If the Market has Bottomed

[THS2011]

14 hours ago, DarterBlue said:

I can relate. I have had a few situations like that go against me over the years. It's part of the market game. If I remember correctly, you are young. So if you are really a buy and holder, you should do fine.

My only advice, if you are a buy and holder, is that when you get into your forties, you should begin to reduce your stocks relative to your other investments. 

Yes I am. I'm not worried though. I'll be holding onto my stocks for a while. Loving the dividends. BP dividend is easy $$

[HSFBfan]

The fed finally leaves the interest rates alone. Dow up 390

[ohio]

23 hours ago, DarterBlue said:

I can relate. I have had a few situations like that go against me over the years. It's part of the market game. If I remember correctly, you are young. So if you are really a buy and holder, you should do fine.

My only advice, if you are a buy and holder, is that when you get into your forties, you should begin to reduce your stocks relative to your other investments. 

Hey Darter.

I know you are leaving the site temporarily.  Are you still gonna trade or are you taking a hiatus from pretty much everything till July?

[DarterBlue]

1 hour ago, ohio said:

Hey Darter.

I know you are leaving the site temporarily.  Are you still gonna trade or are you taking a hiatus from pretty much everything till July?

I still plan on trading if I like the market's action. When you feel you are in-sync with the market you should never abandon it, for good money can be made. 

[DarterBlue]

The market closed the month in bullish fashion as the major indices except the DOW were higher today. To add to the bullishness, volume was significantly higher and the DOW closed close to day highs and barely down on the day. On a personal note, I had my best day in a fairly long stretch up $5,027.34 or 1.03%. All, the positions were higher and CRM and TEAM both cleared technical hurdles. With the good day, I have closed out the first month of the year up approximately $2,200 which is the worst underperformance I have had when I had the market’s direction right since the mid 1990s, as the major averages had their best January in decades.

The primarily culprit has been the MRK calls which have been my bane. They may get resolved one way or the other tomorrow, as MRK reports before the bell and any exaggerated positive or negative movement in the stock in response to the earnings will have a big effect on this position which may determine whether I keep it or exit this trade.

Back to the market’s action which has been very strong. Even though I feel that the foundation of its strength is weak and is overly dependent on the Federal Reserve, at the end of the day, I am a trend follower and for the month of January, the trend has been decidedly up. At the closing bell today, the indices ranged from a small, .06% loss on the DOW to a solid, 1.43% gain in the NASDAQ 100. Advancing stocks led by margins of 21-9 on the NYSE and 20-11 on the NASDAQ. For the first time since early October, new 52 week highs surpassed the 200 mark (209), while new lows were only 34. If one ever needed evidence of the FED’s influence on stock prices, that in a nutshell sums it up.

Tomorrow, I may have a big decision to make on the MRK calls. I may also make a decision as to whether I expand my long exposure. If I do, at this stage I am leaning towards LEAP Call Options on the NASDAQ 100 and S&P 400 MID Cap index. In a final public post on the market (at least till summer) Friday evening or Saturday, I will summarize my action, as well as my performance since I resumed trading at the end of January 2018.

[DarterBlue]

The above represents my performance relative to risk assumed during 2018. In truth, it should have been for 11 months as I was in cash for all but the last day of January. The statistically able can see from the green rectangle, that I clearly destroyed the market by a wide margin. If January 2018 was excluded, the margin is even wider as that was the best month for the market in 2018 while I was flat. In that sense one reason for inserting this was to refute my detractors. However, the more important reason was to demonstrate that beating the market can be done with hard work, a willingness and ability to learn, self discipline and risk control. 

So, far 2019 has not been nearly as kind as I lag the indices which are up from over 6% to over 11% year to date. Over this period, I am up a meager 1.2%. However, I am confident that by year's end I will be ahead of the indices, as I have the experience and confidence in what I do to realize this. Below is my assessment of where things stand as of today's close.

The averages closed today more or less where it left off Thursday, which marked the end of the years’ first month. While the averages closed mixed, the damage was limited to the NASDAQ indices, and those, largely fell because the market did not care for Amazon’s conference call that followed the release of its quarterly results. Without Amazon’s sin, in all likelihood, all indexes would have been up on the day. At today’s close, stocks ranged from a .45% loss on the NASDAQ 100 (largely due to AMAZON) to a gain of .33% on the S&P MID Cap index. Volume declined on both exchanges, but for the second day in a row, new highs were promising as there 155 versus a smidgen of new lows.

Today, before the bell, MRK reported earnings that slightly beat expectations. And despite finishing the day significantly off its highs, the stock closed up nicely for the second day in a row. So, the MRK calls and a nice gain in CRM and a much smaller gain in TEAM offset a bad day in CROX. As of today’s close, I am up $5,466 year to date, or a bit over 1.2% on the year. While this is still gross underperformance relative to the major indices which are up year to date in the high 6% to 11% range, at least we are back on track after closing in the red for the first time this year at last week’s close. The problem is that while TEAM and CRM have performed admirably since I purchased them, CROX has not and neither have the MRK calls. Regarding the two laggard positions, overall, I liked MRK’s action to earnings today and intend to give the stock at least the next week (barring unforeseen circumstances) before ditching the calls, which are now not far from breakeven. With respect to CROX, while it has disappointed, it has not violated major support yet. With that said, it is right at it as I type this, so if it does, it could be gone early next week.

Despite the contraction in volume and the negative NASDAQ, all in all, the market continued to act well. So, in addition to maybe dumping CROX if it cannot hold its fifty day moving average, I may buy LEAP Calls on both the QQQ and MDY. If I do so, it will probably be either off a pullback, or after a quiet period of consolidation. We are well extended and even if we go higher, we would expect at a minimum a pause before we continue climbing. One other position I may add is Five Below (FIVE). This one is on the verge of moving past a buy point (it has a beautiful setup). If it does, I will consider buying it. Its business looks faddy, but for an intermediate play it may work. After all among the markets biggest winners over the years (on a year to year basis), going back decades was the maker of Cabbage Patch dolls. Such is the nature of manias. 

See you in July. To my board friends, vaya con Dios. To my detractors, screw you, too!