The Stock Market

[DarterBlue]

As I type this, stock futures are way up. In fact, if stocks were to close today at the current indicated open, the two NASDAQ indices will be a hair's breadth from making all-time highs. This is a remarkable event given the ferocity of the selloff in February/March. In nearly 31 years of trading, I have never seen a market behave this way. With that said, on some level, I understand the action given the unprecedented Fed backstop of the entire financial system. Of course, in the long run I believe this will all end badly. However, in true Gatsbyesque fashion, for now, the good times are a rolling. 

A possible downer would be a sharp reversal from the opening highs. I don't think the odds favor this. However, I would not be surprised if it did occur.

[imaGoodBoyNow]

[DarterBlue]

1 minute ago, imaGoodBoyNow said:

That's pretty bad ass. He sure got his game face on!

[imaGoodBoyNow]

UAL did great, up %5 .. it’ll dip tomorrow, ima buy some afternoon tomorrow 

 

 

@DarterBlue what’s your thoughts on Spirits airline?

 

how stable are they

[DarterBlue]

Stocks gapped up at the open and seemed well on the way to broad, based gains of great magnitude. Then, curiously, the NASDAQ indices, later joined by the S&P 500, started to give up their gains to the point where eventually the NASDAQ 100 (largest market cap NASDAQ stocks) closed down on the day. Still, the DOW, buoyed by stocks like Boeing, and the small and mid-capitalization stocks, closed solidly in the black with a majority of early gains intact. Volume rose considerably from the holiday induced volume posted on Friday. Advancing stocks led by the healthy margin of 5-1 on the NYSE and the decent margin of 2.25-1 on the NASDAQ. The range on the day was from a loss of .26% on the NASDAQ 100 to a gain of 3.4% on the S&P Mid Cap index. The day, had the feel of a rotational day, as a majority of the early leaders of this Coronavirus rally, did not participate, either closing lower or unchanged. Juxtaposed with this subpar performance of the leaders, were the cyclicals such as airlines and hotels which had a great day. The questions to be asked here are: Is the day’s rotation symptomatic of new leadership emerging? If the answer to this is yes, then can we expect this group of beaten down stocks to power the market higher? My feelings are that while it is good to see the laggards starting to participate in the current rally, if the current crop of leaders give up the ghost, this cannot be good for the sustainability of the rally. Why? The leadership to date consists of the kinds of stocks that did well in the lockdown, and, in my opinion should continue to do well even with the opening up of the economy now fully underway to various degrees in the 50 states. While a consolidation by these leaders may not be a bad thing, if they roll over, then I think they will take the market with them.

Today marked the sixth consecutive day of underperformance for me. After being up over $4,000 early on, all those gains were surrendered, and I ended up closing down approximately $1,600. This reflects the weakness in the NASDAQ leadership (TTD and ZM), and continued suspect action in LLY. These disappointments were offset by the S&P Options closing in the black for the first time since I purchased them. LLY has now closed beneath both its fifty-day and 12-day exponential moving averages. In short it has violated critical support levels. It must now be sold tomorrow unless, and only unless, it trades above the 50-day shortly after the open and holds there through the day’s close. With that said, I expect I will part with it mid to late morning. The other two stocks, which disappointed today, have not violated any critical support and both, being high beta stocks, have a much wider trading range than LLY. Thus, it is not time, yet, to consider parting with them.

[DarterBlue]

1 hour ago, imaGoodBoyNow said:

UAL did great, up %5 .. it’ll dip tomorrow, ima buy some afternoon tomorrow 

 

 

@DarterBlue what’s your thoughts on Spirits airline?

 

how stable are they

Regarding SAVE (Spirit) I hate the company because they are deceptive. However, my wife loves them because over the years she has learned how to game them. In terms of finances they are not the strongest of the lot, but are not on the verge of bankruptcy. At least not yet. They had a monster day today, up over 20%, so I would wait for a pullback of at least 5% (perhaps more), before buying any. The chart looks good, much like UAL's, which I think has bottomed. 

[imaGoodBoyNow]

Just now, DarterBlue said:

Regarding SAVE (Spirit) I hate the company because they are deceptive. However, my wife loves them because over the years she has learned how to game them. In terms of finances they are not the strongest of the lot, but are not on the verge of bankruptcy. At least not yet. They had a monster day today, up over 20%, so I would wait for a pullback of at least 5% (perhaps more), before buying any. The chart looks good, much like UAL's, which I think has bottomed. 

