DarterBlue Posted June 4, 2020 Author Report Share Posted June 4, 2020 I purchased 237 shares of the MDY this morning at prices ranging from $336.30 to $336.50. Total cost was 79,734. This purchase is a bet that secondary stocks will continue to out leg the market as they have recently. The MDY is an ETF that tracks the S&P 400 Mid Cap index. With this purchase, I have committed all I intend to on the long side for this cycle. With this purchase, I am a little under 50% invested. However, based on the very high beta, and high alpha, the irony is that it should perform better than the broad indices should the market continue to go up even though I am a little over 50% in cash. Hopefully, the good times will continue to roll. Quote Link to comment Share on other sites More sharing options...
FootballGuy Posted June 4, 2020 Report Share Posted June 4, 2020 Do you feel like now is a good time to buy some shares MGM? I know things are opening back up for the summer, and people are gonna be traveling...especially to Vegas (even tho it won't be the same) @DarterBlue 1 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 4, 2020 Author Report Share Posted June 4, 2020 8 minutes ago, FootballGuy said: Do you feel like now is a good time to buy some shares MGM? I know things are opening back up for the summer, and people are gonna be traveling...especially to Vegas (even tho it won't be the same) @DarterBlue Like UAL, it has clearly bottomed and has massive accumulation. So, it certainly looks like it wants to go higher over the month of June. Beyond that, I don't know. It depends on how Vegas recovers. 2 Quote Link to comment Share on other sites More sharing options...
imaGoodBoyNow Posted June 4, 2020 Report Share Posted June 4, 2020 You live and you learn Quote Link to comment Share on other sites More sharing options...
imaGoodBoyNow Posted June 4, 2020 Report Share Posted June 4, 2020 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 4, 2020 Author Report Share Posted June 4, 2020 11 minutes ago, imaGoodBoyNow said: You live and you learn Unless something dramatic happens overnight, these expire worthless. When you first asked me about options, I advised you don't buy the front end contracts. Unless you have inside information, they are a losing game, as usually you don't give yourself enough time for your position to gain. The only time I ever buy the front end contracts are ahead of earnings when I am confident my stock is going to blow the numbers out of the water. But the best teacher is experience. I am confident you will come to see that I have given you sound advice. On another note, UAL has just taken off like a rocket. I can add this one to some of the better stocks I have missed over the years. It was obvious it was going to take off, but I thought I had time on my hands. Oh well ... 1 Quote Link to comment Share on other sites More sharing options...
imaGoodBoyNow Posted June 4, 2020 Report Share Posted June 4, 2020 2 minutes ago, DarterBlue said: Unless something dramatic happens overnight, these expire worthless. When you first asked me about options, I advised you don't buy the front end contracts. Unless you have inside information, they are a losing game, as usually you don't give yourself enough time for your position to gain. The only time I ever buy the front end contracts are ahead of earnings when I am confident my stock is going to blow the numbers out of the water. But the best teacher is experience. I am confident you will come to see that I have given you sound advice. On another note, UAL has just taken off like a rocket. I can add this one to some of the better stocks I have missed over the years. It was obvious it was going to take off, but I thought I had time on my hands. Oh well ... I missed up on my first few options because I didn’t understand the break even $## and strike price. My spirit and ual options are my bread and butter, I still got one more week on those contracts 1 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 4, 2020 Author Report Share Posted June 4, 2020 5 minutes ago, imaGoodBoyNow said: I missed up on my first few options because I didn’t understand the break even $## and strike price. My spirit and ual options are my bread and butter, I still got one more week on those contracts The strike price is the price at which you have the right to buy or sell the stock at (buy calls, sell puts). At the strike price the option is neither in or out of the money. Above the strike price the option is in the money and has inherent value (the difference between the strike price and what the stock currently trades for). When the stock is below the strike, there is no inherent value. All the value at prices below the strike are "time value." On short dated options time value wastes away very quickly. View time value close to expiration as you would time value on an old guy with diabetes, heart failure and cancer. Not much value there, unfortunately. