Sunday it is today and you’d think I’d take a break from trading. But it seems trading doesn’t want to take a break from me! Just as I was cooking, inspiration struck about a trade I want to do for Facebook. FB is
Girl Power Trading
So the Fed made good on my prediction and continued to be supportive of equities. Too supportive, my hedge / option ran away from my breakeven point. I was looking at it yesterday and though my own thoughts is that the “rally” is exaggerated. We were looking at valuations being on the high side just a few days ago so in my projection the price went too far too soon, considering we are at the end of the quarter. And so far today, I have been proven correct with the BHP stock moving down 40+, as much as half of yesterday. I think it will hover around or drift lower a little bit at the current price till we get the proof of earnings new quarter. But one must think, if exiting, where should we put our money? “There remain very few alternatives for your cash other than putting it in stock” is a big idea from the article here.
Anyone for more predictions from me? Well,,,, I would bravely stay in stocks. Meaning, this bull market may be volatile but the uptrend should continue for a month or so! Again stick to those with fair valuations (PE below 16) if you can, just so you won”t get a thumping when a selloff comes around. Or if you are a believer in this bull market, go for the stocks that have been riding the bull market well or the so-called “momentum stocks”. Just remember your Risk management should be in place.
Up since 2am local time to update my price chart/ data for testing, time delay in the site I get it from made me forget to do it earlier on after the close. It’s one of the challenges of being trader mom, my kids almost always want me to be on to something, and then I also had a newfound commitment to get fit! Add some advance reading for my language-challenged kids and their bedtime also becomes my bedtime. Ting ting ting ting… fortunately my body clock seemed to have known about this (someone must be so committed!) so I woke up just before 2am before the data gets reset, and I get to watch some market action.
It’s also my way of putting my foot on the US session seeing if being “awake” can help me get more attuned to the market because I am feeling wary of the direction at the moment! But then again it’s June and this kind of volatility always shows up. And as it turned out, I only got a teeny weeny problem because compared to professional fund managers who got to make money for other people, they get not just the problem but also the stress … yeah, they are two different things!
Here’s “Bazillionaire’s Guide to Stress Relief” by Michael Lewis which I found to be very refreshing article. Not a lot gets written about the stress management that every trader / investor needs to be doing. There’s even a video on this article so you can see how important this is! I can’t say I will follow the one about sitting on fat kids currently, I still got a fat behind to sit on.
My solution for this “directionless” market is one of those nifty tools in Options – Covered Calls to profit from volatility and time decay while the market gets its footing. Or when expecting a big jump in either direction, more Options strategies like straddles or even some kind of spreads.
One of my recent blog posts “June to Follow May” was about June being possibly a down and difficult month, well mid-way, here it is! Valuations – one the of the “Legs” of the bull market has gotten to heaven and must be brought back to earth! They call it a “correction” and I don’t know about you but I think we need one! It’s how you get into the good stocks with low risk. But! But! But! Not all stocks are created equal, in fact, in this slow-growth era, the stock you buy is crucial. Now stock-picking is not my usual emphasis in this blog but see, the bull market, the recent all-time highs are coming from a great small world of stocks only. I found a short and sweet video below from Bloomberg that could very well enlighten you.
The thing that really struck me is that the “world” of stocks, like I guess the rest of the world, is only “governed” or even say “controlled” (in this sense – how it makes the market move to all time highs or even move the indexes from red to green) by a few, by virtue of their financial power. Imagine, 5 big-cap stocks have the equivalent of 3000+ other smaller stocks. But the good thing to know there is those 5 stocks represent fair value – meaning their valuation is reasonable, in fact all are under the S&P 500 PE valuation of 16 (or so) they are still in the “cheap” side.
So yes, key words in the market these days – valuation, valuation, valuation.
Now on my watchlist are the following:
Been watching Facebook (FB) since late May which was around $58.50 on the 21st and it hasn’t even been one month and the stock has moved up to $65, this “momentum” stock might be in for a profit-taking but it’s still going to run off into high gear for years to come because of the products and services offered and growing revenues from a very protected market share. (Remember Google? Apple? Amazon, in their early years? This is the stuff of dreams!)
Apple (APPL) – which just had a stock split is showing a lot of promise, by virtue of their “affordability” making them more attractive to retail investors, (the $700 per stock is just a little under $100), plus of course the “cool” factor in their products that’s always been where they are very good at. PE is just at 15.69 so it is, for once, the APPL of my eye.
