Great Trades
Great stock trades based on fundamentals and technical analysis.Thursday, February 26, 2009
Took oil profits, lowering stops on leveraged shorts
With oil up even more, our trading model has sold out of the oil long. The leveraged ETF that we use, DXO, had moved up over 40% in a short period, and we had also sold half and reloaded lower to get extra returns. We'll look to re-enter on a pullback.
To lock in profits, our trading model is also lowering stops on the leveraged 20% S&P 500 short (held by speculative traders) to 760.
Open Positions: 70% short S&P 500, 25% short financials, speculative traders short another 30% financials and 20% S&P 500, short gold to hedge.
To lock in profits, our trading model is also lowering stops on the leveraged 20% S&P 500 short (held by speculative traders) to 760.
Open Positions: 70% short S&P 500, 25% short financials, speculative traders short another 30% financials and 20% S&P 500, short gold to hedge.
Added shorts, took more profits on oil, covered some gold
With another big run in oil, our trading model is taking partial profits on our oil position again to lock in big gains.
With the retest and failure to get through 780, our trading model is also adding shorts, again with a tight stop on a clear break through 780 to limit potential losses. Adding 20% more short S&P 500 (plus 10% additional for speculative traders) and 5% more short financials (plus 10% additional for speculative traders) to get to 95% short, and more so for speculative traders.
With the huge drop in gold, our model is also beginning to scale out of the short gold hedge.
Open Positions: 70% short S&P 500, 25% short financials, 2% long oil, speculative traders short another 30% financials and 20% S&P 500, short gold to hedge.
With the retest and failure to get through 780, our trading model is also adding shorts, again with a tight stop on a clear break through 780 to limit potential losses. Adding 20% more short S&P 500 (plus 10% additional for speculative traders) and 5% more short financials (plus 10% additional for speculative traders) to get to 95% short, and more so for speculative traders.
With the huge drop in gold, our model is also beginning to scale out of the short gold hedge.
Open Positions: 70% short S&P 500, 25% short financials, 2% long oil, speculative traders short another 30% financials and 20% S&P 500, short gold to hedge.
Wednesday, February 25, 2009
Added shorts on failure to get through 780 resistance
After a very nice rally, the S&P 500 stalled out at 780 resistance, so our trading model added shorts to get to 50% short the S&P 500 and 20% short financials (plus another 20% for speculative traders). Tight stop on a clear break through the 780 S&P 500 level.
Today's action was not good follow-through on yesterday's rally, and there are a number of indicators pointing to more downside action in the short term.
Open Positions: 50% short S&P 500, 20% short financials, 5% long oil, speculative traders short another 20% financials and 10% S&P 500, short gold to hedge.
Today's action was not good follow-through on yesterday's rally, and there are a number of indicators pointing to more downside action in the short term.
Open Positions: 50% short S&P 500, 20% short financials, 5% long oil, speculative traders short another 20% financials and 10% S&P 500, short gold to hedge.
Sold longs, now in mostly cash
With the market having reversed to a nice gain, and the S&P 500 at 780 resistance, our trading model has sold the remaining long positions and the leveraged oil position to get to mostly cash. Speculative traders can short the S&P 500 10% for a pullback.
Open Positions: 5% long oil, speculative traders short 10% S&P 500, short gold to hedge.
Open Positions: 5% long oil, speculative traders short 10% S&P 500, short gold to hedge.
Stop hit, rebought lower
Our stops hit at 765 S&P 500 this morning on half our long stock positions. With the S&P 500 dipping below 755, our model is re-adding those positions with a tight stop on a clear break of 750.
Open Positions: 85% long S&P 500, 5% long oil, 3% long HIG, speculative traders long another 5% oil via leveraged ETF's, long partial BAC, and short gold to hedge.
Open Positions: 85% long S&P 500, 5% long oil, 3% long HIG, speculative traders long another 5% oil via leveraged ETF's, long partial BAC, and short gold to hedge.