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 4, 2020 Author Report Share Posted June 4, 2020 Stocks closed mostly lower on higher volume. It was a very interesting day for the following reasons: 1. Despite high volume on Wednesday, Thursday’s volume decisively beat it. Thus, we had a distribution day which is so called because there is heavy institutional selling. 2. There was significant rotation out of the high flying NASDAQ types into certain cyclical issues and secondary stocks. Hence, the airlines, RV stocks, defense contractors, and traditional retailers all did well. 3. Despite the selling in the leadership types, breadth was not bad. At the day’s close, the range was from a loss of .77% on the NASDAQ 100 to a gain of .14% on the Mid Cap index. Advancing stocks led 8-7 and 17-16 on the NYSE and NASDAQ, respectively. For a negative day, it was not severe. However, the rotation bears close watching. While this market can continue working higher with a broadening of the stocks participating, I don’t think it can survive the early leadership group rolling over. Overall, I am still quite bullish on the market, but the next few days bear close watching. On a personal note, my four day win streak came to a crashing halt! All three stocks, ZM, TTD and SHOP were creamed. The new MDY (S&P Mid Cap ETF) purchase was the only positive position I had today. I bought 237 shares for a price of $79,734. The purchases were at prices between $336.30 and $336.50. The S&P August, call options were down, but the loss was relatively small. When the smoke cleared, I was down $7,809 or 1.5% on the day. UAL continued to explode and was up around 16% on the day, benefitting from the rotation into cyclicals. Another one of the shortlisted buys, LCII also had a great day up nearly 6%. This game can be frustrating. This is why I use a strict system and adhere to it. If I did not, I would be constantly making emotional trades and that is a no, no. Onward to tomorrow. Quote Link to comment Share on other sites More sharing options...
imaGoodBoyNow Posted June 5, 2020 Report Share Posted June 5, 2020 11 hours ago, FootballGuy said: Do you feel like now is a good time to buy some shares MGM? I know things are opening back up for the summer, and people are gonna be traveling...especially to Vegas (even tho it won't be the same) @DarterBlue See your late, u can’t wait on these decisions, last 2 WEEKS MGM is up $8 up 24% 1 Quote Link to comment Share on other sites More sharing options...
FootballGuy Posted June 5, 2020 Report Share Posted June 5, 2020 36 minutes ago, imaGoodBoyNow said: See your late, u can’t wait on these decisions, last 2 WEEKS MGM is up $8 up 24% well ain't that a bitch....smh. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 5, 2020 Author Report Share Posted June 5, 2020 48 minutes ago, FootballGuy said: well ain't that a bitch....smh. It does not mean you can't buy it. But it does mean you are assuming more risk. With that said, the casino and hotel stocks look like they may be making a sustainable group move. If that is true, it may keep going for months. Quote Link to comment Share on other sites More sharing options...
FootballGuy Posted June 5, 2020 Report Share Posted June 5, 2020 1 hour ago, DarterBlue said: It does not mean you can't buy it. But it does mean you are assuming more risk. With that said, the casino and hotel stocks look like they may be making a sustainable group move. If that is true, it may keep going for months. Brilliant! Looks like the sports books are gonna be up and running now that casinos are open, so with that being said, I feel like it's a good time to get shares in DraftKings as well as MGM. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 5, 2020 Author Report Share Posted June 5, 2020 I have placed an order to buy 441 shares of LCII at a limit of $109.5. LCII is a manufacturer of parts for the RV and manufactured homes industries. It is an old friend. Back in the first decade of this century, when it traded under the symbol DW, it was a 100% winner. I am buying this a bit more extended than I usually like; however, the stocks of its major customers seem to be taking off much as the airlines are. Assuming my orders are filled, if this does not work out, I plan to cut my losses at $95. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 5, 2020 Author Report Share Posted June 5, 2020 1 hour ago, DarterBlue said: I have placed an order to buy 441 shares of LCII at a limit of $109.5. LCII is a manufacturer of parts for the RV and manufactured homes industries. It is an old friend. Back in the first decade of this century, when it traded under the symbol DW, it was a 100% winner. I am buying this a bit more extended than I usually like; however, the stocks of its major customers seem to be taking off much as the airlines are. Assuming my orders are filled, if this does not work out, I plan to cut my losses at $95. Overcome by greed, I chased LCII, buying 471 shares at prices between $114.41 and $116.50. I don't normally do this and may well end up regretting it. I paid a total of $54,930 for my folly! Quote Link to comment Share on other sites More sharing options...
