SD-2020 TRADING WITH THE TIDE

[sd]

FED INTERVENES-AGAIN

With the FED announcing it will also backstop corporate bonds - it reversed the market sell-off that had started today- and markets rallied-
This seems to be a stop-gap measure to prop up weakness in the markets and to reassure investors that corporate business will be back-stopped in the interim by the Fed.
Will this action and the follow up FED Speak reassure the markets in the face of the inevitable near term pain as workers find their unemployment stopping and return to a new work
reality - and possibly jobs that no longer exist.... ? Potentially -YES- Because the markets look forward....or so we are told Will this be just a short term stimulus? Or-an investible rally off a pullback? I cannot trust the longevity of this move, but perhaps compelling in the short term.... But will be making some smaller buy-stops....

[sd]

I bought the ARK group of funds today- except ARKG... likely will buy some tomorrow. Did also take a couple of small spec trades- DFKG, and nkla which also hit my stop today . With the Fed backstopping corporate bonds, and a good retail report, markets look poised to move higher-and a potential steroid treatment that can help the most severe cases of Corona virus. My bias tells me that the market is misinterpreting-and focusing on the good data, and ignoring the cautions of the Fed Chairman about what lies ahead. For that reason, I limited the purchase size with the idea that I need to have my toes back in- follow the chart- but I was really anticipating at least a -10% pullback .... and I appear to be Wrong! However, I have set enough of my bias aside to take a smaller portion back into the tech sectors - through the ARKQ, ARKF, ARKK,ARKW
Listening to James Bianco on Fast Money- a prior Bear, now accedes that it is now all about the Fed backed momentum - and attributes much of that to the small retail trader pushing the momentum higher. Got to go With the tide, but I believe I will limit my equity exposure to approx 40% +/- of the portfolio- The Easiest way to allocate is by using the Roth accounts for that active/spec portion, and the remaining Van IRA account for the more stable approach.
FWIW- The IB Roth $12,753.00 The Van Roth $49,661.00 The Van IRA -presently holding some bond funds $141,555.00
Within the 2 Roth accounts, I have approx 30K invested, 32 k waiting . In the IRA, simply 116k in cash, remainder in bond funds that likely will not provide much growth. Up about 10k YTD on the combined funds- Overall, about a 5% YTD gain, much better than taking a loss- but due to aggressive stops and repurchases at lower costs-
However, what occurred in March did not happen last week- and so I was simply whipsawed with barely a gain for the amount of money at work for that 10 days. But- it proved to net a small net gain vs a loss-
I'm going to continue to apply a stop-loss trading approach to the Roth accounts seeking that portion to be the growth generator. With a few spec stock trades , and more ARK funds innovation
focus. I have mixed feelings - on one side, I think I should simply keep a large cash position, and see what happens once the fall elections are behind us- If the Democrats manage to take the senate- or -Lord help us- also the presidency- the market will tank 25% - Throw in a resurgence of Covid and no vaccine- and Cash is King - Ahhh.... the bias is showing when this is the mindset,..... Hard to think beyond the - "What If" - But, in the Post Covid era- a small Dip in this decade, there is an entire new world of potential driven by technology and medical advances.... That should be the future driver and solution ....
While both the medical and economic and social disruption in our way of life this 2020 Corona year is Huge- Where will we be in the next year? Overall, I believe in the resilience
and ability of our economy to adapt and perhaps make meaningful change - and that change may be all inclusive- social change, Medical change- and perhaps political change-
But as China and some other countries have adopted renewed isolation policies as the virus continues to expand, Other countries are resolved to allow the new economies to develop within the context of a more relaxed policy - in order to keep the economy working.

[sd]

Bought 84 Snap mid day maxed out the free cash in the (IB) and added 100 to the ARKF position (Van Roth) - both on movement higher- Nas up .5 - AAPL (not a position) breaking out higher.
Good 3 hr Tutorial on You Tube to apply some of the many features of stockcharts-
www.youtube.com/watch?v=FLvmM3oZZVw

The Hourly chart- I seldom use an hourly chart recently, but found it instructive mid day lunch to view my prospective additions- of Snap and ARKF- I saw both were showing green on the summary page .
Snap Daily chart- This is my 2nd entry into Snap - Sold it last week on a raised stop just reentered today as it appears to be pushing up higher following a few days of pullback.
My typical chart is the daily, but I also glanced at an hourly prior to taking the entry- Note on the hourly, the PSAR dots as a method to trail a tight stop-loss and to signal an entry does a good job to capture the majority of most moves of late for short term day trading- PSAR on the daily may be useful for trailing stops
Daily:
i.imgur.com/QxNNUzU.png
Hourly:
i.imgur.com/7IO8Pc0.png

