3:25 p.m. New York time

And as the closing bell approaches, my short iron condor position on SMH drops into unprofitability. Here’s a quick-and-dirty table showing my short iron condors and how far below the short put strike prices they are. As a percentage, nothing too terrifying.

SYM	LATE IN SESSION	SHORT PUT	DIFF%	DIFF$	ITM?
QQQ	216.71	215	0.8%	1.71
SMH	135.66	137	-1.0%	-1.34	x
XBI	91.62	89	2.9%	2.62
XLB	56.365	58	-2.8%	-1.635	x
XLE	49.375	51.21	-3.6%	-1.835	x
XLI	78.2819	80	-2.1%	-1.7181	x
XLK	92.89	95	-2.2%	-2.11	x
XLP	62.165	62	0.3%	0.165
XLV	97.425	99	-1.6%	-1.575	x

2:20 p.m. New York time

The stock position GH in my Genetics Portfolio has triggered its trailing 20% stop/loss, exiting for a $71.64 credit per share, down $4.50 from the entry debit. The position produced a 5.9% loss over 22 days for a -98% annual rate.

12:10 p.m. New York time

Of my nine short iron condor options positions, five have moved below the strike price of the short puts that make up the iron condor strategy. They cover a wide variety of sectors: XLB for for materials, XLE for energy, XLI industry, XLK technology and XLV for health care.

The positions with all legs remaining out of the money — the good spot — are QQQ for the NADSAQ, SMH for semi-conductors, XBI for biotech and XLP for consumer staples.

10:45 a.m. New York time

Yesterday’s dive in the markets — the headlines said it plunged, but honestly, having watched the value of my mutual funds evaporate during the Crash of ’87, when the market lost 25% in one day, this little 3%+ stubbed toe doesn’t seem too terribly impressive by comparison.

I lost two positions to my standard trailing 20% stop/loss, which is a fairly robust performance in a portfolio that had 28 positions.

My short iron condor positions made it through Monday with all options out of the money — the good place. However, this morning my XLE position saw the price move beyond it’s short put strike price of $51.21, to $50.79 at the time I’m writing. Friday is 21 days before expiration, when I manage options positions, and for the moment I’ll keep close watch on XLE but take no action.

I follow three big-picture metrics that give me guidance on when to pull out of the markets.

• One is the 200-day moving average on SPY, the exchange-traded fund that tracks the S&P 500. The closing price on Monday stood at 3.1% above the simple moving average, compared to 9.85 above at Friday’s close. The action point is a persistent close below the moving average.
• Another metric, more economics oriented, is the Sahm Rule, a Federal Reserve metric that can be used to gain early warning of when the economy has moved into a recession. The Fed’s alarm signal is when the Sahm moves above 50. My alarm signal is when the metric moves about 20. It presently stands at zero for the second month in a row and will next be updated on Friday next week, March 6.
• A third metric — more of an experiment, really — is the average Zacks rank of the stocks in the Dow Jones Industrial Average — the DJ30. A rank of one is the best and five is the worst. It has been steady at a rank of 2.8. Anything lower than 3 is a “buy” signal. I have no specific action point on this metric, but if it moves above 3 then I’ll start to worry, and the higher it goes, the more likely I’ll be to act, most likely making the decision in conjunction with the trend of the most sensitive of the three metrics, the moving average.

And so, today, with the market looking a bit dazed.

My focus portfolios are Growth and Genetics. I plan no new entries in either. In honor of yesterday’s declines, I’ve added a new requirement, that the Fisher Transform (FT) metric be in uptrend mode. I’ve used the FT for quite some time in an options context. An explanation of the FT may found here.

None of the Genetics Portfolio prospects met that requirement. One of the Growth Portfolio prospects — UTHR — has an uptrending signal, with earnings to be released on Wednesday before the opening bell. The Zacks Earnings Surprise Predictor is negative, and so I’m staying away from it.

Bottom line: I plan no stock entries today.

I took profits on CYH, exiting after it made a huge rise after earnings were announced. The Street estimate was a 47-cent loss. The actual net income was a 40-cent gain. I figured the only reasonable next move was a decline.

I exited CYH for a $6.11 credit, up $1.60 from the entry debit. The position produced a 35.5% gain over 29 days for a +447% annual rate.

Also, I made one transfer to the Bench, as RL’s Zacks rank dropped from “strong buy” (1) to “buy” (2), removing it from the SP500 Portfolio. It can remain on the Bench with a rank 3 (“hold”), as long as either the growth or momentum metrics show an A or B. A drop to the “hold” rank (3) or both the growth and momentum metrics moving at worse than B would trigger a sale.

Finally, SNX, which had been benched, regained its place in the Growth Portfolio.