Tuesday, February 24, 2009
Took partial profits, holding most long
On today's very nice bounce-back rally, our trading model took partial profits on HIG in the mid-8's from the low 6's and on BAC in the mid-4's from around 3. Both are likely to continue higher, but we needed to take some off the table after both had 50% moves in 2 days. The model also took profits on half our oil position again on the nice rally and took profits on the extra leveraged S&P 500 long.
While the stocks and oil had a very strong day, gold dropped over 3%, making our gold short hedge very timely and effective.
On the remaining stock positions, we're putting in a stop on half at 765 to lock in profits and on the rest at a break of 750 on the S&P 500.
Open Positions: 85% long S&P 500, 5% long oil, 3% long HIG, speculative traders long another 5% oil via leveraged ETF's, long partial BAC, and short gold to hedge.
While the stocks and oil had a very strong day, gold dropped over 3%, making our gold short hedge very timely and effective.
On the remaining stock positions, we're putting in a stop on half at 765 to lock in profits and on the rest at a break of 750 on the S&P 500.
Open Positions: 85% long S&P 500, 5% long oil, 3% long HIG, speculative traders long another 5% oil via leveraged ETF's, long partial BAC, and short gold to hedge.
Monday, February 23, 2009
Adding long to get to 100% long
With the S&P 500 down about 8 points on the day, our trading model is adding 10% long the S&P 500 to get to 100% allocation long. Speculative traders can add another 20% long the S&P 500 to get to heavily leveraged long. We believe a bounce-back rally in the market is imminent.
Open Positions: 85% long S&P 500, 10% long oil, 5% long HIG, speculative traders long another 10% oil via leveraged ETF's, long another 20% S&P 500, long BAC, and short gold to hedge.
Open Positions: 85% long S&P 500, 10% long oil, 5% long HIG, speculative traders long another 10% oil via leveraged ETF's, long another 20% S&P 500, long BAC, and short gold to hedge.
Friday, February 20, 2009
BAC for speculative traders
Speculative traders may want to buy some BAC for a trade at around $3 or less, as it dropped down to $2.53 on fears of nationalization. CEO Ken Lewis came out with a release basically saying that nationalization was not going to happen to BAC. If the fears of nationalization subside, BAC could rise significantly.
Open Positions: 75% long S&P 500, 10% long oil, 5% long HIG, speculative traders long another 10% oil via leveraged ETF's, long BAC, and short gold to hedge.
Open Positions: 75% long S&P 500, 10% long oil, 5% long HIG, speculative traders long another 10% oil via leveraged ETF's, long BAC, and short gold to hedge.
Stopped and re-entered on stocks
760 on the S&P 500 broke, triggering our stops, but the ensuing selling looked like panic selling, at least in some areas, along with some positive divergences, so our trading model is back in the same positions at around S&P 500 755 with a stop at 750. It looks like a good bounce is very close.
Open Positions: 75% long S&P 500, 10% long oil, 5% long HIG, speculative traders long another 10% oil via leveraged ETF's and short gold to hedge.
Open Positions: 75% long S&P 500, 10% long oil, 5% long HIG, speculative traders long another 10% oil via leveraged ETF's and short gold to hedge.
Added HIG
With Hartford Group (HIG) down to the lower 6's, we've taken a 5% long position in this oversold and overshorted stock.
Open Positions: 75% long S&P 500, 10% long oil, 5% long HIG, speculative traders long another 10% oil via leveraged ETF's and short gold to hedge.
Open Positions: 75% long S&P 500, 10% long oil, 5% long HIG, speculative traders long another 10% oil via leveraged ETF's and short gold to hedge.
Back long S&P 500, hedging gold
Our trading model is buying today's big gap down, back to 75% long, stop at 760 S&P 500. Speculative traders can also short gold as a hedge against physical gold holdings and mining stock long-term positions, right near $1000/oz (over 98 on GLD).
Open Positions: 75% long S&P 500, 10% long oil, speculative traders long another 10% oil via leveraged ETF's and short gold to hedge.