MasterCard (MA) – sure I’ve been attracted to banks which can ride the strengthening economy but I’ve found something that makes money like the banks, but does not have the risks (capital requirements, bad loans etc), but instead focus on transaction processing and payment solutions. Smart hey! It’s also just had a “stock split” so yes, the affordability factor is there and rising stock price has been achieved!
(More about stock split here!)
On my own holdings, I got BHP still on my accounts. It hasn’t been following the market much on the upside given the challenge in iron ore prices but oil has been it’s saving grace so it has been on “neutral” mode. But alas, yesterday’s World Bank report on slow global growth spooked the markets and BHP started to breach 1st level Support at 36.10, I’ve put a bearish position “covered call” to protect my current holdings. I am not too worried about the fall in price because it has low valuation (12.17 at it’s current price 35.94) and the stock price could easily be a “bargain hunter’s delight”). I think give a few days for market to shake off that report in time for next week’s FOMC meeting, which I project to be supportive of the markets.
And here of course is the promised video:
It’s comforting to read news articles and commentaries given the new all-time highs. At least I know I’m not the only one whose confidence in the market is shaky over those “puzzling new highs” or for those who are more into “intriguing, mysterious stuff” how’s this — a fund manager’s outlook on stocks is “bearishly bullish”. I can tell you I have the same feeling as he does. (Confusion?! HAHAHA) This means,I’m seeing the growth in the US economy happening, plus stimulus in Europe, the trickle effect to the world economy is also in the cards BUT the growth is in baby steps, not in leaps and bounds and that’s where the cautiousness is coming from because like what had happened in 1st Quarter GDP, the growth can easily turn negative. And not to forget, watch out for the horse might get ahead of its cart and get overvalued. But the outlook is justified by what was explained as the “3 legs” of bull market in equities which are — Liquidity, Growth and Valuation. So check out the video below.
I am going with the idea that the bull market is continuing though a somewhat tame bull market, — so got some positions on undervalued stocks (BHP is at 13.50 PE) to ride the uptrend but still maintaining strict risk management through position sizing. I’ve also been eyeing new stocks with strong interest like Facebook which is very strong in mobile and internet media, however, finding that it has not moved with the market (NASDAQ) index in its recent highs, need to verify the performance growth … it is looking to me like a “buying opportunity” as the mobile revenue continues to increase.
Bull Market runs:
Is that a trick question? June to follow May? When May defied the “Sell in May and Go Away” phenomenon and though volatile, went about achieving record highs. Surprise surprise! But as I was reflecting with a workshop attendee in April, if you have to get out of your stocks, where will you put it?
Last year was the year everyone just piled on to USD because the tapering plans of the Fed made the US dollar attractive — we saw the spectacular falls of the high-yielding Aussie dollar, even emerging economy currencies like Real (Brazil) and Pesos (Philippines).
Now, no one is jumping up and down for anything. I traded a few short positions on BHP, aware of the huge run up of the price (up around $37 mid-May) but seeing that the valuation is still below 13.50 it is not “overvalued” yet, and the good thing was that aware of the uncertainty, I halved it from the usual position size so the hole in my “wall of capital” was small, which was made up by a bullish position I put in next, this is why position sizing strategy is so important and has to be attuned to you, the investor, respecting your feelings, or professional traders would say “intuition”, in that if you really aren’t sure, just don’t trade, resist the feeling to be in the market if it’s not making sense to you, or if you feel you have to make your investments, to do so with only a small position size until you are more confident, feel good about your investment!
So how about June? I think it will just follow the up and downs, but likely on the more “unloved” stocks for May. If you are thinking of banks,(I’m eyeing Bank of America, JP Morgan for US and ANZ, CBA for Australia), this article might be helpful. Plus check out this insightful video:
We were having dinner last night when my son blurted out “Mom, why don’t you have a job?”
It’s funny because after I said, “I do, I work, I have a business with my stocks and book, I do most of it when you are sleeping”. He continually says “why” to everything I said that goes something like this”
… on why I do my business when he is sleeping…
“So I can take care of you,,, help you in what you need to learn”
He says, “Why?”
“Because I love you”
“Because you are my son and I want you to be the best person you can be … to reach your true potential”
They’ve been watching Lego Movie with the ninja story and and one of the episodes
had the theme of finding one’s “true potential” (Deeeeepppppp yeah)
He laughs and says “Why”
“So you will have a good life and be of help to other people”
He says again, “Why?”
“Because you are blessed to be alive, healthy and with means, you should not waste it”.
