Fortunes were won and lost this week, but more were probably lost.
But in the SharePlanner Splash Zone, that couldn't be further from the truth. Instead the trades made this week, continued the theme of last week and that was "Profitability".
It was a quiet week of trading, I only made six trades and today alone I didn't add anything new. But the week was a solid one and sets up nicely for the week ahead.
Here's how the trading turned out:
As I always do, I take profits quickly on the short side, and that played out correctly with a nice 5.1% gain in JPM, while closing out leveraged shorts in SPXS earlier in the week for a 12% gain and GS for a 4.4% profit.
So it was a nice week and I would love to have you in the Splash Zone next week, so that we can profit together. You can try out the Splash Zone for Free for seven days and you'll have all the benefits the members already receive including access to the chat room where I post all of my trades and market commentary real-time, as well as instant email and text alerts (international too).
I've made two trades today, and both of them were to cover my remaining shorts. One for a profit and the other for a loss. Overall the week and month of trading in the Splash Zone has been absolutely fantastic. But today, I'm not going to push any more positions into my portfolio.
Here's why I am going cash this weekend, and it is pretty obvious if you ask me:
1. Three-day holiday weekend. Heck, it is hard enough holding positions overnight, much less a weekend. But throw in President's Day, and you have a lot of additional risk that you're taking on by holding positions over the weekend.Read more...
Ideally, I like holding a short 2-3 days. Once I get profits in the 4-7% profits, that is where I start getting itchy to cover my position.
While I embrace shorting stocks when the market calls for it, I recognize too, that I am swimming against the current every time I do. 99.9% of the country wants the market to go higher, so when you are shorting the market, you are fighting a lot of forces, including the companies that want their stock to go up, the federal government, namely the Fed, that wants the market going up, and many more factors. As a result, I don't pretend that somehow I am greater than all these forces at work. Instead, I take my profits when I get them and don't let them run for extended periods of time.Read more...
My Trades:Read more...
Alright - it is time to post another update on the T2108 - what is it you ask? (in the case you haven't been following this blog for very long). It is the percentage of stocks trading above their 40-day moving average.
This is probably the single best predictor I know when it comes to finding market bounces. And by the looks of it, the bounce isn't happening just yet if history is any indication. It used to be that a move into the teens was a great opportunity to get long on the market for an anticipated market bounce right around the corner. But lately that has not been the case, instead driving the T2108 into insanely bearish territory, namely the single digits before getting a bounce.
That is what happened in January when SPX bottomed out at the 1812 level - the reading was 3.81% - that is insane!
Right now it is hovering in the 16's and unless it is a massive bullish divergence (and that is always a possibility too), then I think SPX has further to go to the downside, and that means breaking those January lows and going sub-1800.
As for now, I won't consider getting heavily long until the single digits are revisited again.
SPY again trying to confirm this monumental head and shoulders pattern.
And yes, if this pattern confirms, it does not bode well for the market going forward. Simply put, a close below 1820 on SPX or 182.00 on SPY means this pattern has confirmed. More importantly though will be tomorrow, and whether Friday's price action keeps price below 1820 for the week or not.
I did a post on this earlier this week, and it is worth doing again, because it is that important. Also important is the 1812 level which was the January lows that the market reversed higher for a period of time off of. We've tested that level exactly today and so far there has been a light amount of buying. Maybe it morphs into more aggressive buying, but in my opinion it is probably a reprieve before it ultimately breaks that level either today or tomorrow.
My Trades:Read more...
Short International Paper (IP)
Short 3M (MMM)Read more...