11:50 a.m. New York time

As the world knows, today began as a down day in the markets. I awoke this morning to the gentle clanging of stop/losses triggering on seven of my stock holdings. My options holdings were giving silent screens of pain as they moved away from profitability five days before I’m scheduled to exit the profitable positions.

The Wuhan coronavirus panic has been blamed for the declines. Given the history of the markets over the past year, I’m more inclined to think that the long-awaited major correction is stepping forward. But January honors the Roman god Janus, who is said to have adapted, trading in his double face — Peace or War — for the 21st century’s great concerns: Bull market or Bear. So perhaps the never-ending bull market written by the trading algorithms has not ended yet.

Today’s focus portfolio is Momentum, and a quick check while sipping morning tea — Japanese Bancha, my favorite — I discovered that SNE had dropped off of the Momentum Portfolio, requiring that it be sold. All in all, way too exciting for a Monday morning.

I found three candidates in the Momentum screen that also were still in their uptrends, and I added them to the portfolio.

Today’s exits, combined with those last week left me a with wheelbarrow of free cash and no obviously good place to park it. As always, research will solve that problem.

In the trades below, SNE dropped off the Momentum screen and was manually sold, AAPL exited when its trailing 2% stop/loss was triggered, and the rest had my standard trialing stop/loss that was triggered, set at double the Average True Range.

Stock Trades

• Growth
  • Exits
    • CRMT, for a $106.28 credit per share, down $3.33 from entry, a 3.0% loss over six days for a -185% annual rate.
    • LHCG, a $144.40 credit, up $0.78 from entry, a 0.5% return for a +12% annual rate.
    • YY, a $56.50 credit, down $7.47 from entry, an 11.7% loss over six days for a -711% annual rate.
• Momentum
  • Exits
    • MX, a $14.36 credit,  down $1.56 from entry, a -9.8% loss over five days for a -717% annual rate
    • SNE, a $71.43 credit, up 0.83, showing a 1.2% return over 19 days for a +23% annual rate
  • Entries
    • CVH, a $4.51 per share debit.
    • ELVT, a $4.93 debit.
    • FRTA, a $14.32 debit.
•  Genetics
  • Exit
    • AAPL, a $309.07 credit, up $17.17 from entry, producing a 5.9% return over 27 days for an +80% annual rate.
• Robotics
  • Exits
    • CSOD, a $59.41 credit, down $3.09 from entry, a 3.0% loss over four days for a -441% annual rate.
    • TSM, a $55.52 credit, down $1.70 from entry, a -3.0% loss over four days for a -272% annual rate.

By Tim Bovee, Portland, Oregon, January 27, 2020

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3:15 p.m. New York time

Additional stop/losses have been triggered. APAM in Momentum and EIX in Utilities had tight stops because they no longer qualified for their portfolios. SYNA had the standard twice the Average True Range for a stop, and HYG — my vehicle for junk-bond income — had a long-standing fixed stop that was triggered after a four-day decline in price.

The details:

• Momentum Portfolio
  • Exits
    • APAM, a $33.59 credit, down 96 cents from entry, producing a 2.8% loss over nine days for a -113% annual rate.
    • SYNA, a $71.04 credit, up $1.49 from entry, for a 2.1% return over 17 days for a +46% annual rate.
• Utilities Portfolio
  • Exit
    • EIX, for a $77.20 credit, up 23 cents from entry, or a 0.3% return over eight days for a 14% annual rate.
• Bond Income
  • Exit
    • HYG, for an $87.72 credit, up 79 cents, excluding dividends. With dividends included, the position produced a 3.3% return over 185 days, or a 7% annual rate.

2:15 p.m. New York time

Of my eight short iron condor positions expiring February 21, all are well below my management point, which is 50% of maximum potential profit. Two are unprofitable and trading above the breakeven point (TLT and XLK). One other is also unprofitable but trading within the profit zone (XLE). Five are profitable at the present (EEM, XBI, XLI, XLV and XLY).

The positions reach 21 days before expiration on Friday of next week, and at that point I’ll exit all positions that are profitable, even if minimally so, a manage-early practice shown by TastyTrade research to improve results.

