THE 3 IMPORTANT BENEFITS OF A CORE VERSUS PERIPHERY STRATEGY
As any of you who have been reading this blog for longer than a fortnight know, I am an advocate of having a core strategy that allows you stay in peace, while giving you the maximum potential for profit possible. For some of you that strategy may involve trading 40 times a day, taking multiple ticks out of the market. For others it may be a consistent method of investing in stocks that exhibit a certain price pattern. And for the chosen few, perhaps it's actively trading the markets while high on prescription drugs with a variety of costume clad woman keeping you company (true story - don't ask for details). Whatever the strategy may be, once a core strategy is established then and only then are the advantages of a periphery strategy felt. A sound periphery strategy (definition: a strategy you don't rely on for your primary investment gains, but instead rely on to compliment the performance of your core strategy) will allow you to bring in that spinach and macaroni money, while your core strategy is what you rely on for the steak and potatoes. A sound core strategy paired with a sound periphery strategy should accomplish the following: 1. A solid core strategy will make your periphery strategy that much better due to the fact that you don't *need* the periphery strategy to make your dough. Therefore, you can allow trades that your periphery strategy generates to come to you. There is no rush or need to force a trade. You are, therefore, empowered to only take the best risk/reward opportunities. That is unless you are a mouth breathing, compulsive button pusher. In which case, no strategy will be of benefit. 2. A periphery strategy will allow your core strategy the extra cushion it needs when it goes through its inevitable drawdown periods. As much as we all think we have that one system that is immune to drawdowns, it is inevitable that you, me and the next guy will suffer as a result of one. The magic of a good periphery system is that it allows you to absorb the drawdown by whittling down the pressure, at least somewhat. This will allow you to keep your mind in balance, which is essential when you are getting bombarded, while holding your head and praying that you don't end up going the way of Willy Lump Lump. 3. Psychological comfort. Knowing that have two methods of taking cash out of the market, gives you that much more confidence. Important note here: don't fool yourself into thinking you have two methods that compliment each other well and allow...
SOME MANIACAL THOUGHTS
- The longer oil stays above its recent breakout point, the greater the chances of a sustained move with the goal being a break of the $42 level on the USO. Time to check the tire pressure on my 10-speed. - The longer the QQQQ remains below $58, the greater the chance of a slip and slide right into the neighbors front yard. Paramedics on standby. - TDSC - mentioned in the video as a potential short last night, doesn't seem to be in the mood to give me the margin of safety I want. If it doesn't want to play in my sandbox, it can go swing on the monkey...
*VIDEO* THE GUN – A BLOATED SHORT OPPORTUNITY AND REVIEW OF OIL
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FOOT ON NECK SYNDROME
The manner in which oil sliced through the significant amount of overheard resistance like a hot knife through butter is a direct result of the surprising pace with which this move has come. You can be assured that a majority of those who either *HAD* to get long or cover their shorts, were waiting until some of yesterday's gap was retraced. Once they saw that it wasn't happening, everyone piled in...and here we are...above resistance...a picture perfect, clean break. Next major target/brick wall $42 on the USO. I'll be going over the chart tonight. It seems we're at the beginnings of a new leg up in the oil markets. Got your...
WICKED WEDNESDAY – 6 CHARTS THAT DESERVE YOUR ATTENTION
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THE IRON MAN – WALL STREET STYLE
Any test of a trader or investor's portfolio does not come when the market is going up day after day, similar to what we have been witnessing recently. It comes when the market drops. That is when you know if you simply have a portfolio that is either a high or low beta version of the S&P 500 or a portfolio that trades independent of the market averages and will be able to sustain returns through most conditions of the market. Today was the Wall Street version of the Iron Man. Only the most fit, long biased portfolios finished with anything resembling a gain today. To the point where a small fractional loss would be considered a great outcome given the carnage today across all asset classes that don't count on the end of world being their formula for success. With that being said, I was very happy to see our portfolio bring in a gain today. We posted yet another new high in the managed portfolio. It was mostly due to a super-tiny micro-cap stock that we own with an enormous spread sporting a small buy at the end of the day, which made it close up 10%+. If it wasn't for that we would have had a very small fractional loss, which I still would have considered a great victory. Either way, all 3 of our concentrated portfolio names held their own. Our largest holding was down a little over 2% and our second largest holding posting a gain of greater than 3%. Iron Man - Wall Street style. In the first race, we finished top of the heap. We'll see how the second race goes. Never too late to join Zenpenny. We now have two membership options. And both are...
