An apology and updates

Wow, I just realized that it has been over 2 years since my last update.  I knew I had been slacking, but this is ridiculous.  I will try to do more frequent updates (I am pretty sure that is what I was thinking last time as well).

I started this account with $3000 in the beginning of 2010 with the goal of turning it into $1 Million.  Let's see where we are with that goal.   As of yesterday, the account is around $16000 and I pulled out around $1400 to pay for my toys (XBox One, PS4, and some other electronics).  By the end of 2010, the account had a return of around 100%.  Then I lost track because I failed to download my statements.  But I had made it up to around $12,000.   At that point, I was introduced to the guys at Tasty Trade.  I listened to what Tom has to say and it made a lot of sense.  So I started following their style of investing, which is stay small, sell premium (instead of buying calls and puts, I was selling calls and puts trying for about an 8 to 10 percent return per month).  However, they were somewhat biased towards a market drop (bears).  To make a long story short, over the next year I managed to lose 50% of the portfolio and ended back around $6000.  I am not saying anything bad about their style but it didn't work for me in this market.  It will work much better in a sideways market (or a trending market if you pick the right side).

In Dec 2012, the portfolio was worth $8000.   And as I mentioned earlier, now the value is around $16,000 (so the 2013 return was around 100%).  Granted I have not pulled money out of this account to pay for taxes, which is probably something I should do in order to have a true representation of performance in an taxable account.  In 3 years, the portfolio has generated a return of approximately 450%+ on the original investment.

So now I am back to my old philosophy of "go with the market".  Regardless of how scary the market might look, if it is a bull market, the better odds are on the long side.  I am still mostly in calls.  However, at present, only about 20% of my portfolio is invested.  The rest is in cash.  For a portfolio that trades in options only, risk management requires me to stay largely in cash just so that if the market turns against me and I lose 100% of the invested capital (currently in options), I still have enough reserves to stage a comeback.  Remember, the market trend dictates the direction that 3 out of 4 stocks will follow.

Anyway, my current positions are in AOL (coming out of a flag pattern), SYY (my profit windfall for last year), MSFT (I think the pull back is done and the stock will perform over the next month or so, plus I like that Ballmer is leaving and the XBOX One platform is pretty nice, and the charts look good).  GTI, ZNGA, DANG, DRYS and CLF are some of the other currently held positions.

Here is to a great 2014, and may I have the time to continue to post more stock analysis that I have in the last 2 years.

Cheers.

Domino's Pizza (DPZ) update

The flag pattern appeared to break down and the stock price undercut the stop loss order point that would normally be set by investors.  A lot of the people who got stopped out might now want to get back in now that the stock is rallying and is gaping up.  I have decided to stick with my positions even though they expire in December to see if I can hit my targeted returns.  Here is to the current optimism in the market (however temporary until the next set of bad news comes in from Europe) and the potential profits.

Domino's Pizza (DPZ) update

The stock still continues to base in the formation.  We no longer have the pennant formation.  I would say the flag formation is still intact.  But the move needs to happen soon.  I am targeting a move from 34 to 35 to start taking profits (or sooner if this pattern takes too long to materialize).  I am starting to see a lot of positive coverage in the press about DPZ (e.g. Cramer has now recommended it in Mad Money).  I am looking for that move where everyone piles in driving the stock up about 15-20% and take my profits as option expiration drawn near.

New Stock Setup - Domino's Pizza (DPZ)

Looks like Domino's is setting up a very nice Penant  (Flag) formation.  This formation can pay off handsomely if it works.  Take a look at the attached chart.

The stock has moved from around a low of 26 (Oct 4) to around 32.50 for the flag pole formation.  And then is around 31.5 at present while making the flag/pennant formation.  That is about a 17% move (all numbers are rough and conservative).  A flag or pennant formation will generally result in the same percentage move if it breaks to the upside as before.  So we can (very conservatively) look for about a $5 move from here in a short period of time.  I am playing this with Dec options.  Dec 32 calls are running around 1.05 bid and 1.25 ask (but you can probably get them around 1.15).  I would expect the option to get to $4 or higher if the stocks makes it move in short order making it a potential triple play.  I also own some Dec 30 calls at present.   Of course, if the market breaks down (and who knows which direction it will head into with the Greek disaster that is ongoing in the European front), all bets are off.  This is a high risk, high reward pattern that I have played successfully in the past for very large gains (and some severe losses as well).  So buyer beware. 