In stocks, I moved the stop/losses of the positions to double the Average True Range, or closer in a few cases. And sure enough, three positions — EDIT in the Genetics Portfolio, TER in Robotics and VIPS on the Bench — all triggered their stop/losses. Only TER had the standard double ATR stop. EDIT and VIPS each had a single ATR stop.

Two positions no longer qualified for their portfolios. I tightened the trailing stops for APAM in the Momentum Portfolio and EIX in Utilities, since both were trending upward. When EIX exits, it will be the last position in Utilities, which I shall then discontinue.

I sold three other positions. And I entered three, all in the Values Portfolio, which is the focus portfolio for the day.

Stock Trades

• Value Portfolio
  • Entries
    • RUSH, for a $43.66 debit.
    • SNX, a $144.49 debit.
    • WCC, a $54.03 debit.
• Momentum Portfolio
  • Exit
    • MS, for a $54.4 credit, down $1.71 from the entry level, producing a 3.0% loss over two days for a -556% annual rate.
• Genetics Portfolio
  • Exits
    • CDXS for a $17.12 credit, down 18 cents from entry, resulting in a 1.0% loss over one day for a 372% annual rate.
    • EDIT, a $31.79 credit, down $3.78 from entry for an 11.9% loss and a -434% annual rate.
    • REGN, a $345.07 credit, down $14.49 from entry, a 4.0% loss for a 1,471% annual rate.
• Bench Portfolio
  • Exit
    • VIPS for a $13.64 credit, down $1.61 from entry, producing a -10.6% loss, or a -351% annual rate.

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

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Update 2/4/2020: Note that this method of exiting created problems and I have abandoned it. See the new Trading Rules explanation on the pulldown menu at the top of any page.

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1:10 p.m. New York time

Today was taking out the trash day, as I cleared out some positions from the Bench that no longer had a reason for being there. And it turned out to be a down day on the markets generally, so there were mainly losses.

I’ve reworked my stock trading rules to bring them into line with my current practices, adding a few new things along the way. Here they are:

1. 1. 1. Entry
         1. When the Zacks criteria are met.
            1. Strategy portfolios, which are the results of queries into the Zacks database: When the stock appears on the screening, meaning it matches all of my search criteria.
            2. Watchlist portfolios, which are lists of stocks: When a stock on the watchlist has a Zacks rank of 1 or 2.
            3. Income portfolios: When the fund has a Zacks rank of 1, 2 or 3.
         2. Set a trailing stop/loss for each position.
            1. 1. The standard stop/loss will be set at double the 14-day Wilder Average True Range at the time the stop is set.
               2. The stop/loss can be varied to meet the needs of a position.

1. 1. 2. Position Management
         1. Exit each position that fails to meet the criteria of its portfolio.

1. 1. 1. 1. 1. In exiting, consider setting a close trailing stop/loss rather than exiting outright, in case the position rises.
            2. A position that no longer meets the criteria of its portfolio may be moved to the Bench if there is a reason to continue to hold it, such as an ex-dividend date in the near future.

The biggest change is the trailing stop/loss requirement. I’ll be updating the Trading Rules section with these changes over the weekend.

Today’s focus was on the watchlist portfolios. I’m in the process of phasing out the Utilities Portfolio, replacing it with a Robotics Portfolio based on the holdings of the ARKQ exchange-traded fund, which also manages the ARKG fund, the source of the watchlist for my Genetics Portfolio (although ARKG calls it “genomics”).

