Year to Date Portfolio Performance – April 2015

logo-rtixThe last five days of April damaged my gains in several positions, some I’m still holding within trends and others I sold or stopped out of. Application of short-term swing trading would have preserved some profits, however my desire to utilize longer-term trend following timeframes for select trades ruled out in the end. I opted to take heat on some positions in order to hold them for hopefully larger moves down the road. I’m finding that in this market environment, choosing the correct strategy for any particular trade is as increasingly important as choosing the correct stock to employ it on.

April Net P/L:  -6.0%

Year to Date Net P/L:  1.5%

Notable Wins

  • RTI Surgical (RTIX) 16-day trade for +20.5%. A very good entry was made on a late March 61.8% retracement level preceding a straight line up swing trade.
  • Cheetah Mobile (CMCM) 8-day trade for +19.1%. I snatched this gain way too early on the first day of a four-day surge higher and regrettably left a lot behind.
  • C&J Energy Services (CJES) +12.8% on a 62-day trade. I had been through enough ups and downs to decide to take the profit after April 14’s doji candle printed.
  • Advanced Semiconductor (ASX) +8.4% on a 13-day trade. This was a Fibonacci calculated swing trade with two 1/2 position buys made near 50% and 61.8% retracements of the 2015 uptrend, then all sold on April 27 at the 61.8% retracement of the March-April downtrend. While it proved I could have waited for the 61.8% level to buy a full position, this was still my best utilization of fib levels in that my 7.00 basis was sold at 7.59 before price returned to 7.01.

Notable Losses

  • Array Biopharma (ARRY) -12.5%, 54-day trade. I bought what looked to be a range break higher which failed, and then I held far too long until it broke down at the end of April. That is why I prefer to buy support rather than resistance.
  • PMC-Sierra (PMCS) -7.6%, 69-day trade. Dead money going sideways before breaking down and stopping out in late April.

Despite the down month, I avoided changing up strategies in mid-trade on current positions I’m holding in response to negative market action, something I’ve been successfully working on. My biggest mistakes were taking profits too early in CMCM and CJES, however it’s often difficult to let some positions run without snatching gains, particularly in volatile stocks like those, when buy and sell points were determined with a high degree of accuracy in other positions such as RTIX and ASX.

Points to ponder.

Current Positions

Long – AAPL   AXAS   BCOR   BERY   BXC   CYTX   HNNA   HW   JUNO   LPI   PLNR   QRVO   RICE   RLGT   RUBI   XENE

Short – None

Getting Slippery Near the 200 DMA

Here are a selection of twelve charts in the Energy Sector with price positioned at or near the 200-day moving average. If the 200 DMA is your thing, watch for these crossovers and trade accordingly. Note today’s move in RPC Inc. (RES) on triple average daily volume – just what you want to see.

Abraxas Petroleum (AXAS) Daily Chart - April 29, 2015

Abraxas Petroleum (AXAS) Daily Chart – April 29, 2015

Continental Resources (CLR) Daily Chart - April 29, 2015

Continental Resources (CLR) Daily Chart – April 29, 2015

Canadian Natural Resources (CNQ) Daily Chart - April 29, 2015

Canadian Natural Resources (CNQ) Daily Chart – April 29, 2015

Green Plains Renewable Energy (GPRE) Daily Chart - April 29, 2015

Green Plains Renewable Energy (GPRE) Daily Chart – April 29, 2015

Helmerich & Payne (HP) Daily Chart - April 29, 2015

Helmerich & Payne (HP) Daily Chart – April 29, 2015

Laredo Petroleum (LPI) Daily Chart - April 29, 2015

Laredo Petroleum (LPI) Daily Chart – April 29, 2015

Marathon Oil (MRO) Daily Chart - April 29, 2015

Marathon Oil (MRO) Daily Chart – April 29, 2015

Parsley Energy (PE) Daily Chart - April 29, 2015

Parsley Energy (PE) Daily Chart – April 29, 2015

Pioneer Natural Resources (PXD) Daily Chart - April 29, 2015

Pioneer Natural Resources (PXD) Daily Chart – April 29, 2015

RPC Inc. (RES) Daily Chart - April 29, 2015

RPC Inc. (RES) Daily Chart – April 29, 2015

Range Resources (RRC) Daily Chart - April 29, 2015

Range Resources (RRC) Daily Chart – April 29, 2015

Suncor Energy (SU) Daily Chart - April 29, 2015

Suncor Energy (SU) Daily Chart – April 29, 2015

All 61.8% or Nothing

I think I gravitate to Fibonacci levels because it satisfies the dip buyer in me while at the same time defining technical levels to evaluate the risk and reward boundaries of putting on trades. Who wouldn’t want to be able to determine the perfect buy point on a deep pull back before the next leg higher?