imaGoodBoyNow Posted June 5, 2020 Report Share Posted June 5, 2020 19 hours ago, DarterBlue said: Unless something dramatic happens overnight, these expire worthless. When you first asked me about options, I advised you don't buy the front end contracts. Unless you have inside information, they are a losing game, as usually you don't give yourself enough time for your position to gain. The only time I ever buy the front end contracts are ahead of earnings when I am confident my stock is going to blow the numbers out of the water. But the best teacher is experience. I am confident you will come to see that I have given you sound advice. On another note, UAL has just taken off like a rocket. I can add this one to some of the better stocks I have missed over the years. It was obvious it was going to take off, but I thought I had time on my hands. Oh well ... Lol something dramatic like 1 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 5, 2020 Author Report Share Posted June 5, 2020 36 minutes ago, imaGoodBoyNow said: Lol something dramatic like Lucky bastard!! Cover the trade immediately, don't exercise. 🤣! 1 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 5, 2020 Author Report Share Posted June 5, 2020 29 minutes ago, GardenStateBaller said: +968! https://www.bing.com/videos/search?view=detail&mid=B60847A886BDE68AC2EDB60847A886BDE68AC2ED&shtp=GetUrl&shid=67e7e42a-2893-4c75-8694-b210579656cb&shtk=RG9uJ3QgQ2FsbCBpdCBhIENvbWViYWNr&shdk=Y29tZWJhY2s%2F&shhk=ky6xHxP7wt1hEUWD1eqelpSCVm97rRXvVrBIiHL7tpQ%3D&form=VDSHOT&shth=OSH.kRp3y%2BfUzhbJFnB%2BmrOXQA I will chose the love train, thank you. You all can take the above train to your doom! Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 5, 2020 Author Report Share Posted June 5, 2020 Before the open, the Labor Department released unemployment numbers that seemed way too good to be true. In the month of May, if this is to be believed, a net 2.5 million jobs were created. The expectation was for a loss of jobs in excess of 6 million. Consequently, the unemployment rate fell to 13.3% versus the expected 19.5%. The futures which had been up decently to modestly before the announcement skyrocketed. This translated to a gap up at the open which kept motoring up through late morning before going sideways most of the afternoon and tapering off a bit in the final hour. At the close, the gains, which were across the board, ranged from 2.02% on the NASDAQ 100 to 3.79% on the Russell 2000. Although the two NASDAQ indices were the laggards on the day, they both recorded new all-time highs. Breadth was a very bullish 5.5-1 on the NYSE and 3-1 on the NASDAQ. I could find no flaws today as the action was decidedly bullish. The only warning is that the market is now extremely overbought and, therefore, a pullback or at the very least a consolidation lasting at least a week are now in order and should happen within the next three trading days. With that said, the market looks higher from here through June and likely beyond. Today, I bought 471 shares of LCII. I chased the stock and compounded the potential problem by increasing my exposure to the market beyond what I had intended. I was overcome by the action and in a moment of sheer, unadulterated greed acted against my better judgment. On the day, two of my four stocks were down, ZM and SHOP. However, both were well off day lows. At day’s end, LCII, the new purchase was essentially breakeven. I made a killing in the S&P options position and a very nice gain in the S&P Mid Cap ETF. Consequently, on the day I was up over $10k, or 2% and closed my best week of the year so far, with gains just under $25k, or about 5.5%. I nearly closed out the options position today as at the peak I was up well over 100% on it (it closed about 86% in the black). I eventually chose not to because the expirations are in August, and I think we go quite a bit higher at least through June. Had the market continued its upside explosion in the final hour I would have covered the position with a view to buying some higher strikes after the pullback I expect. But the market was pretty calm over the final hour pulling back a bit but not much. Thus, I decided to keep them. 1 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 6, 2020 Author Report Share Posted June 6, 2020 Knowing Who You Are: To be successful in the financial markets you have to know who you are. What do I mean by this? It is simple, yet complex. Am I patient or impatient? Am I analytical or emotional? Am I willing to do a lot of research or do I react based on what's going on in the here and now? How much risk am I willing to take? How intelligent am I? How knowledgeable am I? The answers to these and like questions determine what kind of market participant I should be or whether I should even participate at all. Investors: Investors are one type of market participant. In general, investors are willing and able to take positions in stocks or other financial vehicles that may be kept for years. Generally speaking, there are two types of investors: 1. Value. 