ARKF :

[sd]

IB trading account closing back above 13k today - Based on the gains this week in the 100 share ARKW position up a few points- Note that I compared ARKW with SKYY and hands down ARKW is the outperformer.
Holding 25 DKNG, and 84 SNAP- I had sold NKLA as it stopped out for a loss- and presently have $1,088.00 in Free cash - Before going in large with ARKW, I had an order for SHOP- never filled-so I bought ARKW with some size-
NIO looks interesting- but it's a double in the past month!
Well, Robinhood seems to be the popular momentum retail market- Clearly I am missing out !

[sd]

Friday - day off- alternate will work Saturday- splitting the workload - On the lake until mid afternoon with the wife- who always outfishes me! , got back before market close and bought the Close of IBB and ARKG on the basis of the breakout higher. In the IB account, ARKW posted the best gain for the week, but Snap and DKNG moved more today.
While the indexes closed down- Q's flat, Arkk funds - except ARKQ all closed higher- Small grind higher this week overall-
Sad to hear about the young 20 yr old Robinhood trader that was allowed to apply leverage and ended up owing the brokerage 3/4 of a million dollars - and he killed himself-
Using Leverage seems wonderful until it goes against you....and how could such a young person be granted that kind of leverage? More importantly, it shows the psychological impact that losing can take- Certainly bankruptcy would have been an option for this young man....
During this period of stay-at-home, government bonus/stimulus checks, and the ability to trade with a bullish rally behind your back- What's to worry about?

Amazing times we are seeing in 2020- Pandemic, Election year, Social upheaval prompted by the killing of George Floyd by a police officer-bringing the issue of racism to the forefront across America- and even the world- - Businesses and families in quarantine for months, and an attempt to restart the economy - with the virus still among us and spreading in some states.
Transformational times across multi fronts-
Recognizing that I am in the sweetspot of not feeling pressured to force investment trades - and certainly not following the day to day popular trading vehicles that are highlighted on boards like Robinhood- Tracker etc-

When this phase of the Covid/invest/day trader is over- Where will "We" be in our new normalcy as we go into Fall?
By September, - a typically negative month for the markets, the impact of July and August business foreclosures, Virus spread, and a new economic reality as we head into an Election year- and with a heightened social activism, I think that the economic gains of the prior 3 years will come under fire post-Covid- impact- and a "new normal " will evolve. As we go into September and perhaps a resumption of the virus -ahead of the Flu- It looks to be both a political and economic game changer at this point.

[ira85]

SD, you mentioned how events in the news may play a big role in determining the election this Fall. About 4 months of political ads with all the candidates trashing each other. I don't enjoy this season and quickly grow tired of the ads. But the political ads are no worse than the almost constant bombardment of ads by attorneys promising to help you get the money you deserve.

Just in case you missed this article . . .
The Arrival of the Unavoidable Pension Crisis. seekingalpha.com/article/4349885-arrival-of-unavoidable-pension-crisis?ifp=0&utm_medium=email&utm_source=seeking_alpha&mail_subject=must-read-the-arrival-of-the-unavoidable-pension-crisis&utm_campaign=nl-must-read&utm_content=link-0

This could become a major social issue in the next few years.

An article by Mark Hulbert this week end estimated a total return for stocks of 1.7% annually over the next decade. So the broad market expectation is less than 2% annual growth for the next 10 years. Grim? Not compared to the bond market. An article by Suze Orman discussing long term risks for bonds, interest rates, and future income tax rates concluded “You have to be crazy, if you ask me, to be in bonds at this point in time.”

I've seen several articles on these two subjects, i.e. persistently low interest rates driving borrowing to unsustainable levels and the prospect for a Japan style long term stock market no growth stagnation. In the past I would have been inclined to buy something out of favor, some deep cyclical that might have better prospects than the broad market. That's how I put a uranium ETF and a fertilizer stock in my IRA years ago. I bought the uranium ETF about five years after the Fukushima earth quake and tidal wave nuclear disaster. Uranium had tanked for five straight years. The stock was low and gave me a low risk entry, right? No , it kept on going down. That's the kind of loss I want to avoid in the future. No matter how logical the reasoning seems to be, I'll take my loss and sell. The loss is small. Waiting to see what happens is the real risk. - ira

[sd]

Hi Ira,
Certainly a rather Dire article - should be followed with one regarding SS and the future reduction that will be required for those getting benefits-
If government does intervene to back stop underfunded pensions across the individual State and perhaps private businesses- That is the bell ringing for socialism to become the norm in the US. Consider the vast other "issues"- student debt , healthcare for those unable to fund their own at today's high rates, wage inequality and social unrest- The future certainly has many significant issues to face- always has though-and the issues of yesterday eventually fall aside....