In some instances of finding chart setups of stocks I wanted to be in I’ve seen reversals from 50% retracements that never make it to 61.8%. Because of that, I adopted a practice of buying a half position in a stock when it seemed to me to have found support at 50%, then buying the second half if it did continue to retrace to 61.8%. If that happened, I’d be left with a compromise price between the two levels with an exit typically being a failure for price to hold the 61.8% level. If 50% is where price reverses higher, then the worst case scenario there is that I earn a profit on the smaller half position I’m holding.

That pre-planned strategy has been the one and only exception I use to add to a losing position. Knowing the price points in advance and sizing my position accordingly manages the risk.

I’ve since changed my philosophy on the strategy of buying half at 50% and half lower at 61.8%. I’m finding too many occurrences of the 50% level failing to hold and putting the 61.8% level in play. It really boils down to there simply being too many setups available to trade anything less than my optimal target of a 61.8% retracement. If a stock I’m watching for an entry fails to hit the 61.8% level then I simply forget about it and move on to others. That keeps me out of the adding to a losing position scenario as well as more sharply defining risk and reward when putting on trades.

Voodoo Charts – Past, Present and Future

Charts which stand out from others that conform particularly well to patterns and levels I like to call “voodoo charts”…..you know, that technical analysis voodoo stuff fundamentalists frown upon. If you like to think of them as squiggly lines, then by all means stop reading here. If you think technical analysis predicts the future, again, please stop reading here. Technical analysis uses past data to create projections, not predictions, of probable outcomes. Sometimes it works, sometimes it doesn’t, but when it does work, in some instances technical analysis can be eerily accurate. Those are voodoo charts to me.

CyberArk (CYBR) Daily Chart - April 17, 2014

CyberArk (CYBR) Daily Chart – April 17, 2014

Here’s a prime voodoo chart – CyberArk (CYBR) meets Fibonacci. CYBR’s quick +113% rip in February preceded a pullback, but to where? Looking at this in late February, where would you think a good place would be to buy this after it doubled so quickly? The 38.2% level provided a bounce, and while the 50% level didn’t really figure in, 61.8% surely did. The March 16 buy point which could have been determined as early as February 23 proved to be greater than 99% accurate. If your fortune-teller told you to buy near the 61.8% retracement then you’re holding a 27% gain today. If you don’t have a fortune-teller you could also have just used Fibonacci levels.

CYBR’s buy point is old news though. Advanced Semiconductor (ASX) is a voodoo chart that is progressing now which I currently have a position in.

Advanced Semiconductor (ASX) Daily Chart - April 17, 2015

Advanced Semiconductor (ASX) Daily Chart – April 17, 2015

The shooting star candle of March 6 sent a blaring sell signal, setting the parameters for the Fibonacci levels at 5.91 for lower and 8.12 for upper. Afterward, there was a bounce at the 38.2% level, support for a while at the 50% level, then finally a dip down to the 61.8% level on April 16 which painted a beautiful hammer candle on 2.5x average volume. Seeing ASX withstand Friday’s sell off closing down just .29% was encouraging. Despite conforming to the 61.8% level, ASX does have a habit of dropping down to the 200 DMA, currently at 6.46, therefore I’m accounting for that in my position size in advance. The 78.6% fib level is 6.38 – a close under that knocks me out of this trade.

If I think a stock’s price is establishing support at the 50% level then I’ll sometimes buy a 1/2 position there, then add the other half if it does end up retracing to the 61.8% level. In that case, I end up with a full position calculated to exit on a failure to hold the 61.8% level. I did this with ASX buying a 1/2 position at each level, then I was able to reduce the size Friday at break even. I now have a position size to allow me to add if price drops to the 6.46 – 6.38 range if I choose to.

Finally, here are some charts I’m looking at for future buy points if they reach levels I’m looking for.