Yes definitely wanna add some airlines to my lineup, I want to add some cruise line but I feel that’s way to risky of a sector to touch

[DarterBlue]

13 minutes ago, imaGoodBoyNow said:

Yes definitely wanna add some airlines to my lineup, I want to add some cruise line but I feel that’s way to risky of a sector to touch

The airlines and hotels are more critical to the economy. I would rather buy within those two groups than touch the cruise lines.

I would recommend cruise lines only to long term investor types that wanted to buy the group as a package through an ETF, if one exists, or take positions in several of them to reduce the risk of bankruptcy. Over the next few months I expect the airlines and hotels will do better than the cruise line industry. 

[imaGoodBoyNow]

Damn I just looked Chipotle stock went up 500$ a share to over 1000  in less than a few months 

[imaGoodBoyNow]

2 hours ago, DarterBlue said:

Stocks gapped up at the open and seemed well on the way to broad, based gains of great magnitude. Then, curiously, the NASDAQ indices, later joined by the S&P 500, started to give up their gains to the point where eventually the NASDAQ 100 (largest market cap NASDAQ stocks) closed down on the day. Still, the DOW, buoyed by stocks like Boeing, and the small and mid-capitalization stocks, closed solidly in the black with a majority of early gains intact. Volume rose considerably from the holiday induced volume posted on Friday. Advancing stocks led by the healthy margin of 5-1 on the NYSE and the decent margin of 2.25-1 on the NASDAQ. The range on the day was from a loss of .26% on the NASDAQ 100 to a gain of 3.4% on the S&P Mid Cap index. The day, had the feel of a rotational day, as a majority of the early leaders of this Coronavirus rally, did not participate, either closing lower or unchanged. Juxtaposed with this subpar performance of the leaders, were the cyclicals such as airlines and hotels which had a great day. The questions to be asked here are: Is the day’s rotation symptomatic of new leadership emerging? If the answer to this is yes, then can we expect this group of beaten down stocks to power the market higher? My feelings are that while it is good to see the laggards starting to participate in the current rally, if the current crop of leaders give up the ghost, this cannot be good for the sustainability of the rally. Why? The leadership to date consists of the kinds of stocks that did well in the lockdown, and, in my opinion should continue to do well even with the opening up of the economy now fully underway to various degrees in the 50 states. While a consolidation by these leaders may not be a bad thing, if they roll over, then I think they will take the market with them.

Today marked the sixth consecutive day of underperformance for me. After being up over $4,000 early on, all those gains were surrendered, and I ended up closing down approximately $1,600. This reflects the weakness in the NASDAQ leadership (TTD and ZM), and continued suspect action in LLY. These disappointments were offset by the S&P Options closing in the black for the first time since I purchased them. LLY has now closed beneath both its fifty-day and 12-day exponential moving averages. In short it has violated critical support levels. It must now be sold tomorrow unless, and only unless, it trades above the 50-day shortly after the open and holds there through the day’s close. With that said, I expect I will part with it mid to late morning. The other two stocks, which disappointed today, have not violated any critical support and both, being high beta stocks, have a much wider trading range than LLY. Thus, it is not time, yet, to consider parting with them.

I gotta ask , do you just copy and paste this, or you legit write out all these posts

[DarterBlue]

4 minutes ago, imaGoodBoyNow said:

I gotta ask , do you just copy and paste this, or you legit write out all these posts

I have kept a trading diary for the past 13 years. These write-ups are edited versions of the diary. At the end of each month, I read all the entries for the month. It provides a history of what the market did and how I felt about it and what decisions I made and why I made them. I find this very useful, as I don't have to go to a variety of other sources to get certain critical information. It is also a running record of my feelings on a daily basis which I can see how those feelings played out over time. 

I take this game seriously, because the winners take it seriously. People that win take money from the habitual losers. But to get your share, you have to have a routine. 

Short answer, yes I legit write up what I post. But I don't write it for the board. I write it for me. I copy and past parts of it from my own diary and post it here. I have done it because I felt I could possibly stimulate discussion. Back in 2018, there was another trader, @ohio who used to read and respond and post his ideas in response to me. Trading can be lonely. So having another person give their input is sometimes useful and is more productive than the crazy political posts that make their way to the off topic board. 

