SD-2020 TRADING WITH THE TIDE

[sd]

9-11 Somber anniversary - hard to imagine how divisive America has become this year!
Fishing was Fun, but Catching wouldm have been even better!
Markets tried to make a small rally- up slightly on some non-tech positions.
Reading "All About Market Timing" by Masonsen. It's somewhat dated- 2011 but he is a strong proponent of Stops, understanding seasonality, and cites some well back tested-strategies ,..
The longest term back testing primarily covers results from the Dow, The Nas being developed more recently.
Besides recommending that Stocks should not be held in any September- the historically weakest month-
Website that applies seasonality and it's premise that market cycles tend to be replicated around the 4 year election cycle in the US
www.alphaim.net/seasonal_description.html
This week ended up weak in Tech, and I think that using the 50 ema/this weeks pullbacks as a stop for 2/3 of the positions offers me a chance to repurchase at a larger market decline- perhaps at least -20% .....

7

[sd]

9-14 premarket- Asia up, Futures higher- Opportunity to raise stops higher? Possibly see a profit in the recent purchases?
Nas Futures up 2% premarket.

EOD- Markets closed up, Port positions are JUST now back in the green..
QQQ's managed a +2% up move- Not very impressive considering the hammering of the prior week.
i.imgur.com/wx6Dygl.png
ARKK managed to gain +4% ....

This is not the typical trend pullback.... and so I'll remain skeptical unless we see further upside this week.

[sd]

With yesterday's net positive Close across all indexes, adding to my positions -Will use the recent lows as the defined swing low for a stop placement.
PM EDIT-Most of my orders were set as limits and were jumped over and moved higher- and I ended up changing to market buys mid pm- Dow lost on AAPL- and i have ended up with a smaller 20% cash position now- and fingers crossed that the present momentum for the week can continue- Fed Speak Wed may affect the markets- but we have better unemployment, better GDP- than anticipated- So much is up in the air- a prudent person would be almost all on the sidelines with cash the primary position-

[sd]

9-16 Tepid markets -didn't get to see any TV- perhaps a good thing- With a larger % invested and lesser % cash- Presently I'm holding a wider mix -and not all tech-
WRK looks like it's topping- and not going to retry for the $40.00 level-raising stops on a split position. Futures all lower after the Fed announced it doesn't expect to be raising rates any time soon.
GLD- reviewed it recently- been in a sideways wedge/base- perhaps it will breakout higher and challenge it's recent high- The relatively tight base makes it a low risk trade on a break out.

[sd]

Sharply reduced my position size in most tech positions yesterday (Thursday) Had some upside in WRK- sold the remainder today at a $39 limit sell order I had set that got taken out this am only to see it pulling back. I had split the position with a raised tight stop that was hit for 1/2- and then the limit- so it executed well.
My present sense of things is the Fed did not spur great confidence for the Investing side- and perhaps we drift or go much lower as we head for the election. Presently down -5% from the prior high, and may consider lightening up more- .

[sd]

"https://seekingalpha.com/article/4374997-30-reasons-why-stocks-may-fall?utm_medium=email&utm_source=seeking_alpha&mail_subject=must-read-the-truth-your-s-p-500-etf-is-riskier-than-you-realize&utm_campaign=nl-must-read&utm_content=link-8"

I agree- Tech rotation prompted me to further reduce position size- Market rotation seems to be underway, and as i estimated the potential Risk vs the possible gain- as not favoring trying to hold long tech- So I've sold a majority of my remaining tech positions today, locked in some small losses in doing so-
My Present sense is that I should likely just Close my brokerage account until the day before the Election-
The smallest loss is indeed the best loss.

[ira85]

It seems like there's a disconnect in market action. There seems to be no end of risk factors for the economy,e.g. the pandemic and need for stimulus/support for unemployed, high stock valuations, sharp sell off of Apple stock with no apparent market concern, low fear, no sign of being oversold, S&P seems to be quite a way above support, i.e room to fall. Etc, etc. there are plenty more risk factors. It seems like risk outweighs benefit. I bought some SDS, short the S&P, to have a small position to benefit if the market has further to go in this correction of the last 4 days.