To your point about investing in the nuclear ETF- (URA?)and seeing it still in decline- Certain areas can fall out of favor and entire industries as well- Other than the decline itself losing value, the long term trend is likely not changing based on it becoming a greater "value" .
To the lesson of "The stock was low and gave me a low risk entry, right? No , it kept on going down. That's the kind of loss I want to avoid in the future. No matter how logical the reasoning seems to be, I'll take my loss and sell. The loss is small. Waiting to see what happens is the real risk. "

I believe in following trend momentum- The market overall tells you what is in favor and what is in disfavor over a period of weeks, months , and years. Investing in a Value proposition assumes a high return on your money when the market chooses to invest in that segment and is willing to pay up for it. However, as you have found and numerous others that because price has declined does not mean that the purchase is a good value- Time erodes the Opportunity cost of money that could have been put into an improving investment.
For example- compare an Uranium ETF URA with a tech ETF QQQ over a 5 year period

i.imgur.com/vmjf6J5.png.

Similarly, compare Tech to the S&P SPY :
i.imgur.com/uNq2y1K.png

A total return index of the next 10 years of 1.7%? Perhaps in Japan- yes- Perhaps here in the US if the Democrats win and socialism becomes the norm-
With Bonds at an all-time low, investors will continue to want to capture something greater to live on- I think overweighting Technology areas is the way to accomplish that- because Technology is the driver of business improvements, as well as the disruptor of the status quo- At least for the near future-
There may well come a major shift in the year (s) to come- There may equally be new positive places to continue to invest - ESG funds for example- capture the social responsibility aspect- ARK Funds- (I am certain there are other similar ETFS) -
Today I overweighted the group of ARK funds - Adding to each position - Extended? Yes- Sweet spot -Yes- Overpriced? Likely- Stop-loss - Advisable.
Technological innovation is the driver of our economy- and as long as the Fed is backing the corporate markets- Risk -On makes sense-
Note that when I say "RISK-ON" makes sense- I am still holding a large % -2/3 cash position- The Goal is to see if the present momentum in outperforming market segments can allow me to raise stops. Lock in Gains- Yes, that requires tweaking of the positions, adjusting stops- and buying at prices I know are over inflated and likely not sustainable-
As long as the music plays, the chairs are empty....perhaps except for the truly wise ones that don't feel the need to "beat" the index.

[ira85]

Your assessment of the prospects of technology related investments makes a lot of sense, especially the strategies to reduce losses. If the market has 1.7% annual growth for the next 10 years it won't be 1.7% every year. There could well be a 50% loss and a couple of 20 or 30% gains in those years. It looks like you have a sound plan to outperform the market should there be a 50% loss. Good work. I like your thinking.

I read an article recently that some data showed women on average have higher performance as investors compared to men. The author pointed out men have a higher incidence of reckless driving, arrests for impulsive and aggressive behavior, etc. The author said men are more likely to take big risks and treat investing as a sport. Been there. Done that. The part about treating investing like a sport i mean. Not the reckless driving, arrests stuff. Never arrested and plan to stay that way.

My professional money manager has me in small positions with Bitcoin and a penny stock for a silver mining company. Seriously. I'll explain later. Getting a professional's input took a surprising turn. -ira

[sd]

"My professional money manager has me in small positions with Bitcoin and a penny stock for a silver mining company. Seriously. I'll explain later. Getting a professional's input took a surprising turn. -ira "
I think that may be appropriate- for a small % of one's Risk assets - possibly providing outsized returns- I know the money manager that I have would likely shy away from anything that speculative- but then again- I don't have a lot of funds to put into the spec camp.
I actually get some small crypto exposure through the Ark funds- I think it runs about 10% in their ARKF fund- would have to verify that %- The ARKK fund had a very high return a fewyears ago-primarily to the bitcoin exposure they were holding at the time.
If the funds he is recommending for speculative growth are within the " Risk- I can afford to Lose" segment of your investments- Then rest easy- Does he employ stops at any point, and where would he exit if things went South? And, Does he own these himself?