2. Growth. Value investors seek to identify unrecognized value in the companies they buy. Growth investors are looking for companies that are growing quickly, but that, more importantly, sustain that growth for a number of years. If you are an investor, it helps a lot if you can either currently understand SEC filings including the audited financial statements as well as the notes thereto, as well as the risk disclosures elsewhere in the 10K and 10Q. Or, if you don't currently understand the legalese and accounting jargon, you are wiling or able to invest time and effort to obtain such skills, or if that's not your bag, you are willing and able to subscribe to a source of investment advice (newsletter, journal, or other publication) that has a proven track record. Regardless of whether you are a growth or value investor, you need to have patience. For, except in rare circumstances, it may take a year or more, for the fruits of your research to be recognized by the market. Also, once it is recognized, you will need further patience to hold the positions for two or more market cycles to extract maximum profits from your investment vehicles. Investors are primarily fundamental market participants, though some (but certainly not all) may use certain technical indicators, often to determine the timing of an investment. In short, successful investors need the following qualities: patience, an analytical mind, willingness to do a lot of research, at least average intelligence (but above average is better), and, superior business and economic knowledge. If you lack these traits and skills, then investing is not for you. Traders: Traders are the other main type of market participant. I loosely classify traders into the following categories: 1. Day traders. 2. Swing traders. 3. Position traders/trend followers. Traders, unlike investors, pay less attention to the fundamentals. Many have never looked at an SEC filing or an industry trade publication. In fact, many will trade a vehicle without having the faintest grasp of what the vehicle actually is, as shocking as that may sound. Traders rely primarily, if not exclusively, on technical analysis when making their market decisions. Some traders, however, do incorporate fundamentals when doing their analysis. But even these pay more attention to the technicals than to the fundamentals. Day traders are in and out of positions often in minutes. They are looking to exploit very short-term movements in price. Day traders, even if they hold a position for hours, seldom carry it overnight. Thus, it is very important for day traders to be right a high percentage of the time. Why? Because you are scalping for relatively small profits, you have to be right a lot to offset the losing trades and still make a decent profit. This is compounded by transactions costs that come with every trade. What transactions costs you may ask, my broker gives me commission free trades? Yes, that may be true, but if you are a retail customer, you are not getting the right side of the bid/ask spread. So, yes, every trade to the small account holder comes with significant transactions costs. Swing traders generally carry a position for a few days. When I have employed this tactic, I have generally faded the market. In short, I have looked for overbought or oversold markets which were due for pullbacks and sold/bought the other side, knowing full well, that the primary trend is still in place. But, you could also be a swing trader that is looking to profit short term from breakouts or breakdowns by going with that short term trend. Swing traders avoid some of the excessive transactions costs associated with day trading. Position traders/trend followers look to identify emerging longer term trends (a few months or more) and take positions in line with the trend. Of the three types of trading, this one is most amenable to incorporating fundamentals although technicals will still be the primary factor influencing entry and exit. I identify myself as a position trader. Most of the big winning periods I have had have come over time periods ranging from a couple months to a couple years. Position traders hold their winners for relatively long period of at least several weeks to sometimes a year or more. Successful traders need the following qualities: an analytical mind, nimbleness, willingness to spend a lot of time with charts learning to identify patterns seen in successful breakouts or breakdowns, a strategy for identifying a set up and for finding a triggering event, a willingness to take your losses very quickly when you realize you have made a mistake. Closing Comments: Regardless of whether you decide you are a trader or an investor, successful participation in the markets is not easy. It takes a commitment and a lot of hard work. It also takes a respect for risk and a willingness to manage it very carefully. A decimated account, by definition is out of the game. In fact, one of the greatest traders of yore, Jessie Livermore, committed suicide because his lack of respect for risk caused him to blowup his account one time too many. If you are willing to make the commitment, have at least average or better intelligence, and have the available time, I recommend that you actively participate in the financial markets using your own God given talent, but learning from the experiences of successful participants at the same time. Lord knows, in the America we live in today earning a paycheck, unless you are highly skilled, will never get you financial independence. Market participation can, as well as owning and running a successful small business. 