Ambarella (AMBA) Daily Chart - April 17, 2015

Ambarella (AMBA) Daily Chart – April 17, 2015

 

Crown Media Holdings (CRWN) Daily Chart - April 17, 2015

Crown Media Holdings (CRWN) Daily Chart – April 17, 2015

 

1-800-FLOWERS.COM (FLWS) Daily Chart - April 17, 2015

1-800-FLOWERS.COM (FLWS) Daily Chart – April 17, 2015

 

Spark Therapeutics (ONCE) Daily Chart - April 17, 2015

Spark Therapeutics (ONCE) Daily Chart – April 17, 2015

 

Standard Pacific (SPF) Daily Chart - April 17, 2015

Standard Pacific (SPF) Daily Chart – April 17, 2015

 

Silicon Precision Industries (SPIL) Daily Chart - April 17, 2015

Silicon Precision Industries (SPIL) Daily Chart – April 17, 2015

Good luck trading this week!

Symmetry in Qorvo

The reason why I study technical analysis is to try to determine what levels to look at for potential buys, sells, targets and stops. It doesn’t always work, but when it does the results can sometimes be uncanny. I’d say today’s trading in Qorvo (QRVO) demonstrated that.

Qorvo (QRVO) 2-Hour Chart - April 14, 2015

Qorvo (QRVO) 2-Hour Chart – April 14, 2015

QRVO’s previous 78.05 to 63.17 high / low retracement from January 28 to February 14 measured -19.06%. From March 24’s 85.63 high, today’s 69.30 low measured -19.07%, matching to 1/100 of one percent before inching up a bit toward the close. I’d venture to describe the accuracy of that symmetry as uncanny.

Of course, it only counts if it holds. Since the 61.8% level has already failed, a close under today’s low would be a sell signal for me.

No Five Me, Bro!

After stalking Qorvo (QRVO) for weeks and waiting patiently to take a trade I had plotted out, today I bought it precisely when and where I wanted it, and it ended up working out beautifully for me. By the time the closing bell rang, the trade worked out +4% in my favor. High five!

No, no five. The prominent thought on my mind afterward was that I was not as excited about my successful buy as I used to be. Buying is really just the first step in the process of trade management. Whether it works or not, whatever I do with a trade after I hit the buy button is all that matters. Success can multiply or disappear as quickly as it comes, and when that happens I have to be prepared to know how to react in any situation that presents itself.

Focus needs to be on the business of a trade, not the exhilaration of success or of being right. My profit can be gone overnight with no fault of my own. I’m only on the right side of a trade after a profit has been booked, and that’s ultimately the success I work to achieve.

High five me then, bro.

Year to Date Portfolio Performance – March 2015

logo-soncA measure of hard work was undone by one trade this month, and it took another measure of work to repair most of the damage caused by it. Stock selection played a part, however my failure to properly manage the trade due to being distracted at a critical moment while busy at work was primarily responsible for the depth of the loss. In this instance, the only thing I had going for me was position sizing. 

March Net P/L:  -2.3% 

Year to Date Net P/L:  +8.1%

Notable Wins

  • Sonic (SONC) 33-day trade booked for +10.1%. I took advantage of a pre-market pop two days ahead of their earnings report and sold at 35.35. That proved to be premature as the stock continued to run into earnings after I sold, peaking at 36.73, however I’m thankful to have avoided to sell off that followed.
  • Solazyme (SZYM) +13% on a 5-day trade. Stopped out after tightening up my risk management, and believe me when I say it isn’t easy to use the term “risk management” when referencing a position in a secular downtrending stock like this one. I took the quick hit on a purely technical volume pattern trade and fortunately escaped with a win.
  • Juno Therapeutics (JUNO) intraday trade for +2.8%. Snatching pennies to some, but this was a successful example of a planned intraday trade. 2.8% on a sizable position for a few hours worth of work is notable in my book.

Notable Losses

  • The only loss worthy of special mention is Lentou International (LAS). Another volume pattern trade, I bought the 50% retracement of the March 5 advance at .64 sized for a stop under the recent low of .52, or 20%. Over the next two days price dropped to a low of .52, setting up for March 11. I was not overly concerned since down volume was comparatively less than up volume during this decline. On the 11th, without a hard stop in place, price plunged to a low of .20 on chatter of impending lawsuits and store closures while I was distracted at work. When I finally noticed what was already in progress, I managed to exit the position at .34, resulting in a 5-day trade loss of 47%. While my position size was relatively small, the end result of more than doubling my acceptable loss amount did some damage. I do not want to see ridiculous percentage losses like this on my trade log no matter how small the position is.

Upon writing this entry LAS has since recovered to a high of .78. While I have no crystal ball which would have allowed me to foresee that move I do at least have a gold star for disclosure. Maybe it’s a case of being in the right place at the wrong time. Had I bought the deep dive to .20 and nearly quadrupled my money I’d have looked a lot more brilliant than I do eating a 47% loss.

