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

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4:10 p.m. New York time

I exited DX for $16.88 credit, up $1.05 from the entry price. With 30 cents a share in dividends added in, the position produced a  6.5% return over 57 days for a +41% annual rate.

3:45 p.m. New York time

One of my Income Portfolio holdings, DX, has been downgraded to hold, and I’ve exited. Results shortly.

10:50 a.m. New York time

And once again a string of exits, two from my primary portfolio, Growth; one from a secondary portfolio, Momentum; and one from a watchlist portfolio, Genetics.

That follows five portfolio exits on December 31, two of them from Growth; one on December 30, from Growth; one on December 27, from Momentum; and three on December 26, two of them from Growth. That follows a period when exits from the Growth portfolio, while not rare, weren’t daily occurrences and didn’t come in batches. So what gives?

The Growth Portfolio differs from the other two strategy portfolios in that it is forward looking. It is based on analyst assessments of future prospects for earnings growth, the engine that drives stock prices. Momentum, in contrast, looks to the past — if the trend has been up in several different time frames the it qualifies for the portfolio. Value is wishful thinking — a stock is cheap now compared to earnings, maybe it will recover.

My hypotheses is that we’re getting a string revised assessments from analysts. It’s the start of the year, and that’s when such things happen. The next earnings season kicks off January 15, when AA publishes 4th quarter results, and it is in the run-up to earnings that new analytical reports are most useful.

Today’s trades in stocks.

• Exits
  • Growth Portfolio
    • CRAI for a $53.94 credit, up $3.13 from entry. I received 23 cents in dividend payouts. Altogether, the position produced a 6.1% return over 43 days for a +52% annual rate.
    • HA for a $29.73 debit, down 93 cents from entry, resulting in a 3.0% loss over nine days, or a -123% annual rate.
  • Momentum Portfolio
    • IRWD for a $13.33 credit, down 12 cents from entry, showing a 0.9% loss over three days for a -109% annual rate.
  • Genetics Portfolio
    • EDIT for a $29.17 credit, down 53 cents from entry, producing a 1.85 loss over two days, or a -326% annual rate.
• Entry
  • Growth Portfolio
    • BLDR for a $25.41 debit.

By Tim Bovee, Portland, Oregon, January 2, 2020

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