By Tim Bovee, Portland, Oregon, February 25, 2020

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12:30 p.m. New York time

TNK in the Value Portfolio hit its trailing 20% stop/loss a few minutes ago and was sold for a $12.91 per share credit, down $1.24 from the entry price. The sale resulted in an 8.8% loss for 14 days, or a -228% annual rate. TNK was a valid member of the Value Portfolio as of the latest Zacks analysis. The price has long been on a long decline since January. A reversion to an uptrend ended after only four days, and the downtrend resumed on February 14. The stop/loss was triggered two days before the earnings announcement.

10:25 a.m. New York time

The trailing 20% stop/loss on my stock position on EDIT in the Genetics Portfolio was triggered this morning amid a general decline in the markets.

I exited EDIT for a 23.30 credit per share, down $5.69 from the entry price, resulting in a 19.6% loss over 27 days for a -265% annual rate. The stop was triggered two days before EDIT’s next earning announcement. It still remains as a potential trade in the Genetics Portfolio, with a Zacks rank of 2 (“buy”).

Otherwise, my stock activities today have all been Bench transfers. INVA was benched after its Zacks rank dropped to 2, costing it it’s spot in the Momentum Portfolio, and two benched symbols again qualified for their portfolios and were sent back into play: KBH in Value and PHM in Growth.

I plan no entries today until the markets stabilize a bit.

In my short iron condor options positions, no trades are in sight today. I’ll manage the positions 21 days out from expiration, which is next Friday.

By Tim Bovee, Portland, Oregon, February 24, 2020

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9:45 a.m. New York time

In stocks, I’ve added INVA to the Momentum Portfolio, which — along with Robotics — is today’s focus — for a $15.25 debit per share.

KBH dropped from the Value Portfolio, a day after I entered the position, and was moved to the Bench, along with PHM, which was dropped from the Growth Portfolio, although it remains viable in the SP500 Portfolio.

By Tim Bovee, Portland, Oregon, February 21, 2020

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9:45 a.m. New York time

Yesterday’s short iron condor exits cleared my accounts of the FEB series of options positions. My options contracts now expire on March 20. Their next milestone comes on February 28, which is 21 days before expiration. On that day I shall exit all profitable positions.

The unprofitable positions is the problem, as always. Do I get rid of them immediately? Do I hang on to them until expiration week, in the hope that they will improve? I’ve tried both strategies for good and bad results. Each position, after all, is sui generis, and my best strategy is, I would think, to treat each losing position separately, without an overarching rule.

I’ll begin to buy the next series of options, APR, on March 3.

Having freed up cash with the sale of FEBs, I entered several new share positions in today’s focus portfolios, Growth and Genetics. The Growth symbol also appears on the Momentum Portfolio. I exited a former Value Portfolio position now on the Bench and used those funds to add a position to Value.

The trades:

• Growth
  • Entry: AEL, for a debit of $33.10 per share.
• Genetics
  • Entry: REGN, , a $398.84 debit.
• Value
  • Entry: KBH, a $39.93 debit.
• Bench
  • Exit: RUSHA (formerly Value) for a credit of $43.17 per share, down $0.49 from the entry price.  The loss was 1.1% over 27 days for a -15% annual rate.
  • Transfer: GIII back to Value

By Tim Bovee, Portland, Oregon, February 20, 2020

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3:20 p.m. New York time

I’ve exited my short iron condor position on XLK and updated the analysis with results. This was a full exit, in contrast to my partial TLT and XLE exits.

2:15 p.m. New York time

I’ve updated my analyses of short iron condors on TLT and XLE with results after my partial exit.

12:40 p.m. New York time

I partially exited two losing short iron condor positions today as the FEB series of monthly options nears expiration after Friday’s close. I exited the calls TLT position and the puts in XLE, leaving an out-of-the-money short spread in each case that I anticipate will expire without value. I shall update the analyses later today.

One other losing position from the series, XLK, remains, and I hope to exit it on Thursday.

In shares, I cleaned out three positions from the Bench in order to raise funds for new trades, and also exited a position that had dropped from the Robotics Portfolio and didn’t qualify for the Bench.

The three exits from the Bench, two profitable and one for a loss:

• AMED, for a $193.89 credit, a $12.56 profit per share. The position produced a 6.9% return over 19 days, or a +133% annual rate.
• IMKTA, a $36.52 credit, a loss of $6.31 per share, producing a 14.7% loss over 15 days for a -358% annual rate.
• OESX, a $6.32 credit, a profit of 62 cents per share, producing a 10.9% return over seven days for a +569% annual rate.

And from the Robotics Portfolio, I exited SPLK for a $175.42 credit, up $18.56 from the entry price, producing an 11.8% return over 20 days for a +216% annual rate.

Three positions were moved to the Bench: DAL from the SP500 Portfolio, and GIII and RUSHA, both from Value.

I entered no new stock positions.

By Tim Bovee, Portland, Oregon, February 19, 2020

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9:50 a.m. New York time

This is expiration week for my remaining short iron condor positions in the FEB options series. TLT, XLE and XLK all remain well in the money on one leg. I’ll give them another day, for time decay to work (decay being in my favor for short positions), and exit the losing legs on Wednesday, allowing the remaining spreads to expire valueless (also in my favor).