For myself, I'm holding a group of Ark funds as my go-to exposure to innovation and different technologies- It reduces the impact of a single company or two going bust- yet the narrow number of focused holdings in specific areas- Web, Financials, Genomics- offers the potential for market beating -or losing- returns. Presently doing very well -
Compare ARKF- to the XLF as an example of not being in your every day financial sector of big banks-

i.imgur.com/Nwhg3Tr.png

And the group including the q's- outperforming the "Market"

i.imgur.com/JdtESiM.png

Performance since the March lows- Q's 30% outperforming the SPY , but the entire group of ARK funds has easily beaten the QQQ's.
i.imgur.com/wODCA3P.png

That present outperformance noted -also when Tech runs out of steam, Profit taking will occur where gains are large-so trailing stops makes sense.

[tiarra]

Hi, Kevin! I just stopped by to see how you all were doing! Looks like a lot has changed. I hope all is well! Glad to see all of our post are still here.

[sd]

HI Tiarra!
Nice to hear from you! I hope you've been doing well and not too adversely affected by this virus- other than the relative isolation we are all supposed to be imposing on ourselves-
So many people have found their lives and finances taken to the limit by this pandemic-

Yes, Lots has changed-Horse Race closed -Overdue ..... Age taking it's toll on most of us..... It's Ira and myself periodically posting some commentary- I continue to Babble/ post on occasion just to keep myself involved- This board qualifies as my only social interaction on line- and still working the day job during this "crisis" as the government labels my work as "Essential" ..
2020 has brought many challenges with more to come the rest of this year .
Please feel welcome to jump in anytime-- There's a few dozen daily visitors- obviously people bored to death- that might find some fresh perspectives welcome!
Stay Safe!

[sd]

Catching up -I was considering GDX but instead
Added the remaining free IB cash into the net profitable SNAP position- In the IB account I overweighted ARKW with 100 shares, and then doubled that in the Vanguard account-
Market momentum is still favoring Tech- Fed is buying corporate bonds- keeping companies afloat as needed.
The downside of all this is the potential for future earnings to fail as the consumer does not recover with jobs and cash to drive the economy higher- A few months of delayed mortgage payments will suddenly revert to "pay me Now" and the reality of lost jobs, lost income , will be what we are facing in this new reality-. We will have gone from the most prosperous economy to the great depression era numbers within 6 months due to this pandemic. While the markets look forward- will the new reality support the higher valuations . I think there will come a day of reckoning- and stop-losses are the best way to prepare for that event -
A fellow investor/trader and I discussed Flash crashes briefly today- We haven't had a significant one in a while- and many who might read this will not have a clue about what happens-during a flash crash- The only recourse to a Flash crash is to have a stop-loss combined with a Limit loss to ensure that a huge overnight gap down open does not take you out of your position at a -30% loss. Food for thought-
-




6-24 premarket- Futures down, Corona virus cases rising in areas around the country cause for concern that we will not see a full recovery- Some credible fears there-because
it appears that this Virus is not going away because warmer weather and summer is here- I'm not tightening stops premarket- will have to see how the day closes- Will be instructive to see how well the ARK funds hold up to the potential weakness in the indexes.

[sd]

Today was the 1st decline in 6 days, and I'm not planning to react with tightened stops-Even GLD and GDX pulled back today a bit, and I find that odd- Thought that the defensive would turn to that area- Did not manage to catch any of the evening news, nor CNBC-only the Corona update increasing spread concerns across a number of states.
Here in NC, the Governor has postponed opening phase 3- and everyone is encouraged to wear masks in public, and maintain social distancing- A new statistic from Durham, NC- 78% of the cases are coming from the Hispanic population- who comprise 14% of the population- Masks are now required in public in Durham, Orange counties- which seems a common sense way to reduce the infection rate. Lots of non compliance though and no "enforcement" other than some businesses posting signs - Masks are required to enter.
We've had such a remarkable recovery, and many are anticipating that it is unsustainable- and waiting for the next leg to drop lower....
Typically, I would be tightening stopsw tonight and just under today's lows as part of a capture the gains- lock in some profits- and hope to buy again lower...
But many of these pullbacks-Dips- are short lived events- perhaps this time is different? What happens if I elect to stay invested in my present positions and the market drops another -30%? 50%

The present position sizing is Tech comprises about 30% of my total self managed Net portfolio-or 1/3 . 63k +/- Assuming a high 50% decline in those positions - taking the investment down to 30k the net account value would be hit with a -15% loss- substantial, but not devastating- Assuming that there would be a recovery over the next few years- led by Tech, that type of Aggressive positioning assumes that the net outperformance trend of Tech will resume it's momentum again as part of the essential new economy following the depression of 2020...
I could mitigate that by setting stops for 50% of the positions at my cost of entry- assuming I would get a sell at my entry cost if we continue to decline lower this week.
The Market could easily do as it has in the past- Shine it's focus on some positive remarks of a Fed chair or some economist that offers a ray of promise in the Tea leaves.
I'll view the charts as this week progresses and see if we haven't found some footing by the Friday close.