2 Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 6, 2020 Author Report Share Posted June 6, 2020 Choosing the Right Vehicles to Invest in: Most neophyte and casual investors have the incredible bad habit of looking for "tips" when deciding what to invest in or trade. A slightly less bad habit is to troll for ideas in the newspaper or in financial publications. In reality, the correct vehicle depends heavily on the kind of market participant you are. Are you an investor or trader? If you are an investor, are you looking for value, growth, or growth at a reasonable price (relatively inexpensive growth)? If you are a trader, are you a day trader or a swing trader or a position trader? The answer to these questions will yield very different correct choices of investment ideas. If you are an investor of the Warren Buffet variety, your ideal investment will be very, very different than if you are DarterBlue. This does not mean that one is right and the other wrong. It means that based on what each of us are looking for, is very, very different because we have very different time horizons. Having said all of the above, how, then, should one pursue finding vehicles with the potential to satisfy one's objectives? Well first, you have to know what your objectives are. As explained in the post immediately above, you have to know yourself and use that knowledge to determine what kind of market participant you want to be. Assuming you have done this honestly, the next step is to screen for stocks (or other financial instruments) that are compatible with you. How do I screen for ideas? Today, this is relatively easy. The broker I use, Charles Schwab, allows its customers to create stock lists based on predetermined criteria set by the individual. I am sure most other brokers offer the same tools. Or, if you want something more sophisticated, you can subscribe to a service. A useful one is IBD's Market Smith, which is very good, but not cheap. After creating your screens based on criteria that you think are compatible with who you are as an investor or trader, you can build of stocks that are potential buys. Of course, if you are an investor, the list is only the very first step. The next step would be to look at the SEC filings for the most serious candidates for purchase, to confirm the initial opinion that these ideas actually are sound. On the other hand if you are a trader, you would take the list and analyze the charts of the individual stocks screened to see whether the charts are at buy points, or if not are they setting up to be at buy points in the near future. To be clear, the objective of me sharing this is to tell you that to get to the red zone, let alone the end zone with consistency, you need to put a lot of systematic work in. I am speaking to you from nearly 31 years of experience. I have obtained this experience because I am a survivor. Believe me, I have not inherited wealth, nor have I attained it from work or illicit activity. So, if I had kept destroying my account equity, there would have been no way to replenish it. A final comment. For those of you that are inclined to day trade, my first advice is, you have to do this as a full-time job. This means either quitting your day job or working a night job. For day trading requires constant monitoring of the markets to be successful. Also, if day trading is your route to the holy grail, then you should only trade a very small list of securities, perhaps no more than 5-10 at the most. Why? To do this successfully, you will need to know these stocks better than you know your spouse. That is where your edge will come in: from intimate knowledge. Now this does not mean that the small list should not change with time. What it does mean is that changes to it should be made very slowly and only when the stock in question starts to change the attributes that attracted you to it in the first place. I am done dispensing advice for the weekend! 2 Quote Link to comment Share on other sites More sharing options...
rockinl Posted June 6, 2020 Report Share Posted June 6, 2020 Made a nice profit on LYV the past 2 months. Bought at 23, sold last week at 54. Quote Link to comment Share on other sites More sharing options...
DarterBlue Posted June 6, 2020 Author Report Share Posted June 6, 2020 3 minutes ago, rockinl said: Made a nice profit on LYV the past 2 months. Bought at 23, sold last week at 54. Then you must have bought it on the day it made its lows. Based on what I do, there is no chance I could have ever picked it up that cheap. Congrats! Based on its chart, I think it has further to go before it's done for this cycle. Given you had a 133% profit when you sold, I would have probably kept half of the position. Something to consider when you next have a big winner. 1 Quote Link to comment Share on other sites More sharing options...
rockinl Posted June 6, 2020 Report Share Posted June 6, 2020 31 minutes ago, DarterBlue said: Then you must have bought it on the day it made its lows. Based on what I do, there is no chance I could have ever picked it up that cheap. Congrats! Based on its chart, I think it has further to go before it's done for this cycle. Given you had a 133% profit when you sold, I would have probably kept half of the position. Something to consider when you next have a big winner. I bought it l;ow on a tip from an online interview I heard with Mark Cuban. He bought a BUNCH. 1 Quote Link to comment Share on other sites More sharing options...
imaGoodBoyNow Posted June 6, 2020 Report Share Posted June 6, 2020 I made way to much this week on options and my stocks , this week I can tell you for a fact my stocks are gonna take a huge dip 1 Quote Link to comment Share on other sites More sharing options...
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