overall portfolio is UP for the year! I love it when everything turns from red to black. So what could go wrong now?

[NW-Bound]

Congrats! I am still down about -2.7%.

Things can always go wrong with the market of course, but with a lead on me, you most likely will stay ahead.

[utrecht]

I bought back my weekly SPY 195.5 calls this morning at a loss. My weekly SPY 186 puts will expire worthless for a nice profit. For the second time in the last 2 days I made a quick day trade of SDS. SPY has serious resistance at 200. When it hit 200, I bought SDS at 21.30 and sold it at 21.42 about 3 mins later. At the end of the week I will total up my SP500 related trades for the week. I dont normally trade this much but it was a strange week and Im trying to recover the loss on the weekly calls that looked very safe when I sold them.

Still holding one batch of SDS shares.

[NW-Bound]

I accumulated $21.5K worth of SPXL (3X leveraged S&P) more than a week ago. My timing was not great, so the cost basis was around $72 although it dropped as low as $65. It closes at $79.77 today. To hedge, I already wrote calls on it earlier, which were out-of-the-money then, but are in the money now.

If the market holds up until the options get exercised, I will make $3200 profit or 15%. If the market drops more than 5% from the current level, I will start to lose money on this bet.

[Fermion]

I do feel a bit like we are tilting at windmills here.

[NW-Bound]

Well, the day is still young. When investors feel frustrated is when there's money to be made.

Biotech does not seem to go anywhere the last few days, but I have made a bit of money going short, then long it. Too early to know for sure what my profit will be, but my covered calls on both long and short ETFs are still outstanding, and both are now in-the-money. It's a weird situation how I got there.

[Fermion]

I am back to even on the Gilead calls, maybe slightly ahead. I definitely sold my Amgen stock too early.

I like to feel as if I can pretend to know which direction the market and biotech is going to go, but I have no clue.

I think I will sell out of Gilead at $105. It is almost $101 now.

[Fermion]

Quote:

Originally Posted by LOL! C'mon folks, tell us about your AMGN and GILD plays. Closing prices 9/28: 132.24 AMGN 94.80 GILD 104.79 CELG

Closing prices 10/8

149.90 AMGN
100.81 GILD
117.97 CELG

What a difference a week makes in this market.

[utrecht]

So this week didnt go that well for my trading. I really thought the market would pull back but obviously it didnt.

I sold 10 SPY 186 puts that expired worthless for $1350 profit
Sold 10 SPY 195.5 calls for $1.10 that I bought back for $3.50 for a $2400 loss
Made several trades of SDS (Sp500 2x short ETF). Im still holding the position as I still think the market moves down from here. Right now I have an unrealized loss of $1600 which would be a lot more if I hadnt day traded SDS a few times during the week for a profit.

So a total loss of $2650 this week. Not great at all but that's what happens when you turn bearish for the first time in years and the market immediately shoots up 7% in a week.

[NYEXPAT]

Sitting on the sidelines until next week, when we test the 2020 level in the S&P.

[NW-Bound]

Quote:

Originally Posted by utrecht So a total loss of $2650 this week. Not great at all but that's what happens when you turn bearish for the first time in years and the market immediately shoots up 7% in a week.

I did not do any trade last week, as I already wrote covered calls on all my short-term trades and as they all got to be in-the-money, I am just waiting for option assignment to book the profits. That is unless the market tanks again, taking away that profits.

One thing peculiar about last week: the stocks that got beaten down really bad, not just recently but for an entire last 12 or 18 months, rallied strongly. This includes mining, metal, and other natural resource stocks. The outlook for these sectors has not brightened up any. So, what was the reason?

[Fermion]

Quote:

Originally Posted by NW-Bound One thing peculiar about last week: the stocks that got beaten down really bad, not just recently but for an entire last 12 or 18 months, rallied strongly. This includes mining, metal, and other natural resource stocks. The outlook for these sectors has not brightened up any. So, what was the reason?

You beat a dog enough eventually he bites back?

Some of the mines have decided to severely cut back on production. Probably people think we are getting near the bottom of the bear cycle in metals. Molybdenum, used in high strength steels, is trading at $4 to $5 a pound, or pretty much where it traded in 1999 (not even adjusted for inflation!). This would be ok if we still paid people 1999 wages.

[NW-Bound]

Yes, it's not like the world no longer needs any metal. But the rally of 20% or more in a week comes very quickly and hard to anticipate, in my view. I was watching the sector on and off, but it caught me by surprise.

But while I missed that nice gain, the stock prices remain very depressed. Look at an old-time ETF I traded in the past called XME, for example. It peaked at 95 in 2008, crashed hard to the 20s in 2009. It then rebounded to the 70s in 2011, then kept fizzle out over the next 4 years until it bottomed out at 16.50. Then last week, it jumped up to 20.

Trailing P/E of XME is 15, and the dividend yield is 3%. For bottom-fishing, it may be worth placing a small bet. A pull-back is likely, at which point I may dip my toes. Perhaps 5 years from now, I will wish I had gone "all in".

[LOL!]

I didn't do any trading this past week and my portfolio went up by a 6-figure amount. Maybe I should stop market timing?

Some benchmark 1-week returns:
3.4% Vanguard Total Stock Market Index fund
5.0% Vanguard Total International Stock Market index fund
-.4% Vanguard Total Bond Market Index fund

[NW-Bound]

Quote:

Originally Posted by LOL! I didn't do any trading this past week and my portfolio went up by a 6-figure amount. Maybe I should stop market timing?

Is this a new form of "Wh***"?

Quote:

Some benchmark 1-week returns: 3.4% Vanguard Total Stock Market Index fund 5.0% Vanguard Total International Stock Market index fund -.4% Vanguard Total Bond Market Index fund

EM Index went up more than 6%, while some beaten down sectors did even much better as I noted earlier.

But you made me look, and I did well, but not by a 6-figure. Obviously, you had more of the winning stocks, or a bigger portfolio. Or both.

[Brat]

Cramer seems to think that the market has established a floor.