There are better ways to trade speculative stocks. In retrospect, I see obvious steps I should have taken which would have gotten me out of LAS soon enough to have avoided the bulk of my problem with it. I’ve traded spec stocks long enough to understand they require a much higher level of attention to monitor volatility and sudden moves, therefore I should have controlled risk better than I did or avoided it entirely knowing I would not be able to give it adequate attention while at work. That goes for SZYM too.

Based on reviewing some recent spec trades, I see where the employment of certain rules would have resulted in better gains on wins and better exits on losses. I’m not ready to throw in the towel on spec trades but I am ready to do additional work to determine and define guidelines to net better outcomes.

In the meantime, higher quality stocks continue to carry the weight of my portfolio despite the fact that my two highest percentage gains are spec stocks – CYTX and RLGT.

Trading consistent performance of best of breed stocks is proving to be more than a match for risking the pitfalls of high risk speculative stocks.

Current Positions

Long – AAPL   APRI   ARRY   CJES   CMCM   CYTX   HAWK   IPHI   PLNR   PMCS   RLGT   RTIX   RUBI

Short – None

We’re All a Genius or Idiot to Someone

Could you be the world’s biggest idiot trading your garbage stock going to zero or are you the world’s biggest genius trading your best under-the-radar stock that’s destined to take off like a rocket? Well, I guess it all depends on your time frame. I gave this some thought this week as I watched social media bantering back and forth over a selection of stocks I’ve been watching. The noise never seems to end.

The following are a selection of charts of one stock with the name of the stock whited out. Play along if you will, and see if trading this would make you a genius or an idiot.

r1

Above we have a daily chart showing our speculative stock in question over 21 heading into a descending triangle where it’s almost cut in half, and then comes the big dump down to the 6 – 8 range followed by another decline into the 3’s, back up over 5, then ending at 3 flat. If you were holding this all the way down you might feel like the biggest idiot around. If you were thinking of buying a bargain would you pick it up at 6 then ride it down to 3? Would you add to it on the way down? Would you buy it way on the cheap at 3 or is this turkey going to zero?

r2

Here’s the next chart, this time switching from the daily to the weekly view. From where we left off, if you bottom fished it at 3 and held it to 24 for an 8-bagger – congratulations! You’re a genius! Only if you sold it there though, because from there the elevator went back down to 6.50. You didn’t hold it, did you, idiot?

r3

The next chart along the progression, another weekly but more extended look. If you’re holding this at 24 waiting to get your money back, just look at how long price fluctuated between 5 and 13. You idiot! But wait – redemption comes at the end of this chart in the form of a moonshot to 57! Look at that! The whole world thought you were an idiot when all along you were patiently waiting to double your money. And for those of you still holding from 3 you’re like friggin’ Einstein with your near 100-bagger! You sold at the top though, right? Don’t tell me you rode it down to 17 after all that? And you holding a double from 24 – you’re not sitting on a loss now at 17, are you?

Idiots. All of you.

r4

The next chart, now a monthly view. That stupendous 57 peak ended up crushed to 15, then a whole bunch of erratic volatility up and down eventually leading to sub-5’s again. Take an overview of this chart and see how many times this stock alternated between being cut in half or more to doubling, tripling or more. This is fertile ground for swing traders to amass fortunes along the way, thereby making them the true geniuses of trading this chart. The guy who bought this at the start at 21 who lost most of that, won it back, lost it again, nearly tripled his money, then lost it all again, well, we all know he’s the biggest idiot of all. Same as the bottom picker at 3 who lost 90% of his near 100-bagger and is still holding under 5. A true idiot.

And now, for the final chart.

r5

The example used to illustrate these charts is Regeneron (REGN) from mid-1993 to present. And look! This particular timeframe has ultimately turned all of you buy and hold “idiots”, everyone who has suffered through the ups and downs, into geniuses up here in the lofty 400’s.

So, if you bought it at 3 and you’re holding at +400, does that make you a genius? You’d be hard pressed to convince me that you’re a genius if you held from 57 in 2000 down to 4.61 five years later. Then again, you’d have a valid argument by simply pointing at today’s 429 price.

All stock stories certainly don’t end like this where everyone is rescued from harm’s way. My point is that you should keep your objectives and timeframes in mind when trading any stock, tune out the noise from anyone (including yourself) who thinks you’re a genius or an idiot, and follow your own plan. Imagine all the gloating arrogance at all of the highs and the painful bashing at the lows. Would any of that noise cause you to buy or hold on to the highs or sell or hang on to lows? Tune it all out, follow price action, and trade your plan – whatever it is.

