Live: Friday, January 3, 2020

3:35 p.m. New York time

In light of the global economic uncertainties after recent events in the Middle East, I plan to reduce my my stop/losses to a trailing 10% over the weekend. Presently, they’re at a trailing 20%.

Here’s the portfolio inventory to end the week:

Options: XLY (a short iron condor)

Stocks:

  • Growth: ATSG, CNXM, HII, LAWS, LPLA, NSIT, RH and TLYS.
  • Momentum: DQ, NGLOY, PAAS and VIPS.
  • Genetics: AAPL, AQB, BMY, CGEN, GH and PSTI.
  • Income: HYG.
  • Bench: JNCE and OESX.

1 p.m. New York time

My short iron condor options position on XLY continues to be unprofitable, trading now at $0.90, well above my minimally profitable target of $0.44. Even so, the price remains within the profit zone, and so the odds are in favor of a profitable outcome. The position ends on January 17, and I shall continue to hold until next week

In stocks, the raging torrent of analyst reassessments continued, triggering three exits from the Growth Portfolio and two from the Genetics Portfolio.

Not all changes were negative. The algorithm added five new prospects to the Growth Portfolio.

I also added three symbols to the Momentum Portfolio. Yesterday’s exit from DX late in the session freed sufficient cash for me to fully build out the Momentum Portfolio, promoting from secondary status to a primary portfolio, on a par with Growth. For that purpose, I tightened the criteria for inclusion, the theory being that momentum varies far more quickly than value or growth, and so should have strict entrance requirements.

The good news is that there are only 14 positions in the reworked Momentum Portfolio, The bad news is that only one of my current momentum holdings, PAAS, still qualifies under the tighter rules. The other two, JNCE and OESX, continue to have strong buy rank from Zacks, so I’ll move them into the Bench Portfolio and continue to hold them until they drop down to a neutral rank.

This adds a second fully realized strategy to the mix, providing greater diversification of my holdings, always a good thing in my book.

The trades:

  • Exits
    • Growth Portfolio
      • AOSL for a $13.61 credit, up 2 cents from the entry price. The position returned 0.2% over three days for an 18% annual rate.
      • BLDR for a $25.31 credit, down 10 cents from the entry price, producing a 0.4% loss over one day, a -144% annual rate.
      • IBP for a $69.36 credit, down $2.14 from entry, showing a -3.0% loss over 22 days for a -50% annual rate.
    • Genetics Portfolio
      • CLLS for a $17.53 credit, down 86 cents from the entry price, producing a -4.7% loss over eight days, or a -14% annual rate.
      • CSTL for a $34.26 credit, up $7.20 from entry for a +26.6% return over 16 days, a 607% annual rate.
  • Entries:
    • Growth Portfolio
      • ATSG for a $23.17 debit
      • CNXM, a $17.79 debit
      • HII, a $258.94 debit
      • LAWS, a $52.53 debit
      • LPLA, a $92.77 debit
    • Momentum Portfolio
      • DQ for a $54.71 debit
      • NGLOY, a $14.44 debit
      • VIPS, a $14.99 debit

That’s the lot. A busy morning, and fine example of the new capabilities that come from no-commission trading. I did in a couple of hours what an exchange-traded fund or mutual fund might take days to accomplish. Their business models force them to think big, and that lengthens their response time. With no commission, I can respond quickly to the changing situation, keeping my positions manageably small so no one company’s ill fortune can cost me a significant portion of my trading funds. Thinking of it that way, it was a very good morning indeed.

By Tim Bovee, Portland, Oregon, January 3, 2020

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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Based on a work at www.timbovee.com.