Open Positions: 75% long S&P 500, 10% long oil, speculative traders long another 10% oil via leveraged ETF's and short gold to hedge.
Added back oil
With oil giving back a significant portion of yesterday's gain this morning in the premarket, our trading model has added back the 5% (10% for speculative traders) oil to get back to 10% (20% for speculative traders) long oil.
Open Positions: 10% long oil, speculative traders long another 10% oil via leveraged ETF's (DXO).
Open Positions: 10% long oil, speculative traders long another 10% oil via leveraged ETF's (DXO).
Thursday, February 19, 2009
In cash and partial oil
When the Dow broke to a new intraday low and the S&P 500 closed below our 780 stop level, our trading model moved to cash as planned, along with half our 10% oil position (20% for speculative traders) taken this morning near the low. While we took a relatively small loss on stocks, our oil position had a huge one-day move. If oil pulls back enough, we may re-add the half of our oil position we took profits on.
After 4 straight down days on the S&P 500, the market is now in an extremely short-term oversold condition. However, the market was also extremely oversold short-term in October in the middle of the seemingly endless sell-off, where the S&P 500 was down 8 straight days.
Given the downside momentum and lack of panic (as evidenced by the recent extremely low put/call ratio we pointed out last week ), the market could still go much lower, despite the short-term oversold readings. It's a dangerous environment for both longs and shorts, so our trading model remains in cash awaiting a good risk/reward entry, with tight stops limiting potential losses. There are a number of indicators pointing to a bounce starting tomorrow, so we may try another long entry if the set-up is right.
Open Positions: 5% long oil, speculative traders long another 5% oil via leveraged ETF's.
After 4 straight down days on the S&P 500, the market is now in an extremely short-term oversold condition. However, the market was also extremely oversold short-term in October in the middle of the seemingly endless sell-off, where the S&P 500 was down 8 straight days.
Given the downside momentum and lack of panic (as evidenced by the recent extremely low put/call ratio we pointed out last week ), the market could still go much lower, despite the short-term oversold readings. It's a dangerous environment for both longs and shorts, so our trading model remains in cash awaiting a good risk/reward entry, with tight stops limiting potential losses. There are a number of indicators pointing to a bounce starting tomorrow, so we may try another long entry if the set-up is right.
Open Positions: 5% long oil, speculative traders long another 5% oil via leveraged ETF's.
Took some oil profits, lowered stops
With the huge oil rally (DXO rising 19% from its low, which occured soon after our post this morning), our trading model took profits on half the oil long position. With the Dow intraday low of 7449 so close by, we've adjusted stops on the stock holdings to this key level.
Open Positions: 75% long S&P 500, 5% long oil, speculative traders long another 5% oil via leveraged ETF's.
Open Positions: 75% long S&P 500, 5% long oil, speculative traders long another 5% oil via leveraged ETF's.
Adding Long
With the Dow down after a gap up (filling the gap), our trading model has added 50% more long S&P 500 to get to 75% long. It also is adding 10% oil long (USL ETF, or leveraged DXO ETF for more speculative traders). We have several indicators pointing to a likely short-term bounce in the stock market. Stops at 780 S&P 500.
Open Positions: 75% long S&P 500, 10% long oil, speculative traders long another 10% oil via leveraged ETF's.
Open Positions: 75% long S&P 500, 10% long oil, speculative traders long another 10% oil via leveraged ETF's.
Wednesday, February 18, 2009
Out of financials because of risk
Our trading model came into today short financials, then covered and went long for an intraday bounce, but because of the risks of government intervention and uncertainty of valuation, the model will no longer hold financials overnight (including BAC). Financials have been great traders, but the risk of a government announcement significantly impacting a position is too high for anything other than an intraday trade.
Open Positions: 25% long S&P 500
Open Positions: 25% long S&P 500
Back Partially Long
With the market turning back negative, and the S&P 500 under 785, our trading model has re-entered the partial long position with a tight stop at 780 S&P 500, giving a good risk/reward entry. There are still some positive indicators on our intraday charts. If the Dow closes down, we will exit this position today.