Flowers.com Trade Strategy

1-800-FLOWERS.COM Daily Plot Chart - March 4, 2015

1-800-FLOWERS.COM Daily Plot Chart – March 4, 2015

I’m not one to step in front of a freight train, and I am bullish on 1-800-FLOWERS.COM (FLWS), however the risk / reward setup on a short-term short trade is worth a look here.

FLWS has gained +85% in the past five weeks on enormous volume with scarcely a rest along the way. It’s 13.6% above the 20 SMA and 28.3% above the 50 SMA. Today’s candle caught my eye along with some selling into the close.

A short entry under March 3’s low of 2.48 with a stop above the recent 13.08 high risks just under 5% which isn’t bad from these elevated levels. FLWS is also close to a key price level – the October 2007 high of 13.42 which preceded a 93% decline from there through March 2009 where it bottomed at .85 cents. A buy stop above 13.42 from today’s close risks 6.7%.

FLWS is a tremendous growth stock though, sporting an IBD rating of 97 so I wouldn’t hesitate to cover a short position at the onset of a new high, particularly 13.42.

Year to Date Portfolio Performance – February 2015

logo-cytoritextUnlike my barely positive January, February proved to be a far better month. I can attribute that to better stock selections, patience on entries, management of position size, and cutting losses more quickly. I also adjusted to direct my attention at taking base hits on shorter term swing trades in order to book profits before they could be snatched away, particularly if a trade turned out to be a quick hit. Freeing up capital to avoid lost opportunity cost elsewhere made sense in some instances. I also noticed my trade execution seemed more systematic an unemotional. The combination of all of those elements worked.

February Net P/L:  +9.96%

Year to Date Net P/L:  +10.64%

Notable Wins

  • My star trades of February involve Cytori Therapeutics (CYTX). I suspected the catalysts were in place for a strong move and my patience was amply rewarded. I sold 1/2 of my position on a 76-day trade for +42%, then two days later sold 1/3 of my remaining shares for +125%. Ironically, the profit earned on each of those trades was nearly identical to the penny which is a reflection on my position sizing. I still have a nice core position playing with the house’s money.
  • Xenon Pharmaceuticals (XENE) 15-day trade for +25.6%. I took my entry at 14.25 referencing the 61.8% Fibonacci level on the daily chart which went green from there. I targeted 18 for potential resistance and sold just short of that, and in doing so I missed some more of the move higher. I was satisfied though since XENE is a little difficult to trade due to volatility, and I’ve seen the bid / ask spread as wide as one dollar. Sheesh.
  • 13-day trade in First Solar (FSLR) 47.88 to 57 for +16.9%. I planned to sell prior to earnings, so the YeildCo news bump a day ahead of time was a gift.
  • Fannie Mae (FNMA) 7-day trade for +12%. Gave up a lot before stopping out.
  • Vericel (VCEL) 6-day trade for +11.7%. Another short-term swing base hit.
  • Control4 (CTRL) 21-day trade for +7.8%. Selling before the earnings debacle prevented this from being placed in the “Notable Losses” category.

Notable Losses

  • Civeo (CVEO) 10-day short position stopped for -10.2%. My stop saved me from much worse here.
  • I gave up on my Leju Holdings (LEJU) long position just yesterday for a -9.5% loss. Under 9.55 was it for me.
  • Dorian (LPG) 6-day short position went against me for an -8% loss before I exited.
  • Actuant (ATU) 17-day short position exited for a -6.7% loss.

The majority of my shorts just haven’t been working for me; not surprising in a bull market, but there’s more to it than just that. I’m glad to be largely out until I figure out a better way.

Notice the overall theme though? Bigger winners and smaller losers works like magic. Monitoring my progress with a greater emphasis on tracking monthly performance in relation to annual performance is keeping me better tuned in to trade management which is translating to greater success.

Many times during February as I booked profits and cut losses I recognized the motivations behind my actions were based on advice I’ve learned from successful, experienced traders time and time again. I had some real “I get it” moments this month that were nice confidence boosters. More pieces of the puzzle are coming together. This was a great month of success in many aspects to build upon going forward.

Current Positions

Long – AAPL  BCLI  CJES  CYTX  ELMD  GFI  IPHI  MNDO  MUX  PLNR  PMCS  RLGT  SONC  VIXY

Short – FXI