Disclaimer:  This should not be taken as a recommendation to buy.  You should do your own due diligence and research before opening any positions.  Stock and Option trading is inherently risky and can result in the loss of all of your capital.  You should always apply sound risk management techniques.

Market jitters

I don't like the look of this market at all.  I think we may be headed for a pretty significant pullback.  I have been raising cash lately.  I am about 70%+ in cash already but will probably end up going 100% to cash real soon.  There may be some hope in the near term (daily charts) but the weekly and monthly charts are starting to look like a bunch of head and shoulder patterns are forming in a lot of leaders.  We are starting to see the initial breakdown in some of the former leaders and the stochastics are starting to turn downwards.  Better be safe and conserve capital to fight another day.  There could be some downside opportunities coming up.  Nothing has made me any money on the long side of the trade in over 6 weeks.  Maybe the short side is the way to go.   Be careful and watch the market carefully if you continue to be long. 

Market update

I am beginning to realize that blogging about anything takes time and dedication.  It is too easy for me to skip posts and focus on other things.  Lately I have been too busy at work to put any attention towards stocks.  But that is the time when I usually fail to get out of the market and then lose money because I was unable to pay any attention to my positions.  So, I am taking some time to review the market, my positions and the general overall feeling that I have.

I am probably about 50% in the market at the moment with the rest in cash.  The pull back has affected my portfolio a little bit but not to a point where I start fretting about the losses.  As the markets have pulled back, the general market sentiment has turned negative in a hurry with a very large bearish attitude.  Combine that with a nuclear melt down, a tsunami, the Libyan war that is now brewing, and we should have the climate to have a strong rally if everything works out.  I am wishing well for the Japanese nation and hope they can get things under control.  The Libyan situation doesn't seem like it should get too messy for the US since a lot of UN members are in on the assault and the enforcement of the no-fly zone.

The job situation has been improving lately, but with the post office about to lay off 40,000 people, the numbers may increase again (unless offset by the private sector).  The FED will probably continue to keep interest rates at negligible level.  If you have been monitoring 30 yr rates lately, they have been declining.  So the market is expecting the interest rates to remain low as well.

Coffee prices continue to climb.  The chart makes me nervous (JO) but I have entered long on the coffee ETF since the long term trend is still intact and I think we may see another strong push towards 100.  The prices at the retail continue to climb.  But it cannot go on forever.  I am trying to make a momentum play and have Good till cancelled sell orders placed at the $85 mark. 

I am fairly optimistic about Intuitive Surgical.  The stock has been consolidating its gains at the top, and despite minor pullbacks still continues to show strong support.  I think if the next earnings blow out estimates (as they normally do), we can see a huge move in the stock.  F is at a good buy point and will probably realize better sales due to the Japanese auto production slowdown/stoppage.  Garmin has been a solid stock and I think its getting ready to make a move to 36 soon.  All we need is some positive news.  But there will probably be more pain in the near future.  It really depends on your time horizon.  If you are a long term holder then you can probably ride out the turbulence.  But if the republicans insist on cutting spending, they may end up killing the recovery and then all bets are off.  So if you are still in the market, play it cautiously and only if you can keep tabs on your positions.  Probably stay away from options for the time being unless you are trying to play short term rallies, and then take your profits when they materialize.

Market update

Soon after I got out, it appears that the market staged a nice rally and most of the stocks are back to or above the levels where I exited the market.  I did enter new positions in First Solar (FSLR) and JA Solar Holding (JASO) - I wonder if I bought it since the company is named with my initials :-)

I have also held onto BCSI, IBM and reentered ISRG.  I missed out on the big move by Chipotle (CMG).  Heard they are launching a new asian cuisine chain.  That could really get growth to spurt if successful.  I took profits in JO (coffee ETF and SGG - Sugar ETF).  The Sugar ETF was timed well, the coffee as well,  but the coffee ETF has taken off since then.  I am looking to reenter the coffee etf if the position presents itself.  I believe Coffee prices will continue to increase for a while.  Sugar might also be attractive as it has pulled back 10% or so. 

I am just too busy at work to mess too much with stocks.  Hence the reduced number of posts.  I currently have open long call positions in AMSC (losing money), FORM (losing money - didn't take my 150% profits), GLW (profitable), GRMN (profitable), and Ford (about breakeven). 

Markets have been acting strong and I am beginning to think that my old analysis that was thinking about DOW 13500 or higher may not be far fetched anymore. However, the Nasdaq is approaching the high set in late 2007.  A pull back may occur soon in the markets.  So I am cautiously optimistic.