Open Positions: 25% long S&P 500, 25% long financials.
Open Positions: 25% long S&P 500, 25% long financials.
Sold longs, now in cash
With the 135+ -point Dow rally and financials going from down 2.5% to up 1.5%, our trading model has moved to cash as the S&P 500 approached 800 resistance.
Our model will remain in cash until the S&P 500 breaks solidly through 800 resistance or gets oversold enough to be set up well for a rally. It could do so fairly soon, or there could be more severe selling ahead. At this point, we'll wait to see when we get the best risk/reward setup.
We will hold the remainder of our BAC trading position with a stop at 4.5, after having taken profits on a good portion of our shares on the rally.
Open Positions: None
Our model will remain in cash until the S&P 500 breaks solidly through 800 resistance or gets oversold enough to be set up well for a rally. It could do so fairly soon, or there could be more severe selling ahead. At this point, we'll wait to see when we get the best risk/reward setup.
We will hold the remainder of our BAC trading position with a stop at 4.5, after having taken profits on a good portion of our shares on the rally.
Open Positions: None
Adding Financials Long
With Financials down another 2.5% after being down 10% yesterday, our trading model is buying a 25% position in financials for at least a bounce.
BAC could be a good long trade from the mid-4's after dropping down from over 7 last week.
Open Positions: 25% long S&P 500, 25% long financials.
BAC could be a good long trade from the mid-4's after dropping down from over 7 last week.
Open Positions: 25% long S&P 500, 25% long financials.
Covered Shorts, Partial Long
With the market down about 1% more, to the 780 level on the S&P 500, our trading model has covered shorts and gone long 25% the S&P 500.
Open Positions: 25% long S&P 500
Open Positions: 25% long S&P 500
Tuesday, February 17, 2009
Reversed to short
With the break of key support at S&P 500 800, our trading model has reversed to 100% short, with stops at 810. For speculative traders, also short 40% financials.
Open Positions: 100% short S&P 500, speculative traders 40% short financials
Open Positions: 100% short S&P 500, speculative traders 40% short financials
Thursday, February 12, 2009
Added long financials
With the hold of 800 and the potential squeezing of financials stocks, our trading model has added 40% long financials to get to 100% long (140% long for speculative traders) with stops at 800 S&P 500.
Open Positions: 30% long S&P 500, 30% long Nasdaq 100, 40% long financials, speculative traders another 40% long financials
Open Positions: 30% long S&P 500, 30% long Nasdaq 100, 40% long financials, speculative traders another 40% long financials
Lowered stop to 800 S&P 500
With some positive divergences on the intraday charts, we're holding our long positions and lowering stops to 800 on the S&P 500.
Open Positions: 30% long S&P 500, 30% long Nasdaq 100, speculative traders 40% long financials
Open Positions: 30% long S&P 500, 30% long Nasdaq 100, speculative traders 40% long financials
Added long on successful retest
On the successful retest of the day's low, our trading model has added 30% more long to get to 60% long, with a stop at today's low of S&P 500 811. Speculative traders can go long financials 40% to get to 100% long, with a stop at today's low.
Open Positions: 30% long S&P 500, 30% long Nasdaq 100, speculative traders 40% long financials
Open Positions: 30% long S&P 500, 30% long Nasdaq 100, speculative traders 40% long financials
Stop hit, rebought long lower
The S&P 500 hit our stop level on our partial long position at 820. With the Dow down over 200 points, our trading model has re-entered long, 15% in the S&P 500 and 15% in the Nasdaq 100 for at least a short-term bounce. Stop at 800 S&P 500.
Open Positions: 15% S&P 500, 15% Nasdaq 100
Open Positions: 15% S&P 500, 15% Nasdaq 100
Wednesday, February 11, 2009
Covered Short, Partial Long
With the Dow going back negative, filling the morning gap, our trading model has covered shorts and rebought partial long, with a stop at 820 on the S&P 500.