[DarterBlue]

14 hours ago, DarterBlue said:

LLY has now closed beneath both its fifty-day and 12-day exponential moving averages. In short it has violated critical support levels. It must now be sold tomorrow unless, and only unless, it trades above the 50-day shortly after the open and holds there through the day’s close.

LLY is no more. Sucked up a loss on this one as the shares were sold at various prices between 145 and 146 bucks per share. Oh well!

[rockinl]

17 hours ago, imaGoodBoyNow said:

UAL did great, up %5 .. it’ll dip tomorrow, ima buy some afternoon tomorrow 

 

 

@DarterBlue what’s your thoughts on Spirits airline?

 

how stable are they

Spirit (Save)

52 Week Range

7.01 - 55.21

Previous Close	12.31
Open	14.06

 

All of the air carriers are pretty much just "hovering" right now. 

 

 

[imaGoodBoyNow]

 

[DarterBlue]

Stocks had a crazy day today. But at the end, they ended broadly higher. The market opened broadly higher at the open; however, the NASDAQ only mildly so. Immediately thereafter, the NASDAQ turned negative and continued selling off until shortly before 11 am. At day lows it was down over 2% and the NASDAQ 100 was down near the 3% range, as the rotation so evident yesterday continued in full sway. In the process, the NASDAQ took down the S&P with it. At its low, it was off about .7%. The DOW, the strongest of the large cap indices, briefly touched breakeven, but quickly bounced off it. After bottoming down over 200 points, the NASDAQ spent the rest of the day following the DOW higher. Finally, at about 2:45, it broke through to the upside and spent the final hour increasing its gains. Small caps and mid caps were the stars of the day. These indices briefly went into negative territory just before 11 am, but there after powered higher. At the close, the S&P 500 and the DOW had cleared significant resistance. The day’s range was from a gain of .55% on the NASDAQ 100 to a gain of 3.11% on the Russell. The DOW, which was the best of the headline indices gained 2.21%. Advancing stocks led by margins of 4.25-1 on the NYSE and 2.25-1 on the NASDAQ. Volume was higher on the NYSE and flat on the NASDAQ. It seems clear now that: 1. A new phase of the market’s rally has begun. This one will attempt to broaden significantly, the participation to include cyclicals and smaller secondary issues. The fact the NASDAQ indices were able to come back from large, early losses seems to indicate that while they may be about to cede leadership, at least for a while, they are not ready to roll over. The day’s action was insane, but bullish. The bull is alive and well.

 Today, I sold my entire stake in LLY. It was a big disappointment. I lost $2,698 on the trade. While within my parameters of acceptable losses, it was a trade that went badly from the start. At day lows, I was down over $8,000 on the day as losses in all three stock positions, coupled with the options tanking, torpedoed my portfolio. By day’s close, I was $921 in the black. I greatly underperformed the market by any measure but it could have been much, much worse. At the close, I have decent unrealized gains in the options position, a small loss in TTD, and a loss in ZM that approximates the realized loss in LLY. So why did I sell LLY and not ZM? The answer lies in the relative volatility of the two issues, and also the entry points of the two trades. ZM is a much higher beta stock and is still in a clearly defined uptrend. LLY had broken critical support and is a larger cap, more sleepy stock. As such, you cull what clearly appears to be a losing trade while giving the higher potential position more rope to bounce back. As we go into the latter stage of the week, the question facing me is: Do I put money to work in the cyclicals such as airlines, hotels, manufacturers, etc.? Or do I accumulate higher beta, NASDAQ type stocks which for the moment have ceded leadership, but which have far greater potential to score very big gains if we have, indeed, left the Corona bear market behind and power on to new all time highs? This is something I need to give careful thought to. If we top, and don’t score new all time highs or barely make them and reverse lower, then the answer is to go with what has the greatest short term momentum. However, if this is the start of a bull market that can gallop for a year or longer, I do believe there are many tech issues that have the potential to triple over that period. I need to spend several hours analyzing both the overall market and the various sectors for important clues before I make a decision.