[ira85]

SD you were right on the button regarding my advisor's rational for putting me into some highly speculative investments, i.e. a penny stock silver mining company and some Bitcoin. He reasoned the money I'm investing is not part of my projected living expenses. It's not part of our budget, so taking greater chances doesn't pose undue risk. I never for a minute would have considered either one of those investments. I've never had any interest in going to a casino, so at least I'm consistent.

You may be on to something with your decision to not tighten stops following the selloff on June 24. It looks to me like there were 3 previous selloffs since the March low that broke through the 20 day SMA. All 3 of those ended up being buying opportunities 3 or 4 days later. In fact it seems like buy the dips has been an amazingly successful strategy for years. Has anything really changed to indicate buy the dips is over?

The sell off yesterday seemed to be driven by virus news, specifically news that opening up the economy may be worsening the spread of the disease. Well Duh! Isn't that what the epidemiology experts have been telling everyone? This should not be a surprise. Finding ways to break the chain of disease transmission is fundamental epidemiology 101. That's how contagious diseases work. It's not a Trump versus liberals issue. It's a disease issue. Finding ways to slow the transmission with the least adverse impacts to our way of life is what is needed until an effective vaccine is developed. If it takes 12-18 months to get a vaccine that's how long to plan our focus on disease transmission disruption strategies. Stay at home, don't go to school or work for the next year or more is not a reasonable strategy for this disease, given it is not as deadly as once feared. The vast majority of people who get it survive. That should be a consideration in deciding how onerous disease control measures should be. But it's hard to have a reasoned discussion about life and death issues and dollars and cents issues. It reminds me of discussions from long ago about how many construction workers would die while building a 50 story building,or how many coal miners would die while mining for X tons of coal. Difficult discussions, but needed.

I found this interesting, from AP Press.-
“Based on data from China and from cruise ships, scientists estimate that unless measures are taken to limit the spread, each infected person will infect about 2 or 3 others, leading to an exponential growth of the virus.
If the virus makes a jump to new person every two to five days, as scientists calculate, then a single infected person could lead to 4,142 total infections within a month — assuming nothing is done to break chains of transmission.
Unless such measures are put in place, scientists estimate that between 40 and 80% of the global population could become infected. Based on an analysis of data from China, scientists found that the majority of new infections are transmitted by people with mild symptoms who may not even know they’re ill, said Jeffrey Shaman, a public health expert at Columbia University.
Even if most people recover and only a fraction of total infections are severe enough to require hospitalization — about 14%, scientists estimate — the sheer scale of the epidemic will put enormous strain on hospitals, healthcare workers and other patients who may see unrelated procedures delayed.”
Hopefully the dip yesterday will be a buying opportunity by next Tuesday. Seasonality is going the other way.though.

I found some interesting info about ARK funds. Will save that for another day. -ira

[sd]

Interesting Data on the spread of this disease Ira, Worse than cats breeding!
Here in NC -still one of the Red states with infections climbing- Governor postponed opening Phase 3 level business- bars, gyms, and masks will be mandatory tomorrow.
Just prudent to mask up in public- I donated blood this past weekend, and one of the benefits is they are testing donors to see if they have antibodies from a Covid infection previously-

The reality of the usual dips is they are usually relatively small- and have been good buying opportunities vs stopping out- I'm going to see where this market weakness takes me- The Futures this am are down modestly for the Nasdaq-
For my prior applications of stops- I would estimate that on average, I would be chasing at a higher price if the pullback was less that 5-6% as i would reenter as price goes back higher-
So that type of defensive tight stop loses on the upmove in shallow pullbacks-and would have me repurchasing fewer shares at a higher price
Where the strategy works is on A pullback of 10% on average - or greater- allows repurchase off a base/bottom allowing to buy more shares at a lower price-
I.e. The March sell-off was the exception to the downside- and gave me a win for the year.
Woll continue later...