The Whys continued with laughing after that …
This morning, I got to show him that even if it doesn’t seem like I’m “at work”, I have to be
disciplined and get online with the market when it opened at 10am, saw that the stock price of BHP had moved down 60cents and my position is ready for profit-taking, all “work” done in 10 minutes. Just executing the action to close the trade could just be 2 minutes but I have ro be disciplined and follow my procedure carefully step by step, even checking the market again,even as I’ve done so early local time after the US market had closed. Double checking the number of positions, prices, symbols, writing the details down again etc.
I was in two minds whether to close the trade since the prices could still fall, but I decided with the expiry happening today, average volatility being at 50cents and price already bounced back up 20cents from today’s low that there could be positioning again for upside for the big GDP report happening tomorrow = this way I’d minimize my risk and take the 2R profit. True enough, prices are recovering as the day progresses. In trading, you need discipline and flexibility in different parts of the business.
So profit made after days of looking at the possible low-risk trade, total time spent online could be around 3 hours of intermittent checks and finally closing the trade this morning.
Then I get to spend time on this blog for people to benefit, and of course, time for you, son.
May is coming to an end this week and I’m wondering where have all the bargains gone! The last week saw the S & P 500 push to a new record and on this side of the earth, the stocks I’ve been trading / watching like banks ANZ, CBA have all been hovering at their 52 week highs and BHP not far behind it’s own high.
What is coming around in the news is that the recent volatility is showing investors on a “merry-go-round”. Hopping from momentum stocks like Facebook to undervalued stocks and also selling in small caps to the more solid, conservative stocks like good old Pepsi Cola whose chart looks like it has defied the selling from March – check the chart here.
Of course this leads many to think about the “Sell in May and Go Away” phenomenon not happening, but let’s pause for a moment why that could be. You read about slowing growth everywhere – China, EU are prime suspects, so it is looking like the US even with sputtering growth in jobs and manufacturing looking better with stronger housing and consumer sentiment coupled with low inflation. In short, when before money need to be moved elsewhere in other assets, it’s finding situation cozy enough where it is, in stocks.
I’m still not going on any buying spree with the bargains all but nowhere to be found in this traditionally difficult (ie volatile) season, I’ve halved my usual positions given the uncertainty — shorting CBA as it in the top of its range and holding a long position in BHP, ensuring the gain I can get is 3 x my Initial Risk, plus whenever I check at new stocks, looking over valuations and avoid getting dumped!
Check out the articles below.
Yes it’s Sunday and it’s going to be busy day for me of celebrations… but something stuck to me in conversations with lady friends who are in government and business who knows I am investing / trading for a living and was excitedly asking / talking to me about the “Prada Fund”… well, who wouldn’t be interested?!
But I did a little digging and found that it had actually closed. Sad.
The official name by the way is Claymore/Robb Report Global Luxury ETF (NYSEArca: ROB)
Here are the the articles I found:
Nonetheless, I note it closed in 2010 and well, I think there is a good chance that it could (and should!) be revived, noting that in 2010 the world is still teetering in recession, but things are looking a little better now in 2014 don’t you think?
Anyway, maybe it is wishful thinking hahaha But it sure is a good idea investing on what people willingly spend (big) money on.
Here a few videos I’d like to share with you, as I haven’t got much time I’m saving it here and commenting on them later.
Alibaba, Warren Buffett’s Verizon stake surely catching my attention. Till next!
Little consolation these days for bullish investors — 2 days of declines in the US despite encouraging signs in the US job market.
What are we to do? I am taking a clue from the volatility we are experiencing and about ready to put in my position to profit from down move — but, BHP is still having hangover from recent “good news” of divestment of its nickel mine which has seen the metal price shine due to supply issues.
Nonetheless, one should be a little more forward looking given market-moving reports and the speech of US Fed Chair Janet Yellen today, strong housing data expected tomorrow (Friday in the US) and the FOMC meeting minutes early next week.
I’ve recently just finished the volume on Risk in the Peak Performance Course so that’s a very good refresher for me to ensure I am following the risk assessment I have built in on my procedure (like, really paying attention to the market since we all have to be careful about our own “positive thinking” or disposition cheering us on (or even the reverse), but may not be in sync with the market).
So, despite weak volume and volatility signals, no new positions today. Waiting for market action following FOMC to make sure I have a low-risk, high-reward trade.
When I can’t get to the blog, I thought I’d share my notes to you guys, at this Facebook Page for HighHeeledTraders.com
which feeds into my Twitter account. Please “Like”, share and keep tabs on this Page https://www.facebook.com/highheeledtraders?ref=hl