Looking Back On November And On To December | Podcast Episode #15

0:07
Learn to trade stocks successfully. Learn to profit consistently. I’m Ryan Mallory, and on my weekly podcast, I’m going to teach you the ins and outs of a complex, ever-changing stock market. You will learn to trade better, trade smarter, and profit bigger.

0:26
Now, let’s go trade. Hey everyone, this is Ryan Mallory with my Swing Trading the Stock Market podcast, giving you another episode here. Uh, today, I am actually going to do a little bit more of a look back on November’s trading and, uh, preview and strategy take on How I’m going to do with December and what what to expect and December is actually a little bit underway as of this podcast, so, I think we’re into our 3rd or 4th day of trading so far in the month of December, but there’s still plenty of time and with the holiday season that always provides some interesting tidbit.

1:03
To go over as well. So, but first, let’s go ahead and talk about, you know, what, what did we have in November. And for, for me, November was another profitable month and, and every month so far this year has been profitable, so that’s great. Um, but I wasn’t always very content with how November played out.

1:24
For one, I think the biggest one was, and before I get to that, I’d just like to say that I tend to be pretty hard on myself with trading. So if you can bear with me a little bit and, uh, hear me out as I tend to berate myself or just, you know, kind of criticize the Decisions that I make in hindsight, and of course when you’re trading, you don’t have the luxury of doing so in hindsight, you have to.

1:53
Uh, trade based off the information that you know at the time, not knowing what the outcome will be based off of those decisions that you make in the future. So, the biggest one for me, and like I said, it was a profitable month and, and, and I’m happy about that. The year’s been profitable, but there’s always room for improvement.

2:10
There’s always places where I can do better as a trader, places where I Should have seen something that I didn’t see or acted a little bit quicker than I did, and probably the biggest one was SQ and I’ve traded the stock a lot this year.

2:29
And it’s been overall pretty good stock. I mean, I’ve, I’ve gotten beaten up on it at times. I traded it, uh, 3 times in November. I think I got that number right, 3 times. Yes, 3 times. And 2 of them were profitable, 1 of them wasn’t, but the first time I traded it was back on November 9th.

2:47
And um The market, the market was selling off that day. And I’m gonna pull up some of these charts so I can provide you with reference points as I’m talking, but on November 9th. We had a pretty steep sell-off in the early going of the trading session, well.

3:07
The market bottomed as it often, often does these days, and then provides a V-shaped bounce. And when it did that, I saw SQ as being a really good trading opportunity off of those, off of those lows. So, um, I think they had just come out with earnings that day too, if, if memory serves me correct.

3:26
And it was testing the 20-day moving average. I got in before it was even green yet, and, and that was at, $36 flat, $36 even. And then it makes a good run and I’m up 4%, and then I, it pulls back a little bit, shakes some people out or at least attempts to shake people out, and I get out at 3.8% profit or 3.75% to be exact.

3:51
So, That day, I’m happy. I, I felt like I was able to take a little bit of the, the hits that the market was providing that day and come out, you know, all right from it all. But the, uh, market kept on going up and that kind of, or not the market, but, well, the market did too, but the, the stock, it shook a lot of people out, shook me out, and then it kept on going higher in the days that followed, and I think it could have been like upwards of a 30% gain.

4:18
So, Of course, I’m going to notice that and of course, it’s going to frustrate me, um, or it’s going to be frustrate anybody because you’re going to think of, what if I had just held on. And, and when I look at the SQ chart, I, I, I should have held on. I was, I was off to a little bit of a rocky start and maybe, um, that played into it a little bit where I was trying to get some solid, uh, profits for the month and and so forth.

4:39
But, um, you know, I played it again on the 28th of November, made 2.2%, and then, Uh, lost on it on the, uh, later that same day when I jumped back into the trade and, uh, uh, lost a little bit there. So. Any case Like I said, the, the month overall, it had some great games and surprisingly, the best trade of the month came from Twitter.

