Week ending 12/28/2007

I finally entered another position this week.  I have been seeing quite a few bounces, but most of them have earnings coming up within the next month and so I can’t act on the buy signal.  The other unfortunate thing is that I am currently visiting family in another city, and while I was travelling last Friday, several of the stocks on my watchlist gave valid buy signals and have done very well since then.

I can’t update the graph on the main page today because I don’t have access to all of my files at the moment, but my position on CTV is currently down $55 so my portfolio is currently at $10,774.55.

I’ll have a post probably in the second week of January to reflect on the past 3 months of running this website and to revisit my goals for the next 3 months.

Bought 1 CTV Apr08 55 put for $8.60

This stock is in an extended uptrend, but it is currently in a short-term downtrend that started in May.  It has a very clear downtrending resistance level, as well as a downtrending support level and the long-term uptrending support level.  The stock has come up and bounced down off the resistance level, and the MACD and stochastics have both peaked and started to head down.

The stock is currently at $48.68.  Resistance is around $50.25 and the nearest support is around $42.

My exit orders are:

• Market order to exit if the stock trades above $51.70
• Trailing stop loss if the stock trades below $43.25
• Stop loss on the option at $4.50

Week ending 12/21/2007

Well, it’s hard to make or lose money when you have no positions.  Despite having over 50 stocks in each of my bullish and bearish watchlists, I haven’t seen any buy signals recently.  The few stocks that have shown a bounce off a trendline with confirmation from the MACD and stochastics still weren’t buy signals because they have earnings coming up soon.

Earnings season is always very difficult for me.  I try to avoid earnings because it’s very difficult to predict what a stock will do after earnings, and I’m not trying to gamble on big moves right now.  Ideally, I’d like to come up with a strategy that I can use around trading time, otherwise I’m going to be practically shut out of the market for about 4 months out of the year.  For now, though, I am going to stick with my trading plan and only take trades that meet my criteria.

Week ending 12/14/2007

This was my worst week since starting this website.  My portfolio ended up down $228 on the week, putting the total so far at $10,831.06.  I had two more trades close for a loss this week, including one that had been nicely profitable just last week.  However, I think this is just a manifestation of the randomness inherent in trading.  I don’t think any of the trades that I’ve lost money on were bad trades, and they were all valid according to my plan.

I did make two mistakes this week in not taking trades that I should have taken.  Both of those would have been profitable and in fact I may have even been up on the week had I entered those trades.

Despite being in a losing streak over the past two weeks, I’ve been able to control my urge to make some quick profits and trading on hunches, which was a big problem for me in the past.  However, I’ve realized that I have a new emotional hurdle to deal with: apathy.  I’ve noticed that I haven’t been that eager to go over my watchlists the last few days and just kind of rush through it (I think that may be why I missed those two profitable trades).  It does make sense though - losing is much less exciting than winning.  I keep reminding myself that a good system can only produce consistent results if it is applied consistently.

Another point to take away from those missed trades is that I know I must have looked at those trades on the day that I should have entered them, but can’t remember now why I didn’t get in.  This website has been a great tool for keeping track of the trades that I have taken, but I also need to come up with a system for keeping a journal for my day-to-day analysis.  I don’t want it to take up a lot of my time, but I would like to be able to look back on a trade that I didn’t take and remember what my analysis was at the time.  I think I will start taking notes on any stocks that I spend more time analysing (i.e. because they’re are close to showing a buy signal), even if I don’t end up trading them.  I’ll see if it also makes sense to publish those notes here.

So I am completely out of all trades right now for the first time since starting this website.  There have not been many opportunities for trades in the past couple of weeks, aside from the ones I skipped, of course.  I definitely want to get into more positions as soon as possible, but I will be careful not to rush it.  I will only take trades that fit my trading plan, regardless of the fact that it’s hard to make money while sitting on the sidelines.

Sold 1 SGP May08 25 call for $4.60.

I bought this call on 10/23 for $5.80.  My original exit order was at $27.30, but I kept raising it to track the supporting trendline and it got as high as $28.60.  Just last week the stock was up at $31.50, but it fell hard in the last few days and today it fell down as low as $27.01.  Luckily my exit order got me out with an acceptable loss.

This trade is a little disappointing because it was up $170 on the second day I was in the trade.  It then dropped back down to support and bounced a few times between the 30-day EMA and the support line before finally breaking above the EMA.  It looked like it was going to complete the move to my target of $32, but stopped short at $31.50 and then fell down. 

In hindsight, I could have gotten out for a decent profit but getting out of your winners too early is almost as bad of a mistake as staying in your losers too long.  So I fought the urge to sell and in the end the trade becamse a loser.  I think I probably did the right thing though.

Sold 1 CYH Mar08 40 put for $5.70

I bought this put on 12/3 for $7.40.  One of my exit orders was to get out if the stock broke up above the resisting trendline and got to $34.75.  The stock went down very briefly after I bought the put but soon turned around and started heading back up.  Today the stock was very strong and triggered my exit order a couple of hours after the opening.  The stock is now up at $35.99, putting the bid on the option at $4.70, so the exit order saved me $100 in further losses.

I think this was still a good trade.  There was a well-established resistance level, although it was a fairly short-term trendline.  The MACD and stochastics were also supporting the trade.  The only thing I can see that indicated that this might be a good trade is that strong bullish days recently on 10/31 and 11/28, and on both days the volume was much higher than normal.  Also, after the low on 10/16, the stock then made a higher low which means that there was no longer a clean pattern of lower highs and lower lows.

Week ending 12/7/2007

There was lots of activity this week, but the net result was a loss of $39.56.  I had two trades, CMCSA and CVC, that both closed after one day for a net profit of over $500.  But I also had JWN which gave up about $300 from its high and closed for a loss.  My positions on SGP and CYH are also down for the week.

The interesting thing to note about the CMCSA and CVC trades is that I almost talked myself out of taking them because I was worried about having 4 puts to 1 call.  In the end I couldn’t turn them down because they were very good buy signals, and it definitely worked out in my favor.

JWN was unfortunate because it suddenly surged up and took the max loss after being up on the first day.  But I have to be happy that my stop was there, because it’s up even further now and my loss would have been much bigger.

Sold 2 CVC Mar08 30 puts for $4.80

I bought these puts yesterday for $3.90.  Interesting that both of the options I bought yesterday closed today at my target profit.  This stock also dropped down early in the day.  The neat thing is that it just touched my exit price of $25 before heading back up, but that was enough to trigger my sell order.

Sold 1 JWN Jan08 40 put for $4.10

I bought this put on 11/29 for $6.10.  The same day I bought it, it went up by as much as $1.10, but for some reason it spiked up yesterday and today broke the resisting trendline enough to trigger my exit order at $37.25.

This is my first put to sell for a loss since starting this website.  In a way, it’s a relief since before, I knew that my 100% run on puts was definitely a statistical anomaly.

Sold 2 CMCSA Apr08 25 puts for $5.80

I bought these puts yesterday for $4.50.  I had set an exit order to enter a trailing stop loss if the stock went below $19.00.  This morning, the stock gapped down by about $1.80 and triggered my exit order.  The stock eventually went as low as $18.08, but I got my target move out of it so I’m happy.