I've been busy with personal and family stuff. It's surprising to me that I've been so busy in my first year of unemployment. I've reached the conclusion I should turn the rest of my IRA portfolio over to my advisor and let him manage it. I'm thinking of holding it with a highly defensive stance until the dust settles after the election. When I read what SD does nearly every day to manage his investments I can see I have neither the energy nor the stock portfolio management skills to do what he's doing. I've worked with a lot of very bright, talented people in my career and SD is right up there with the best.

Roughly a year ago I confessed I had neglected to manage my IRA for several years. The result was I was chronically overweight in cash and holding a small portfolio of stocks that I once bought for a reason but held on to them when the reason didn't work out. So I had these orphans that were maybe 80 or 90% below what I paid for them. I thought it might be useful to clean this up publicly. I sold the individual stocks, the orphans. That left my account 100% cash. I've been bearish since before the market sell off in March. Since I believe we are early in what will become a long and painful recession/depression and bear market it's been hard for me to buy stocks. My professional advisor has no such problem and he quickly got the portfolio invested, the one he's managing for me.

I said above I plan to manage this until the dust settles after the election. Continuing to manage it seems like I'm just continuing my pattern of good intentions but no action. My logic is there will be a time in the next 12 months when it will be clear if we are or are not in a bear market. If we are, I'll turn the portfolio over to the advisor showing 100% cash and no losses during the preceding year. Maybe less than a year. If we don't have a bear market by next September, it will be time to give up on that scenario and give the portfolio to the pro. -ira

[sd]

Hi IRA,
It's good to know your own interests and personality! The choice to not manage your portfolio and allow a professional to do that may be the best decision overall-Before you decide to put all of your eggs into that one manager basket, you may want to consider interviewing a few more professional firms , have them compare their investment recommendations with your present manager- and I would ask if they are "Fiduciaries" -or just investment brokers.
I would also ask for years in business, and check with the SEC for any filed complaints against the broker or the firm they represent-
Complaints would be a possible red flag worth looking into.
The various consultations should be free- and they can give you good input and evaluate the Risk level your present adviser has you invested in
It pays to be cautious and do your homework when you turn over your life's savings into another's hands!
www.edelmanfinancialengines.com/ric-edelman-radio comes to mind-
I would encourage everyone interview and check out different advisers-

An Adviser will tend to keep you invested and not jumping in or out of the market- Timing the market on sentiment- as you already are aware-tends to result in market under performance over the long term for the vast majority of us market timers. Good you bit the bullet and dumped those orphans!
I will have to see what my results will be at the end of this year- Could have listened to the seasonality advice of go away in Sept and Oct. but I since reduced positions, took some initial losses as the market weakened- I'm holding a minimal amount of the various ARK funds, as well as other market etfs- including the Nas Equal weight tech fund- I'm planning on being able to do some purchasing at lower prices as Fall brings more election concerns, likely an uptick in the virus- and potentially millions of people not having jobs to go back to- and then the subsequent fore-closures of homes, autos etc.
Last week I also reduced my exposure in the company IRA, putting 75% or so into the money market fund they offer- actually had a nice YTD gain in the foreign markets funds I was allocated into- I also had topped out 2x at new highs in August - and hesitated to tighten the stops as close as I usually would have done- so that larger gain YTD in the Van account is now a smaller gain.
I agree with your SDS position- I would think that all of your concerns about the conditions will prove to see the markets lower up to the election- and possibly beyond- You should consider trailing a stop-loss below your position - and perhaps consider keeping a small portion in your possession for trading- I'm not allowed in the VAN accounts to Buy inverse or leveraged products anymore- That restriction came into place in 2019-but I was able to place the small order in the IB Roth account. Limit $17.10 will target $20.00 with a limit sell. My history with inverse funds has not been inspiring- 2-4 days and the trend reverses-
i.imgur.com/WtxFqPk.png
I'm busy with the job work load- so I don't get much opp to watch the markets-much- a glimpse during lunch periodically- and plan to go to pasture this Spring-as the job completes- Perhaps Sooner if a replacement is available. We've had some Covid cases on the jobsite-fortunately it hasn't turned into an avalanche of confirmed cases.
I think the downside for the markets if Covid returns without a vaccine in place will be a real shake up for the markets-
I'm planning on some low limit orders for the tech positions- perhaps -20% lower from here ...