[imaGoodBoyNow]

2 hours ago, DarterBlue said:

Stocks had a crazy day today. But at the end, they ended broadly higher. The market opened broadly higher at the open; however, the NASDAQ only mildly so. Immediately thereafter, the NASDAQ turned negative and continued selling off until shortly before 11 am. At day lows it was down over 2% and the NASDAQ 100 was down near the 3% range, as the rotation so evident yesterday continued in full sway. In the process, the NASDAQ took down the S&P with it. At its low, it was off about .7%. The DOW, the strongest of the large cap indices, briefly touched breakeven, but quickly bounced off it. After bottoming down over 200 points, the NASDAQ spent the rest of the day following the DOW higher. Finally, at about 2:45, it broke through to the upside and spent the final hour increasing its gains. Small caps and mid caps were the stars of the day. These indices briefly went into negative territory just before 11 am, but there after powered higher. At the close, the S&P 500 and the DOW had cleared significant resistance. The day’s range was from a gain of .55% on the NASDAQ 100 to a gain of 3.11% on the Russell. The DOW, which was the best of the headline indices gained 2.21%. Advancing stocks led by margins of 4.25-1 on the NYSE and 2.25-1 on the NASDAQ. Volume was higher on the NYSE and flat on the NASDAQ. It seems clear now that: 1. A new phase of the market’s rally has begun. This one will attempt to broaden significantly, the participation to include cyclicals and smaller secondary issues. The fact the NASDAQ indices were able to come back from large, early losses seems to indicate that while they may be about to cede leadership, at least for a while, they are not ready to roll over. The day’s action was insane, but bullish. The bull is alive and well.

 Today, I sold my entire stake in LLY. It was a big disappointment. I lost $2,698 on the trade. While within my parameters of acceptable losses, it was a trade that went badly from the start. At day lows, I was down over $6,000 on the day as losses in all three stock positions, coupled with the options tanking torpedoed my portfolio. By day’s close, I was $921 in the black. I greatly underperformed the market by any measure but it could have been much, much worse. At the close, I have decent unrealized gains in the options position, a small loss in TTD, and a loss in ZM that approximates the realized loss in LLY. So why did I sell LLY and not ZM? The answer lies in the relative volatility of the two issues, and also the entry points of the two trades. ZM is a much higher beta stock and is still in a clearly defined uptrend. LLY had broken critical support and is a larger cap, more sleepy stock. As such, you cull what clearly appears to be a losing trade while giving the higher potential position more rope to bounce back. As we go into the latter stage of the week, the question facing me is: Do I put money to work in the cyclicals such as airlines, hotels, manufacturers, etc.? Or do I accumulate higher beta, NASDAQ type stocks which for the moment have ceded leadership, but which have far greater potential to score very big gains if we have, indeed, left the Corona bear market behind and power on to new all time highs? This is something I need to give careful thought to. If we top, and don’t score new all time highs or barely make them and reverse lower, then the answer is to go with what has the greatest short term momentum. However, if this is the start of a bull market that can gallop for a year or longer, I do believe there are many tech issues that have the potential to triple over that period. I need to spend several hours analyzing both the overall market and the various sectors for important clues before I make a decision.

Hey i was wondering what was the biggest loss on a trade  you ever had in all your years of trading ?

[DarterBlue]

1 minute ago, imaGoodBoyNow said:

Hey i was wondering what was the biggest loss on a trade  you ever had in all your years of trading ?

On one trade? Around $24,000. Back then I did not have good risk control procedures in place. It took me nearly 2 years to recover from that blow. That was in the 1990s.

[Cat_Scratch]

3 hours ago, DarterBlue said:

On one trade? Around $24,000. Back then I did not have good risk control procedures in place. It took me nearly 2 years to recover from that blow. That was in the 1990s.

ouch.

[DarterBlue]

41 minutes ago, Cat_Scratch said:

ouch.

I used more colorful language than that when it happened back then. The wicked stock in question was Conseco. I had this idea that on this one trade (stock and options), I was going to quadruple my money, quit my job and trade for a living. Well, when the smoke cleared, I had blown what was then about 40% of my trading capital in one trade. 

[DarterBlue]

Position Size: Risk management is a critical element of trading. If you lose all or most of your capital, you are out of the game or seriously impaired. That is the reason you should pay great importance to the size of your positions when trading. As a rule of thumb, you should strive to never lose more than 2% of your risk capital on any one trade. So, for example, if your capital is $100,000 you should not risk more than $2,000. How is this impacted by position size. If you place a trade for $10,000, you can afford to to lose 20% of that trade or $2,000. However, if the size of your trade was $50,000 you can only afford to lose 4% on that trade before the $2,000 loss limit is reached. The lesson here is that you can go big but if you do you have to maintain very tight stops. Unless your timing of the trade is excellent, if you trade big relative to your capital, you can expect to take many losses if you are going to keep your losses at no more than 2% of capital. However, if you trade relatively small, you can give your trades a lot more room to run. 