SOME QUICK THOUGHTS
- The limit down move in many commodities today doesn't bode well for the general markets. Like it or not, all these asset classes have been feeding off each other during this rally. Extreme weakness in one asset class, means that much less of a chance of recovery in another weak sector i.e. stocks. - S&P 500 has taken out multiple days of gains in one shot so far today. This is standard behavior during a correction, as they are always violent, scary affairs. Friday's high now becomes a major point of interest for bulls and bears. - I could just imagine the number of fish that are jumping aboard the gold train given the tensions in the Middle East. I would advise said fish to be careful, as they are surrounded by hooks and may find that they are flopping around at the bottom of a boat before they get a chance to know what hit...
LOVE AND HATE IN THE STOCK MARKET
This article also published on thestreet.com The financial markets have the ability to take the most common of human traits and take full advantage of them to an extent that would even make P.T. Barnum look away in embarrassment. All the common emotions that we rely on for our day to day survival, often times end up costing us our wine and cheese money on the alternate planet known as Wall Street. The emotions of love and hate play an important role in determining the what, how and why of a stocks behavior. Ask Senor Average, who invests with XYZ Brokerage, whether a stock that is loved by the masses should outperform a stock that is hated and questioned by most. Invariably, Senor Average will tell you that love will win. Love for the companies products, management and brand will end up trumping anything a company that has been cast in a suspicious light can produce. Love beats hate in the stock market. Arguably, there is no greater love that exists on Earth today than the love for AAPL. People of the modern world, after all, spend more time on their IPAD, IPHONE or listening to their IPOD than with their children, spouses, pets or mistresses. The threat of not having any of these devices for any period longer than that spent in a state of sleep, far outweighs any threat of not seeing friends or family for days or even weeks. Therefore, it only makes sense that if and when the markets decide to pullback, AAPL wouldn't suffer nearly as much as a stock that doesn't have the cult fanfare or the mass following. And there's the trap, it makes sense. Whenever something "makes sense" in the eyes of Senor Average and therefore, in the eyes of a majority of investors, it becomes the markets responsibility, duty and privilege to take full advantage of those who believe in putting their money into "making sense" investments. What doesn't make sense in today's market, as one example, is NFLX. Here you have the opposite emotions of AAPL. NFLX is a company that is looked at as being easily replaceable. It is also a company that is seeing its valuation questioned daily, as well as its long-term viability in the media marketplace. A company that sees its stock price shunned, as if it were a green ogre, attacking a helpless village. Quite the opposite of the make-out session we see between investors and the princess - AAPL. These expressions of love and hate come in form of buys and sells in the financial market. The love for AAPL is expressed through...
NEW MEMBER FEATURE
Just passed a trading watchlist and chart illustrations to members for both potential long and short plays. The plays cover all market caps. Once the technical setups are complete, I will be sharing those stocks with a market cap above $50 million on the blog, as part of "The Gun" segment, which debuted yesterday. All trades that involve stocks with a market cap under $50 million will be held for members only. Awesome opportunity for both readers of the blog and especially members to add performance to their portfolio through capitalizing on intelligent risk/reward setups. And let's not forget about our investment names...the bread and butter of our performance. Intelligent risk/reward setups for trades and detailed research that leaves no stone unturned for our investments. That is what it's allllll...
THE WEEK AHEAD – 6 CHARTS TO KEEP YOU IN PEACE AND NOT IN PIECES
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