Today’s Trades

• Genetics
  • Entries
    • CDXS, for a $17.29 debit.
    • REGN, a $359.56 debit.
• Robotics
  • Entries
    • CSOD, for a $62.43 debit.
    • TER, a $76.15 debit.
    • TSM, a $57.22 debit
• Growth
  • Exits
    • AMED, for a $180.64 credit per share, down 31 cents from the entry level, a 0.2% loss over two days for a -31% annual rate.
    • ATSG, a $21.53 credit, down $1.64, for a 7.1% loss over 20 days, a a -129% annual rate.
    • NTAP, a $59.99 credit, down $1.65, producing a 2.7% loss over two days for a -489% annual rate.
• Momentum
  • Exits
    • PERI, for a $9.06 credit, down 56 cents from the entry level, producing a 5.8% loss over one day for a -2,125% annual rate.
• Bench
  • Exits
    • NGLOY, for a $14.06 credit per shares, up two cents from the entry level, producing a 0.1% return over 20 days for a 2.6% annual rate.
    •  PFGC, a $51.87 credit, down 23 cents, a 0.5% loss over 16 days for a -10% annual rate.
    • TALO, a $25.88 credit, down $5.11 from entry, a 16.5% loss over 16 days for a -376% annual rate.
    • TNK, a $20.02 credit, down $3.77 from entry, a 15.9% loss over nine days for a -643% annual rate.

By Tim Bovee, Portland, Oregon, January 23, 2020

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12:05 p.m. New York time

I’ve updated GLD Analysis with results of my short iron condor trade.

11:20 a.m. New York time

My short iron condor position on GLD was filled for half of maximum potential profit. I shall update the analysis with results later today.

In stocks, today’s focus is on the Momentum Portfolio. I entered three positions and exited two positions in Momentum, and also exited two positions in the Growth Portfolio.

Stock Trades

• Momentum
  • Exits
    • ICHR, for a $37.98 credit per share, down 73 cents from the entry price, producing a 1.9% loss over seven days, or a -98% annual rate.
    • SNX, a $146.65 credit, down $3.89 from entry, showing a 2.6% loss over seven days for a -135% annual rate.
  • Entries
    • MS for a $56.15 debit.
    • MX, a $15.92 debit
    • PERI, a $9.62 debit
• Growth
  • Exits
    • EBMT, for a $22.51 credit, up 12 cents from the entry price, producing a 0.5% return over one day for a +196% annual rate.
    • SSNC, a $64.33 credit, up 67 cents from entry for a 1.1% return over one day, which is a 384% annual rate

By Tim Bovee, Portland, Oregon, January 22, 2020

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12:50 p.m. New York time

This is another heavy day in the Zacks algorithm ‘verse. Four exits in the Growth Portfolio, another in Momentum, and seven additions to Growth.

This is primarily a Growth Portfolio day in my rotation of strategy-based queries. I’ll exit from all portfolios as needed, but give priority to entering new positions in Growth.

Adding to the complexity is the fact that I’m fully invested at this point, so all new positions will need be filled from the proceeds of exits. Another complexity: I’m in the process of increasing my target position size by 50%., so the exits may not cover all new positions.

This turned out to be a good day to try out an idea I’ve had bouncing around my head: Exiting positions once they exceed a 5% profit. This would be in line with the wisdom of financier and trader Bernard Baruch (1870-1965), who famously said, “Nobody ever lost money taking a profit.”

The average holding period for each of my positions is 13 calendar days, a bit less than 28 trades a year. A 5% return, then, is 140% annualized, meaning that if I could repeat that return on a position every time I traded, I’d double that chunk of money each year, and then some.

Clearly, a 100% rate of success is insanely optimistic, but let’s say I succeed only 10% of the time. In that scenario, I’ve earned 14% on money each year, still not bad. Moreover, I can lose 1% on 13 of the trades, and still not be down for the year.

In implementing the 5% rule today, I exited FORM and MKSI in the Growth Portfolio and HIBB in the Value Portfolio

Today’s trades

Positions marked with an asterisk (*) before the symbol were exited under the 5% rule described above. 