Regardless of what you do, risk management is critical. As I explained in the posts above, I took a horrendous loss in Conseco many years ago. It took me two full years to get back to break even from that loss. No aspiring trader should subject themselves to that kind of mistake.  

Using Stops: In order to limit losses based on your position size, employing stop losses is one possible method. A stop loss represents instructions placed with your broker to the effect that should your position trade down (or up if you are short) to a given price, it should be sold (covered). The stop can be a limit price (only sell if a specific price is available) or a market order (which means sell at market when it trades down to a specific price). The first method is not very good at limiting losses as you may never get filled. The second does bear some risk, as if the security gaps down, you will be filled at a price much lower than where the stop was placed. However, at least it gets you out and you can regroup free from the stress of seeing the position fall through the cellar. You can also use a mental stop in your head. The advantage of this is that no one else can see your intended exit, so they cannot "pick your pocket" if you will. But there are too big disadvantages to the mental stop strategy. First, you may lack the discipline to pull the trigger when the trade goes against you. Second, you have to be able to actively monitor the markets for this to work. If you don't have the time due to job or personal commitments, then physical stops should be placed. 

[maxchoboian]

6 hours ago, DarterBlue said:

The wicked stock in question was Conseco. 

Related to Canseco?

 

[DarterBlue]

9 minutes ago, maxchoboian said:

Related to Canseco?

 

Nah, but let's just say both the company's management and Canseco, broke a lot of rules. 

[imaGoodBoyNow]

3 hours ago, DarterBlue said:

Position Size: Risk management is a critical element of trading. If you lose all or most of your capital, you are out of the game or seriously impaired. That is the reason you should pay great importance to the size of your positions when trading. As a rule of thumb, you should strive to never lose more than 2% of your risk capital on any one trade. So, for example, if your capital is $100,000 you should not risk more than $2,000. How is this impacted by position size. If you place a trade for $10,000, you can afford to to lose 20% of that trade or $2,000. However, if the size of your trade was $50,000 you can only afford to lose 4% on that trade before the $2,000 loss limit is reached. The lesson here is that you can go big but if you do you have to maintain very tight stops. Unless your timing of the trade is excellent, if you trade big relative to your capital, you can expect to take many losses if you are going to keep your losses at no more than 2% of capital. However, if you trade relatively small, you can give your trades a lot more room to run. 

Regardless of what you do, risk management is critical. As I explained in the posts above, I took a horrendous loss in Conseco many years ago. It took me two full years to get back to break even from that loss. No aspiring trader should subject themselves to that kind of mistake.  

Using Stops: In order to limit losses based on your position size, employing stop losses is one possible method. A stop loss represents instructions placed with your broker to the effect that should your position trade down (or up if you are short) to a given price, it should be sold (covered). The stop can be a limit price (only sell if a specific price is available) or a market order (which means sell at market when it trades down to a specific price). The first method is not very good at limiting losses as you may never get filled. The second does bear some risk, as if the security gaps down, you will be filled at a price much lower than where the stop was placed. However, at least it gets you out and you can regroup free from the stress of seeing the position fall through the cellar. You can also use a mental stop in your head. The advantage of this is that no one else can see your intended exit, so they cannot "pick your pocket" if you will. But there are too big disadvantages to the mental stop strategy. First, you may lack the discipline to pull the trigger when the trade goes against you. Second, you have to be able to actively monitor the markets for this to work. If you don't have the time due to job or personal commitments, then physical stops should be placed. 

Thanks I was gonna google risk management but passed out last night before I had a chance

[DarterBlue]

34 minutes ago, imaGoodBoyNow said:

Thanks I was gonna google risk management but passed out last night before I had a chance

You be drinking with @HSFBfan again? Dat kid crazy, you be careful. 

[DarterBlue]

On 5/27/2020 at 9:43 AM, DarterBlue said:

LLY is no more. Sucked up a loss on this one as the shares were sold at various prices between 145 and 146 bucks per share. Oh well!

LLY just laughed at me. F'in stock, free from the burden of DarterBlue's ownership, is up around 3.5% or nearly $5 on the day. @@###$$5!