5:03
Now, had I held on to SQ that would have been by far my best trade. But, uh, Twitter was, was a, was a good trade. I mean, it had a bull flag that started with the, with the rally back in late October and then it started pulling back a little bit, and then it gave us, A, a, a very good tradable pattern, and I gotta admit that was the first time I’ve ever traded Twitter.

5:23
And I wasn’t sure what I was going to get out of it. I was a little bit nervous about it because I do know how volatile that stock can be. And then it gives us about 6 straight days of, of profits. I mean, it was amazing. It was like one of the best trades of the year in terms of just consistency and just a pure pattern breakout play.

5:43
I mean, it just worked perfectly to the, to according to the textbooks. So, Then it, it peaked and started giving back a little bit of those gains, and that’s where I got out with like an 8.5% profit. And then it started pulling back, you know, pretty rapidly thereafter. And actually, it would have been a losing trade had I not had a stop loss that I was raising each time along the way.

6:04
So, stop losses do come in handy. Uh, now, what’s the difference between Twitter and SQ and how I managed to trade? With SQ I got a certain percentage amount on that trade and, uh, I’ll admit when I got into it that day, I wasn’t probably expecting a, you know, a 4 to 5% rally in SQ only for me to get out for about 3 and 3 quarters.

6:26
That’s a good trade. Just if you look at it in total isolation, nothing else, no price action of what it did thereafter, just the SQ itself, it was a good trade. But, Looking back on that trade, and I’m trying to toe the line of just trying to be like the perfect hindsight trader versus what I could have, should have done at the time based on the information that I knew at the time, probably the best course of action for me would have been.

6:52
To raise the stock. And yes, maybe I come away with only 2%, you know, maybe the stock would have pulled back the next day. But of course, it didn’t, and it was just off to the races thereafter. And I think we got like 123456789 out of the next 10 days, the stock traded higher and there would have been no reason to get out of it, uh, from a swing trading standpoint, you know, so, I think that was probably The big.

7:20
Glaring, man, I wish I had that trade to do over again. And then there was the ETFC. Which turned out really good. I, I was, I was pretty happy about it. The stock, uh, really rallied hard when the financials were taken off and probably should have, probably should have held on a little bit longer on that one as well.

7:40
Um, I left some money on the table. There’s, there was a theme there that even with some good trades, there’s lessons to learn along the way and that instead of just being aggressive to take the profits, I should be raising the stock losses because we’re in a very strong trendy market. I think it’s strong. markets, you can afford to raise the stop loss of some, give it enough room to, to wiggle.

8:00
But if you, if you’re coming, if you’re at 5% profits and at the end, you come away with 2.5 or 3%, that’s OK because you’re, one, you’re still coming away with profits, and, and they’re good profits, but, and, and yeah, you always prefer to get the most out of your trade, but sometimes, You’re, you know, you’re, you’re, you’re settling for like a 5% profit instead of holding out and maybe coming away with a 15% profit.

8:25
And so, that was the case with ETFC. I don’t think it quite went up that much, but it could have been a, you know, another 5% I could have added to that trade. So, now on the flip side, The, you know, the bad trades on the month in terms of, you know, the ones that I didn’t make any money off of.

8:42
There was, there was a few of those, and the month seemed to start off pretty rough and ended pretty rough, but then in the middle, you had some pretty good trading there that really made the big difference for the portfolio. And, uh, You know, I, I don’t always know how every. trading sessions going to turn out or how, you know, how bullish or bearish each month is going to be, but the idea is to manage each individual trade and to protect yourself from unnecessary losses.

9:15
And so, there was no big losses in the month of November. The biggest loss came from Um, BABA Baba, um, it was a 3.8% loss loss. That stunk. That’s usually on the high side for me because my average loss is probably more around like 1.5 to 2%.

9:34
But, uh, there was, there was probably a little bit bigger losses than what I normally take in the month of November, not, not outside of my risk tolerance, but just, you know, from an average standpoint, um, I would probably say that my average loss in November was around 2, 2.5, about 2.5% or so.