• Growth Portfolio
  • Exits
    • BRT, for a $17.85 per share credit, up 18 cents from entry, producing a 1.0% return over 11 days for a +34% annual rate.
    • FN, a $66.29 credit, up 29 cents, resulting in a 0.4% return over 12 days, or a +13% annual rate.
    • *FORM, a $27.63 credit, up $1.54, for a +5.9% return over 15 days, or a 143% annual rate.
    • ITRI, a $87.42 credit, up $4.09, sowing a 4.9% return over 13 days for a +138% annual rate.
    • *MKSI, a $115.36 credit, $8.37 above the entry price. The return was $7.9% over 14 days for a 204% annual rate.
    • TX, for a $22.70 credit, down 50 cents from the entry price, producing a 2.1% loss over eight days for a -98% annual rate.
  • Entries
    • AMED, for a $180.95 debit.
    • CRMT, a $109.61 debit.
    • EBMT, a $22.39 debit.
    • NTAP, a $61.64 debit.
    • RH, a $223.16 debit.
    • SSNC, a $63.36 debit.
    • YY, a $63.97 debit.
• Momentum Portfolio
  • Exits
    • *HELE, for a $182.95 credit per share, up 77 cents from entry, producing a 0.4% return over 14 days for a +11% annual rate.
• Value Portfolio
  • Exits
    • *HIBB, for a $26.94% credit, up $2.05 from entry, producing a +8.2% return over 11 days for a +273% annual rate.

Tomorrow’s trading will focus on the Momentum Portfolio.

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

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2:25 p.m. New York time

The remaining put options leg of my short iron condor on XLY, which traded for the last time on Friday, expired today without value. That was the assumption I used in the results I posted last Wednesday, which stand.

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

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3:40 p.m. New York time

RH had started what appeared to be a leg up today, and to preserve gains, I set a tight stop/loss slightly beneath the starting point of the rise. The rise faltered, the stop/loss was triggered, and I exited RH for a $224.06 credit, up $19.53 from entry. the position showed a 9.6% return over 51 days for a 68.3% annual rate.

This is the last day for trading my short iron condor position on XLY. All that’s left, after an adjustment earlier this week, is a short put (bull) spread, which is out of the money and ought to expire without value, the preferred outcome with short spreads.

10:30 a.m. New York time

The Value Portfolio is up for management today, and I added a new position, GPX,

In the Growth Portfolio, TLYS was reduced to a “strong sell” rating by the Zacks algorithm. A stock in the Gene Pool, CDNA, qualified for addition to the Genetics Portfolio, and I bought shares.

As is clear from above, the manage-one-portfolio-per-day rule has broken down as quickly as I adopted it.

So, Plan B:

• I’ll manage one screened portfolio daily, beginning with Value and then rotating through Growth to Momentum, and then restarting the cycle. This will give a me a diversity in days traded.
• The pool portfolios — Genetics and Utilities — can be managed on any day, although in a crunch I’ll try to group them with the Value Portfolio, which is low maintenance.
• Any holding in any portfolio that on any day drops to “sell” or “strong sell” can be managed immediately.

Under this plan, since today was the Value Portfolio’s day, and since Monday is a market holiday, next week’s rotation will be Growth on Tuesday, Momentum on Wednesday, Value again on Thursday and Growth on Friday.

I’ll note in passing that I’m not overly enthralled with the Utilities Portfolio. The stocks don’t produce a lot in capital gains, and the dividends are paid quarterly, which complicates management according to the Zacks algorithm. I’m leaning toward gradually phasing it out.

The Middle East having calmed a bit (or as much as that region ever calms), I’m returning to 20% trailing stop/loss. I won’t go back and change the 10% stops but shall set new positions at the higher percentage.

The morning’s trades:

• Value
  • Exit
    • TLYS, for an $8.77 credit, down 9 cents from the entry level, producing a 1.0% loss over three days for a -124% annual rate.
• Growth
  •  Entry
    • GPX, for a $14.96 debit.
• Genetics
  • Entry
    • CDNA, for a $23.97 debit.

By Tim Bovee, Portland, Oregon, January 17, 2020

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3:40 p.m. New York time

SIG in my Value Portfolio shot up sharply on strong guidance from the company, and I took my profits before the inevitable end of day decline set in. I’ll make a decision Friday on re-entry, which coincidentally is when I manage Value positions this week.

I exited SIG for a $30.70 credit, up $11.86 from the entry price. The position’s return was 62.9% over seven days for a +3,281 annual rate.

1:55 p.m. New York time

A trailing 10% stop on DQ was triggered. The exit came at $54.05 per share, down 66 cents from the entry level. The position showed a -1.2% loss over 13 days for a -34% annual rate. DQ began in the Momentum Portfolio, moved to the Bench after it’s metrics deteriorated, and then returned to Momentum, where it met its end.