Stay well! SD

[sd]

on Taking profits- Fast Money contributer Steve Grasso mentioned WRK packaging company as a beneficiary of the stay-at home delivery market.
As I was shifting into some alternate investments outside of Tech, I took the trade- Bought 100 @ market open 9-04 - and held- After 5 days of sideways range, it broke up higher - I elected to sell 1/2 the position at the open 9-17 (filled 35.68) and set a $39.00 limit order which was hit the next day- after which the trade has since declined.
In this choppy market, it seems smart to try for base hits. and not home runs. Of course, it's easier to demonstrate the winner and not the losers!

i.imgur.com/PvOfs4A.png

[ira85]

Go for base hits not home runs? If this is a base hit, you are on the road to millions $$$.

Let me see if I get this. You bought WRK at about $32.49 and sold half at 35.68. That gives you a profit of 3.19 a share on that half. You sold the rest at 39.00 for a profit of 6.51 a share. So your profit on that 100 share position was 3.19 x 50 = 159.50 and 6.51 x 50 = 325.50 for a total gain of $485. Based on the original purchase being $32.49 x 100 = $3,249.00 your gain would be 485/3249 = 0.149 or 14.9% for 6 days of work. Now if you could do that every 6 days you'd make that original $3,249 go up by 485 every 6 days, or about 61 times a year. And that's taking profits on each trade not reinvesting profits. That looks like home run to me!

I did the math to see if I could do it. Not sure it's right. I used to be able to do that kind of math easily. Now it's slow going and prone to mistakes. That's one reason to turn this over to an advisor. My math and judgement skills won't be getting better. It's poor judgment on my part to plan on managing my money long term. That's the reality of dementia. That may sound morbid or melodramatic, but it just seems realistic to me. I don't feel the least bit depressed. I'm just trying to be realistic. My wife and I were talking about it today. I've always handled bill paying, insurance, taxes, etc. She doesn't think she'll be able to take on those responsibilities. We will be examining options. Morbid, maybe, but it seems just realistic.

Don't go to the work of checking the math. You have better things to do with your time. I'll address your suggestions about advisors tomorrow. It look like you have some good ideas. Thanks!! -ira

[sd]

The math is correct IRA! I wish I could duplicate those results weekly- but trading is about having your winners offset your losers- When markets are trending higher, the best approach is to give the trade room to run-
My counter losing trade this week was in GLD- GLD had been in a sideways wedge for weeks-and I anticipated it would break out of the wedge and move higher- Instead of using a buy-stop above the upper trend line as I often do, I elected to purchase a small position inside the wedge- closer to the Point of Failure that a break lower would signal.
Instead of breaking out, it broke down with the markets- stop was hit.

i.imgur.com/AujCuje.png

You make a very valid point as to the possible effects of the disease affecting your faculties as a good reason to not try to manage your own investments-That is sound judgement on your part. I would certainly make those steps to interview a few other advisers and make a decision before year end and get that off your plate.
As for those responsibilities you've always tended to, and may fall into your wife's hands-
Perhaps write out what is necessary to do every month- or every quarter- or annually- Contact information- Bills, credit cards - perhaps minimize how many credit cards you have- consolidate into just 1 or 2- same with investment accounts- reduce what you can so your wife has less to be concerned with.
That write up may be useful for both of you to look at the 1st of every month to review, and then work together to make those payments or meet those obligations- and giving your wife the opportunity to take care of those items with you guiding her-Hopefully your condition won't deteriorate for quite some time, and you'll have years ahead to give your wife confidence in those areas.