Open Positions: 25% long S&P 500
Open Positions: 25% long S&P 500
Sold longs, back to partial short
With the Dow up over 80 points early today and the S&P 500 back near 840 resistance, our trading model has sold longs and reversed to short, 25% in the S&P 500 with a stop at 840.
Open Positions: 25% short S&P 500
Open Positions: 25% short S&P 500
Tuesday, February 10, 2009
Covered Shorts, Partial Long
As we expected, the market pulled back sharply today, with all the major indices closing down 4-5%, led by financials closing down about 10%.
With an extremely high TRIN (Arms index) reading at the close, and other indicators oversold very short term, near S&P 500 key support, our trading model is looking for at least a short-term bounce early tomorrow.
From 100% short (120% short for speculative traders), our trading model has moved to 25% long (S&P 500) for a short-term bounce, though it may reverse back to short intraday.
Open Positions: 25% long S&P 500
With an extremely high TRIN (Arms index) reading at the close, and other indicators oversold very short term, near S&P 500 key support, our trading model is looking for at least a short-term bounce early tomorrow.
From 100% short (120% short for speculative traders), our trading model has moved to 25% long (S&P 500) for a short-term bounce, though it may reverse back to short intraday.
Open Positions: 25% long S&P 500
Monday, February 09, 2009
Reshorting
At the open, our trading model is reshorting the market with a stop just above the S&P 500's January 28 high (SPY 88). Same positions as last week. For speculative traders, also short 20% financials.
Open Positions: 15% short S&P 500, 35% short Russell 2000, 15% short Dow Jones Industrial Average, 35% short Nasdaq 100. 20% short financials for speculative traders.
Open Positions: 15% short S&P 500, 35% short Russell 2000, 15% short Dow Jones Industrial Average, 35% short Nasdaq 100. 20% short financials for speculative traders.
Sunday, February 08, 2009
Likely reshorting for pullback soon
Our trading model had anticipated a sharp market pullback last week after multiple extremely low CBOE put/call ratio readings. As expected, the market did get a sharp pullback from our January 28 shift from long to short -- the S&P 500 dropped from 877.86 that day to as low as 812.87 last week.
However, late last week, instead of selling off further on bad economic news, it rallied from Thursday's gap down into Friday's close in anticipation of Tim Geitner's bank rescue plan and the new government stimulus package. Shorts covered ahead of the weekend in case of big government intervention news, pushing the market indices through some key resistance, which triggered stops on shorts (including ours) and brought in more buying.
Below is a chart of the CBOE put/call ratio. There were multiple extremely low readings (below .80) in Late October, late November, and late December:
However, late last week, instead of selling off further on bad economic news, it rallied from Thursday's gap down into Friday's close in anticipation of Tim Geitner's bank rescue plan and the new government stimulus package. Shorts covered ahead of the weekend in case of big government intervention news, pushing the market indices through some key resistance, which triggered stops on shorts (including ours) and brought in more buying.
Below is a chart of the CBOE put/call ratio. There were multiple extremely low readings (below .80) in Late October, late November, and late December:
Each series of low readings was followed by sharp selloffs in the S&P 500 early the following month, 26% from November 4-21, 9% on December 1, and 15% from January 6-21. With recent put/call readings similar to, or even more extreme, than those of late December/early January, we believe there's a strong chance of another sharp selloff in February. The timing of this indicator isn't very precise, but an increasing put/call ratio will provide confirmation of this signal.
While the S&P 500 remains below the January 28 high, our trading model is still anticipating a market pullback very soon, perhaps after the stimulus/Geitner news comes out (a sell the news reaction after the rumor was bought late last week). With news on the government intervention expected early this week, our trading model will likely reshort on Monday, or possibly Tuesday. Look for intraday updates in the next couple of days.
For now, the model will use a stop on short positions at the January 28 high of 877.86, or will not reenter short positions if the S&P 500 breaks that resistance first. There are also some positive market indicators, so there's a chance the next market pullback will come from well above this level.
With the recent whipsaws in the market, influenced by government interventions and rumors of such, we plan to post intraday updates at times, along with stop levels in advance.