10:05 a.m. New York time

I exited PAAS after it’s trailing 10% stop was triggered. The position sold for $23.39 per share, down $1.81 from the entry level, producing a 7.8% loss over 21 days, or a -135% annual rate. PAAS was initially in the Momentum Portfolio but moved to the Bench after it dropped from the screen. It continues to hold a “strong buy” rank from Zacks.

9:55 a.m. New York time

I managed the Utilities Portfolio today. AES dropped from “buy” to “hold”. The stock goes ex-dividend on January 30, so I moved the symbol over to the Bench rather than selling it.

To replace it in the portfolio, I bought shares of EIX for a $76.97 debit each.

There were no changes to the Bench, beyond the addition of AES.

By Tim Bovee, Portland, Oregon, January 16, 2020

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1:40 p.m. New York time

In stocks, I managed the Momentum Portfolio today.

I exited four positions in the portfolio, and removed a fifth from Momentum, although I continue to hold the shares because it remains qualified for the Growth Portfolio. I added four positions to Momentum. One symbol on the Bench fell to “hold” on the Zacks ranking, and I exited from it.

The trades:

• Momentum
  • Exits
    • CNXM, for a $16.59 credit, down 20 cents from entry, producing a -1.2% loss over 12 days for a -36% annual rate.
    • CS, for $13.87 credit, down 8 cents from entry, a 0.6% loss over seven days for a -30% annual rate.
    • TGNA, a $17.41 credit, up 37 cents from entry, showing a 2.2% return over seven days for a +114% annual rate.
    • VIPS, a $14.61 credit, down 38 cents from entry, resulting in a 2.5% loss over 12 days for a -77% annual rate.
  • Transfers
    • FORM, to the Growth Portfolio
  • Entries
    • APAM, for a $34.55 debit
    • ICHR, a $38.71 debit
    • SIMO, a $50.26 debit
    • SNX, a $150.54 debit
• Bench
  • Exit
    • JD, for a 40.06 credit, up $2.25 from entry. The position produced a 6.0% return over nine days for a +241% annual rate

1 p.m. New York time

My one remaining short iron condor position using the January monthly options, XLY, which trade for the last time on Friday, continues to be in the money (net unprofitable). To avoid having short shares of the fund appearing in my account after expiration, I have sold the call side of the position, updating XLY Analysis with details.

By Tim Bovee, Portland, Oregon, January 15, 2020

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11:55 a.m. New York time

Another trigger on my 10% trailing stop/loss, on ESTE in the Momentum Portfolio.

The Genetics Portfolio is up for management today and saw three falls from qualification as Zacks scores moved from “buy” to “hold”. Two symbols were added to genetics.

One symbol, HII, dropped off the Bench due to sliding score.

I re-established two symbols that had been stopped yesterday but still qualified, TLRY to Growth and, outside of the rules, TNK, which had been stopped from the Bench but still has a qualifying score.

The trades:

• Genetics
  • Exits
    • AQB, for a $2.56 credit, up 53 cents from entry, producing a 26.1% return over 26 days, or a 367% annual rate.
    • CGEN, a $5.98 credit, up 2 cents from entry, a 0.3% return over 22 days for a +6% annual rate.
    • INO, out for a $3.37 credit, up 25 cents from entry, an 8.0% return over seven days for a +418% annual rate
  • Entries
    • EDIT for a $31.79 debit
    • SYRS for an $8.42 debit
• Momentum
  • Exits
    • ESTE hit the 10% stop/loss and was sold for a $5.64 credit, down $1.39 from entry. The exit produced a 19.7% loss over seven days for a -1,030% annual rate
• Growth
  • Entry
    • TLYS, a position exited January 13 by a trailing 10% stop/loss, re-established for an $8.86 debit.
• Bench
  • Exit
    • HII, formerly of the Growth Portfolio, for a $3.37 credit, up 25 cents from entry, showing a +8.0% return over seven days for a $418% annual rate.
  •  Entry
    • TNK, exited January 13 by a trailing 10% stop/loss, re-established for a $23.79 debit

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

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