9:53
And I usually like to try to keep it around, you know, 1.5 to 2. So, so that’s something to consider there. I did, uh, see a number of trades get hit on, on the stop loss and there was a lot of sudden hard sell-offs that took us out of some of those positions.

10:09
Uh, there’s nothing you can do really about that. I think, I think the, the real key in markets where you see sudden sell-offs are, is, or it’s a, it’s really about how leveraged are you, how many, uh, how much cash do you still have in the portfolio.

10:45
If you get a strong sudden sell-off and you get stopped out of, you know, 3 or 4 positions, but you’re only 30 or 40% long, well, then, you know, that’s pretty good because you weren’t allowing a lot of your, your, Capital to to be exposed to that selloff and you also had some powder dry for when the sell-off bottom and then when it would start to come back up, you could get back in long.

11:00
On the long side there. So, so that’s one thing that to, to consider. The other thing was, is, uh, in the month of November, there just wasn’t a lot of shorting opportunities. I mean, um, if you could time when those sudden sell-offs would happen, yeah, you could make some money on a, uh, intraday basis.

11:21
And, uh, there was times where I actually had some, some profits on, on some of my short positions. Now, When I say short positions, I’m not actually taking a short position in like Apple or something like that. I’m mainly just, uh, shorting the S&P 500 through a bearish ETF that I that I get long on.

11:36
So you get long on a 3X ultra bearish ETF and that’s the equivalent of getting a 3 to 1 return for Uh, the inverse of what the S&P 500 does. So if the S&P 500 goes up, you go down, and the S&P goes down, you go up.

11:58
So, that’s also a method of shorting the stock market, um, that you can take on. Um, there’s always a lot more risk to doing that, but, um, it’s, it’s a strategy that has served me well for many, many years, and I do, uh, a pretty good job of containing the risk, but, um, On November 9th, I tried it once there, but the intraday bounce back was pretty, pretty rough.

12:20
And while I had some gains intraday, I’m a swing trader, so I do want to try to hold these overnight if possible, but the evidence was pretty clear this thing wasn’t going to cooperate. So I got in at 1284, got out at 1281 for a 0.2% loss. You also have another instance back on the 29th, same thing, uh, took a 0.5% loss there.

12:36
I stayed in that one for a day. Uh, that was probably, it’s probably like a record for me these days on my shore positions. They just don’t, they just don’t last. So, and I’m not going to try to force. Force myself on the market either if it doesn’t want to cooperate. I have one that was actually up.

12:51
I got in at 13 and got out at 1,301. That’s basically a flat trade. You didn’t make any, you didn’t lose any. Um. But yeah, the, the, the short setups just really weren’t all that great for the month of November. But now coming into December, what do we do?

13:08
What are we, what are we looking for? How do, how do I want to trade the stock market? And we’re about 4 days in. It’s actually been kind of a rough start for December too. I mean, I’m not thrilled about my start yet. Um, One thing that’s interesting though, and I’ll get back to my individual trades so far this month.

13:24
One thing that’s kind of interesting about December is that it’s never been the lowest return month of the year ever. So, the reason why that’s so, well, that alone is interesting, but let’s add some more, more information to this.

13:40
The worst month so far. In the market this year has been March. In March was down by 0.04%. OK, so if. Essentially, that’s flat too, just like that one SPXU trade I had.

13:56
That’s as flat as you can get, 0.04% down. That’s not even really a down month, but that is the worst return that the S&P has seen so far this year. So, If the market finishes in the red at all this month, it’s going to be the worst trading month of the year for the stock market.

14:19
But the thing is, is from a historical standpoint, remember, the stock market has been going on for a very, very, very long time before any of us were even born, is that December has never been the worst trading month of the year. Now, as I’m talking, you know, about the, you know, December and, and recording this podcast, the S&P is down about 1% on the year or on the month, I’m sorry.