In stocks, the focus portfolios today are Momentum and Robotics. Given AAPL’s sharp decline in response to the impact of the COVID19 virus on its manufacturing operations in China, I jumped in and expanded my holdings in the company, which appears on the Robotics Portfolio. It gives me slightly outsized exposure in AAPL, but I’m comfortable with that. AAPL’s entry debit was $318.00 per share.

Two positions dropped off of their portfolios — IBP in Growth and CYH in Momentum — and I’ve transferred them to the Bench.

By Tim Bovee, Portland, Oregon, February 18, 2020

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11:30 a.m. New York time

I exited the stock in my Income Portfolio, replacing it with a stock in the SP500 Portfolio. I also added a position to the Growth Portfolio — today’s focus, along with Genetics — and moved a Momentum position to the Bench.

The Income position, JCAP, was in the small remainder of a Roth IRA. It fell to a Zacks rank of hold (3) with the lowest scores possible for all three strategies — value, growth and momentum. All of this and more than a month to go before the first quarterly dividend.

JCAP went for a $20.31 per-share credit, up 29 cents from entry, producing a 1.4% return over 17 days for a 31% annual rate. Sorry to miss the 1.7% quarterly dividend, but so it goes.

Rather than bringing another income play on board, I turned to the blue chips in the SP500 Portfolio, entering RL in the Roth account, for a debit of $121.97 per share.

In the Growth Portfolio I added a position in IBP for a debit of $75.28.

APAM dropped off the Momentum Portfolio but, with a rank of strong buy (1), it qualifies for the Bench. I’ll continue to hold the position until the Zacks rank falls below hold (3) or, while at hold, the momentum score falls below B (where it sits today).

Monday is a market holiday in the United States. Trading resumes on Tuesday, February 18.

That day also begins expiration week for my February short iron condors. Three options positions remain: TLT, XLE and XLK. All have options that are out of the money, and Tuesday or Wednesday I shall dispose of those portions of the positions and allow what’s left to expire without value, the preferred outcome for short options positions like these.

In stocks, Tuesday’s focus will be on the Momentum and Robotics portfolios.

By Tim Bovee, Portland, Oregon, February 14, 2020

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10:40 a.m. New York time

No exits today. For entries, the focus portfolios are Value and the S&P 500. The new SP500 portfolio is lagging its companion, Value, and so I chose both new positions from the SP500: DAL for $58.80 per share and QRVO for $110.26.

OESX dropped off the Momentum portfolio, the day after I entered the position, and I have moved it to the Bench.

By Tim Bovee, Portland, Oregon, February 13, 2020

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12:20 p.m. New York time

Little trading today, with no exits and two entries, in the Momentum Portfolio, today’s focus. Also, a couple of transfers from the Bench back into their respective portfolios, a new portfolio and a rotation change to accommodate it.

First, the entries: DVA for an $88.04 per share debit, and OESX for a $5.70 debit.

The transfers from the Bench: CYH again qualified for the Momentum Portfolio and SPLK, for Robotics.

I’ve noted that the Zacks algorithm serves up an uncommonly large number of mid-cap and small-cap symbols. No surprise. They tend to be the most volatile.

However, I do see value in balancing my holdings with some large caps. So I’ve created a portfolio consisting of the S&P 500 index symbols with a strong buy rank (1) from Zacks. There are today 21 symbols that meet that criteria, about 4% of the 505 stocks in the S&P 500. I already hold two symbols: DVA in Momentum — today’s purchase — and PHM in Growth.

I’m shortening the new portfolio to SP500, treating it as a watchlist portfolio, and modifying the rotation to pair each watchlist portfolio with a strategy portfolio. So tomorrow will be Value and SP500, Friday will pair Growth and Genetics, and Tuesday, after the Monday market holiday, will pair Value and Robotics, and then the day after the rotation will begin again with Value/SP500.

By Tim Bovee, Portland, Oregon, February 12, 2020

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12:35 p.m. New York time

I exited one stock position, IBTX, from today’s focus portfolio, Growth, and entered two positions in that portfolio. SNX in Growth and IMKTA in Value were both moved to the Bench as they ceased to qualify for their strategy portfolios. MOD qualified again for the Value portfolio and left the Bench, no doubt happy to be back in the game.

The details:

• Growth
  • Exit
    • IBTX, for a $55.17 credit per share, a return of $1.53 over 11 days, or 2.8%, a 94% annual rate.
  • Entries
    • LITE, for a $92.30 debit per share.
    • STM, a $30.88 debit.
  • Benched
    • SNX
• Value
  • Benched
    • IMKTA
  • Returned from Bench
    • MOD

12:20 p.m. New York time

I’ve updated EEM Analysis with results.

11:05 a.m. New York time

I’ve exited my short iron condor position on TLT for 50% of maximum potential profit, with 10 days to go before expiration on February 21. I’ll update the analysis later today with detailed results.

By Tim Bovee, Portland, Oregon, February 11, 2020

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