Open Positions: None
Friday, February 06, 2009
Stop hit on shorts, Adjusting model
With the breakout through 850 SPX resistance, the new Tim Geitner bank rescue plan, and the positive reaction to the negative employment report, our trading model stopped out of short positions, entered some long intraday, but is now in cash. The short-term weakness the model was looking for came yesterday morning, but was bought up hard when support held. There should be more significant weakness soon, but after the aforementioned bullish factors have run their course.
We will be adjusting the trading model, which has been too early in calling for reversals. As we said when we introduced the model last month, it's a work in progress that we continue to fine tune.
One indicator in particular that goes into the model, the CBOE put/call ratio, has shown extremely low readings, which has preceded sizable selloffs near the beginning of each of the last 3 months (each time the model went short too early, but still profited handsomely from the ensuing selloffs). This indicator has actually proven to be a bullish indicator for the very short term, followed by sharp selling. With the model's contrarian interpretion of the extremely low put/call ratios as negative for the market, it went short too early, during the bullish period.
Today, the CBOE put/call ratio again had an extremely low reading at .71, the lowest reading over the past year, following several very low readings in recent trading sessions. These low readings point to a sharp pullback coming, but we're adjusting the trading model to wait for a breakout of the ratio's moving average downtrend before going fully short.
Similarly, on some other indicators, the model will wait for confirmation before doing a full reversal. These changes should improve the timeliness of the trading model. We will continue to fine tune the trading model as needed.
Open Positions: None
We will be adjusting the trading model, which has been too early in calling for reversals. As we said when we introduced the model last month, it's a work in progress that we continue to fine tune.
One indicator in particular that goes into the model, the CBOE put/call ratio, has shown extremely low readings, which has preceded sizable selloffs near the beginning of each of the last 3 months (each time the model went short too early, but still profited handsomely from the ensuing selloffs). This indicator has actually proven to be a bullish indicator for the very short term, followed by sharp selling. With the model's contrarian interpretion of the extremely low put/call ratios as negative for the market, it went short too early, during the bullish period.
Today, the CBOE put/call ratio again had an extremely low reading at .71, the lowest reading over the past year, following several very low readings in recent trading sessions. These low readings point to a sharp pullback coming, but we're adjusting the trading model to wait for a breakout of the ratio's moving average downtrend before going fully short.
Similarly, on some other indicators, the model will wait for confirmation before doing a full reversal. These changes should improve the timeliness of the trading model. We will continue to fine tune the trading model as needed.
Open Positions: None
Wednesday, February 04, 2009
Adding More Shorts
With the Nasdaq still up, our trading model is adding 20% Nasdaq 100 and 20% Russell 2000 short to get to 100% short. Today's failure to break through key resistance leaves the market susceptible to significant weakness in the near term.
Open Positions: 15% short S&P 500, 35% short Russell 2000, 15% short Dow Jones Industrial Average, 35% short Nasdaq 100
Open Positions: 15% short S&P 500, 35% short Russell 2000, 15% short Dow Jones Industrial Average, 35% short Nasdaq 100
Tuesday, February 03, 2009
Adding Shorts
We got the big intraday bounce we were looking for, so we're selling our longs and getting back short, plus adding more short. With the 200+ point intraday Dow bounce, our trading model is adding 15% short on the Dow Jones Industrial Average (DIA ETF) and 15% short on the Nasdaq 100 (QQQQ ETF) to get to 60% short overall.
Open Positions: 15% short S&P 500, 15% short Russell 2000, 15% short Dow Jones Industrial Average, 15% short Nasdaq 100
Open Positions: 15% short S&P 500, 15% short Russell 2000, 15% short Dow Jones Industrial Average, 15% short Nasdaq 100
Reversed to long intraday
For those watching intraday, with the market down this morning (but not breaking down hard), our trading model has covered shorts and reversed to long for the short term. Officially it's still partially short on a closing basis, and will likely add to shorts after an anticipated short-term bounce.
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