14:36
So, if the month were to end today, and obviously it doesn’t, but if it were to end today, it would be by far the worst trading month of the year. So, if history holds up, we should see a rally somewhere close to where we’re trading at right now.

15:08
Um, I don’t tend to like, I don’t really want to bet against, you know, something that’s never happening, happening. So, uh, and the sell-off that we’ve seen so far in the month of December, the S&P is pretty much down every day so far this year.

15:23
And if today, today it’s up about 2.5 points, if that can hold up, then we’ll be the first update of the new of the young new trading month, but Um, we should be getting into a bottom somewhere here pretty soon because we’re already down 1%.

15:38
We don’t do that very often to begin with, and then December is probably one of the most bullish months of the year to be as well, so. There’s a lot to, uh, to look at there. December, it tends to be a bullish month.

15:56
It’s never been the, the worst month of the year in terms of returns. And right now, we’re down 1%, which puts it way below the, the worst month of the year 2017, um, And, and that would be March, which was down 0.04%. We’re down about 1% right now.

16:20
So, the market in order to Keep history and intact or to keep up with the trends of history needs to, to rally off of these lows here. So, but as we’ve seen this year, nothing’s ever a guarantee and just because it’s never happened before, doesn’t mean that it can’t happen.

16:39
So, um, I’m having a hard time wanting to get short on this market here because the sell-off that we’re seeing. Isn’t. Overly aggressive, there’s not a lot of panic selling.

17:04
It’s more of a drip, drip, drip, drip lower and it’s not really. causing fear among traders, it’s just, just a slow, sluggish decline.

17:37
And usually those tend to pop because there’s not really any news behind it. It’s just selling off, not because there’s people wanting to get out of their positions, but because people don’t necessarily are wanting to buy at this moment.

17:54
So, give it a little bit of a Reason or motivation and it will pop next week. You have the Fed, I believe, and they are expected to raise rates, so, um.

18:15
The Fed raising rates in previous times this year has not changed a thing in this market. So I, I don’t know if that’s really going to be a major game changer for the market or not, but Anyways, though, I mean, you’re gonna see a lot of low volume.

18:33
Trading going on throughout the remainder of this year and then you’re going to see that typical situation where a lot of people will sell the stocks that are down on the year and hold on to the stocks that they have likely have capital gains in.

18:52
So, your poor performing stocks tend to get beaten down a little bit in December and your high performing stocks, they will tend to hold up pretty well simply because of tax purposes and We may see even more of that with the GOP tax package, uh, that went through the House and Senate and soon to be signed by the president.

19:10
Um, coming into play for 2018. Um, I’m not actually sure if that’s retroactive for 2017 or not, but, uh, it’s something to keep an eye on and that it may, you may see that traditional effect in the markets be a little bit more exaggerated come come year end.

19:28
And then, of course, you have this Santa Claus rally, which is the last. Three days of the trading year, this is the textbook version of what the Santa Claus rally is. It can, it can start even before that and and and afterwards, but traditionally, it’s the last 3 trading days of the year and the 1st 2 trading days of the new year that is defined as being the Santa Claus rally. So, All right. So that’s, that’s gonna be it for today and uh my latest podcast. I hope you enjoyed it. I hope you’re hanging in there with this market. It’s not been an easy market to trade so far in December, but um if history is any indicator that should change around here in the near future. If you have any questions, please feel free to reach out and contact me. Thank you and God bless. Thanks for listening to this week’s podcast of Swing Trading with Ryan Mallory. I’d like to encourage you to join me in the SharePlanner trading block where I navigate the financial markets every day with traders from around the world. With your membership, you’ll get a 7-day trial, access to my trading room, and text and email alerts. So go ahead and sign up by going to www.shareplanner.com/trading-block. That’s www.shareplanner.com/trading-block. And follow me at SharePlanner on Twitter and on SharePlanner’s Facebook page where I provide unique market and trading ideas every day. If you have any questions, please feel free to email me, ryan@shareplanner.com.