House insurance, taxes, vehicle expenses- maintenance- I'm going to do a similar write up for my wife to have should I become incapacitated in some form. Cognitive or otherwise. Always been my concern , as there have been family members with early onset dementia.
I wish you and your wife the Best!
SD

[sd]

Over the years I've played around with different chart types, settings, and indicators-
The attached SDS chart uses RENKO bars- it's a 30 min chart- and each price bar represents just $0.15 of movement.
Renko can be found in the Stockcharts Chart School as well as Parabolic sar (PSAR) indicator

I modified the PSAR value to ,01 vs ,02 to slow it down a bit on this fast time frame.
Also a couple of moving averages 10,20 .
Below the chart is the MACD indicator with an RSI line overlaid-

Notice in the left half of the chart, the moving averages are trending down, and Renko bars generally are below the moving averages with a couple of attempts to move up- but the trailing Psar never gave a buy signal until the bottom was reached and price reversed higher. This period of decline over 2 months as identified by the declining trend lines would suggest one would be short this position- or long the inverse etf -
The benefit of using these smaller price bars to define smaller moves also assists in getting an earlier entry.
The decling Psar value above the price bars can also be used as a buy-stop entry. Once the declining PSAR gets hit by price, the PSAR drops under the price and becomes a trailing stop-loss. Over time PSAR is desed to get closer to price, so it allows for a bit wider volatility on the entry, and then progressively closes the gap between price.
In this example- Psar kept one out of entering a trade during 2 months of decline. The 1st long trade off the bottom gets stopped out for a gain, the 2nd long trade gets stopped out for a loss. the 3rd long trade signal is still a long position, with a stop suggested at $16.73 -
it's an interesting way to take daily "Noise" out of the charts


i.imgur.com/gv7TqjG.png

[sd]

FCX- COPPER/gOLD COMPANY -Has been in an uptrend and weakened recently-Experimenting with this trade 100 shares.
The Daily Renko chart indicates that PSAR stop was hit and price bars are lower.
Conversely, the short term Renko chart indicates a possible upmove today- with both slow and faster PSAR
indicating the attempted move higher- A Buy-stop entry above where price closed sets a higher limit to enter that price needs to meet before the trade is activated. a limit order is attached a bit higher from the stop . An attached stop-loss uses the low PSAR level below the swing low.

i.imgur.com/W3yO1sa.png

[ira85]

I wrote a document listing all the personal finance responsibilities I could think of. I've updated it 3 or 4 times. Since the last update I've retired, bought a new home, bought an annuity, bought life insurance. In the event my wife survives me, she'll be pretty well fixed. I told her I'd have to stop making her more and more secure. I don't want the event of my passing to be cause for celebration. The title of my personal finance guide is "Things to Do When I'm Dead." It starts with my suggestions regarding funeral/memorial service and getting bids for the cheapest cremation locally. There have been a lot of changes in my situation since I did the last revision. That will be a good place to start. -ira

[sd]

Sounds like solid planning has been your prerequisite for a long time- Good for you! Have you had that discussion with your wife as well?
Likely wouldn't hurt if you haven't done so -in a while....As circumstances in our life change, we adapt, and it sounds like you have taken care of the major loop holes. My Mother recently passed - Age 91- after being given 6 mos with a stage 4 breast cancer diagnosis. She took care of all outstanding documents, signed over authority , made her final wishes known - and updated her will. -including a DNR and had her pace maker reset to not attempt to revive her in the event of a heart failure.
She also went to the local funeral home and negotiated her own cremation- Took all the burden off the rest of the family.

Bought some of each of the ARK funds yesterday, and a small ZM position. and went back into WRK @ $35.88 this pm. I am rebuilding positions in the Ark Funds, will hold these without stops and add more at lower prices.
FCX trade buy-stop did not fill yet- the Buy-Stop order performing as it should.
Interestingly, WRK Fast Renko PSAR gave a Buy signal at the end of day Thursday- I was not watching- but reacted belatedly today to enter mid day, as I experiment around with Renko for some short term swing trades.
In this chart, I added a very Fast Psar setting 0.05.0.2, along with the 0.01;0.02 settings. PSAR initially sets a wide range due to volatility from the entry, and I want to see how a very fast PSAR may perform for some or all of the position. I also set a limit sell $38.25 for 1/2 the position, and -if the trade allows, will trail 1/2 at the slower PSAR.

i.imgur.com/dFJQ3jq.png
PTON up sharply today- Not a present position- Perhaps that's a good tell on the markets expectation that we will be spending more time at home this Fall due to Covid?