LOL!'s Market Timing Newsletter

[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]

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]

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]

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]

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***"?

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.

 

[NW-Bound]

What? No post in more than a week? Are our active traders getting all tired and quit?

I did not do any trade either, but 3 of my options expired last Friday.

A put option on an EM ETF expired worthless due to EM recovery, netting me $308. If EM market kept on tanking, I would end up having to buy another $4800 worth of EM stocks. That EM ETF has sagged, and is now under that strike price, so I got lucky here.

A covered call option on an S&P index ETF ended up being in the money and getting assigned. I lost $32 on this one due to buying the ETF too early, losing money on it so wrote a covered call just trying to recoup the money, which I did. I still have some more covered call options, but they have not expired and have higher strike prices. The shares also have a lower cost basis.

The 3rd option is a covered call on a leveraged Biotech ETF, ending up being in the money and getting assigned. This ETF and the associated option netted me $876 on a bet of $5400, entered a bit more than 2 weeks ago. A good short-term trade like this happens every so often. This ETF dropped since last Friday, and is now hanging around the strike price. Man, I am lucky again.

PS. All the gain/loss amounts above are after trading costs.

 

[NW-Bound]

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

Is this like Irving Fisher, an economist, who declared that the stock market had reached "a permanently high plateau" right before the Crash of 1929?

 

[Fermion]

It is too close to biotech earnings for me to feel comfortable trading. Could see a big move either direction and I don't want to get the direction wrong. Unsure if a strangle would work either.

Solution is just holding a small amount of Gilead and Amgen through earnings. Will make a small gain or loss.

 

[NW-Bound]

I have a correction to make. The EM surge was such that the cash-covered put option on an EM ETF that I made $308 on had its strike price 23% under the Friday price. So, there was no danger of it getting exercised. Also, the cash held to back up that option was $5200, not $4800 as stated earlier.

I looked back and saw that at one point the EM dipped enough that the options could get exercised and I would have to spend $5200 to buy a stock worth only $4400. After accounting for the $308 premium, I would have lost $492.

Yep, it's not easy nor risk-free to make that bitty $308 using a capital of $5200.

It is too close to biotech earnings for me to feel comfortable trading. Could see a big move either direction and I don't want to get the direction wrong. Unsure if a strangle would work either.

Solution is just holding a small amount of Gilead and Amgen through earnings. Will make a small gain or loss.

I still have some bear biotech ETF shares with outstanding covered call November options on them. I am sufficiently deep in-the-money that biotech has to surge 14% from here for the gain to evaporate.

At this point, I am not making any more trade as it seems things have quieted down. I am still mulling the idea of buying SPY and writing deep covered call on it to make 4-5% a year, but instead of the 1-year out option I may do a shorter duration.

 

[NW-Bound]

I looked back and saw that at one point the EM dipped enough that the options could get exercised and I would have to spend $5200 to buy a stock worth only $4400. After accounting for the $308 premium, I would have lost $492.

Yep, it's not easy nor risk-free to make that bitty $308 using a capital of $5200...

Again, I forgot something. If the option holder exercised it when that ETF hit bottom, he would have done me a favor because I intended to hold the shares after being forced to buy it at a $492 loss. And holding it until now, I would have had a gain of $1508 instead of the stinkin' $308.

A win can turn into a loss, then back into a bigger win. It all depends on how you act. It's so much more complicated with twists and turns compared to a card game. That's why I have never gotten interested in card games, and in fact do not remember the rules for any game.

 

[Fermion]

Holy crow, I just made $16,000 on Gilead. Their main competitor for HCV just got a thumbs down by the FDA. Stock jumped big time.

Doing a little happy dance here (sorry for those who own Abbie)

 

[NW-Bound]

Nice!

It has been a while since any single stock gave me a 4-figure gain (ETF and MF do not count). I guess I am too diversified.

 

[Fermion]

It probably will have been my best ever one day gain until Corning gets bought out. I am holding 90 Jan 2017 $13 calls on Corning that I purchased at sub $4 each when Corning was in the low $16s recently. Today it traded 28 million shares vs 10 million normal with no news. Stock was up 5%.

If I had to guess, I think they are selling off a portion or some other such news has leaked early. A spike to $20 and I would sell all, making about a $27,000 profit.

Between Gilead and Corning, this might end up being a good year after all.

 

[NW-Bound]

Nice!

It has been a while since any single stock gave me a 4-figure gain (ETF and MF do not count). I guess I am too diversified.

I meant to write a 5-figure gain, meaning more than $10,000, on a single short-term stock trade.

I have some large unrealized gains on some stocks that I hold long-term. However, I rarely unload an entire position in one trade. Each of my trades, buy or sell, is less than $30K, although I do build some to a larger position in the 6-figure. But the larger positions are all ETFs or MFs, hence diversified. I stopped having a 6-figure in a single stock since the debacle of 2002-2003. It hurt too much when it crashed.

 

[Fermion]

Gilead dropped back a bit and ABBV regained 5%. I am tempted to buy back my Gilead but it has not returned to the $100 area where I like to make my purchases. I guess I sit on the sidelines for next week earnings I reduced my Corning a bit today since the volume evaporated. Still made a bit of tidy profit there. Microsoft sure was a surprise. Internally they are doing nothing right but I guess the cloud is so in right now that it lifts everything.

 

[Fermion]

Gilead dropped back a bit and ABBV regained 5%. I am tempted to buy back my Gilead but it has not returned to the $100 area where I like to make my purchases. I guess I sit on the sidelines for next week earnings I reduced my Corning a bit today since the volume evaporated. Still made a bit of tidy profit there. Microsoft sure was a surprise. Internally they are doing nothing right but I guess the cloud is so in right now that it lifts everything.

Geez, Corning didn't even have great earnings and it is trading up 5% today.

So, mistakes so far...not buying back Gilead at $106 (it is over $110 now) and selling 45 Corning Jan 2017 $13 calls at $5 for a small profit (they are now worth $2500 more).

The remaining 45 Corning options maybe I will hold for long term, meaning a few weeks

Corning said they are going to do a 10B buyback. The market cap is 20B. That is a sizable buyback!

 

[Fermion]

Utrecht, any trades lately or has the VRBO thing gotten you off track? This is earnings week and this thread is unusually quiet.

 

[LOL!]

Sold out a moment ago, so unwound this trade which was nicely profitable. However, BND is up as well, so I will not buy it back just yet and just hold the cash instead. BND goes ex-dividend tomorrow, too.

The above quote was posted on 9/30.

It has been a while since I made any trades except for reinvesting some dividends. I did hold the cash since the last sale until today. Since today BND finally dropped to below where I last sold it at, I used up that cash to buy shares of BND. Clearly, BND has dropped because of the upcoming FOMC decision. I can live with that for now.

And I will get the dividend next week for BND. I did miss out on the previous month's dividend of about 16 cents, but BND today is about 16 cents lower today than last month anyways, so I do not believe I missed anything.

I am back to asset allocation nirvana, too.

 

[NW-Bound]

I just bought a bit of a 2x leveraged long biotech ETF, and immediately wrote a Dec call to hedge.

I have made a few $K this year playing this game with biotech, using short and long as I see fit. Not a lot of money because the amount committed is small (low 5 figures), but it is fun.

 

[LOL!]

My purchase on 10/29 of a bond fund has not worked out at all. Not much I can do about it though.