TMV – ANALYSIS BEHIND TRADE
Below you will find the chart describing the reasons for my long position in TMV from a technical perspective. I said in my post from this morning that I was expecting some of the upward pressure on the long bond to subside in the coming days and weeks. This is due to my opinion that investors will calm down compared to where they are at present. Risk appetites should increase somewhat and the long bond should lose some of the fear premium that is being built into the price currently. Here is the technical...
BUYING TMV
Bought TMV - 3X Inverse ETF on the 30 year Treasury. Took a position around 24.40. Given my strong opinion about the sideways nature of trading for the remainder of August, I expect that some of the upward pressure on the long bond (downward pressure on yields) will subside. 30 year yield (TYX) is sitting at an important point of technical support, as well. I'll post some charts...
TODAY’S THOUGHTS
I further continued my routine of liquidating long positions into today's strength. Furthermore, I added FAZ to my growing family of inverse leveraged ETFs. I still have my eye on adding more FAZ and possibly adding some SDS to the mix to round it out. I already have some EDZ from late last week. We did manage to take out the line in the sand for the bears at around 54 on the QQQ today. It was a strong close and the burden of proof is now on the bears shoulders, as the bulls seem to have taken back control for the short term. In the end, these are all short-term problems if you are bearish. The positions I am establishing on the bearish side of the trade are more intermediate to long-term. I am not looking for a quick strike. Rather, I am playing a decisive change in trend that I believe is taking place in the markets for the first time since the 2009 bottom. I will add to shorts using inverse ETFs slowly if the market is to continue to rise. I will also be out of my long positions completely by the end of this week. I am looking to add to inverse ETFs if we manage to hit 1230 on the S&P or if I see signs that we are in the process of breaking down before we get to 1230. Going into September and October this year will be treacherous to say the least. It seems there are a good deal of puts that were purchased during the first part of August that need to be cleared out before downside volatility returns. I'm expecting a break of the recent lows in September. I'm willing to be patient with this one. Got my bear suit on. Zipped up...
PORTFOLIO POSITIONING
I will be providing updates from time to time as to the general portfolio structure. I have been increasing my allocation to cash over the past couple of weeks. I am now up to 50% cash. I have recently taken a position in EDZ. I have a couple more inverse ETFs that I would like to gain exposure to in the days ahead. I am also looking to liquidate what remains of my long exposure in the market and be net short in the portfolios for the first time in quite awhile. I wouldn't be taking on such positioning if I didn't feel that the downside was substantial from here. A move up to 1200+ on the S&P would not be surprising. A move to 1250 would, however. Expecting to see sub-1000 on the S&P over the next couple of months. What happens from that point will tell us if we are going to test the March 2009 lows. I'll have charts going over the reasons why in my weekly chart review later...
5 ELEMENTS THAT MAKE FOR A SUCCESSFUL INVESTMENT
You guys know that the bread and butter of my investing strategy comes from the research I do and the long-term positions I take as a result. I take on a few short-term trades each month, but they make up a small fraction of our gains come year end. I'm not a short-term trader. I like doing research. I like taking on large positions. I like concentrating my portfolio. I like hitting home-runs. Believe me, I've attempted to take on large, concentrated positions looking for home-run stocks that are short-term trades way long ago. It's a ticket to a prescription to xanax and a nervous twitch that scares small children. Not my thing...real simple. I wanted to take a look at what has been going right recently. Both as a reminder to myself of what I need to be on the lookout for and as an educational experience so that you can search out these opportunities yourself. PSTR is a good example of an investment that has treated us well since I took the position more than a month ago. There are several important elements at play within PSTR. They do not come around very often. But when they do they make for an explosive combination of drivers for a companies stock price: 1. A restructuring angle. This is so important. Why? It's a catalyst. It has nothing to do with the fact that a company reduced debt on its balance sheet by X amount. It has nothing to do with the fact that there are new members of the board. It has nothing to do with the fact that certain pieces of a business are spun-off or sold. It has everything to do with the fact that it renews interest in the stock. Certain groups of investors (usually the investors you want to be holding hands with) will begin taking positions in companies that have been restructured and other groups will follow. It begins a positive life cycle for the stock, if you want to call it that. It is a way of removing the bad and bringing in the good. It insures that the stock isn't moving sideways for months or even years. It's a catalyst...bottom line. 2. Technical perfection. What is technical perfection? It's a basing pattern that begins blossoming into an uptrend with volume to match. That's my idea of technical perfection. When the right people start becoming involved in a company, it shows in the price action. You see their tracks. It creates a healthy base with which the stock price can appreciate. 3. A value angle. This creates a sense of confidence amongst...
A REVIEW OF A LONG-TERM HOLDING AND A SHORT-TERM TRADE
We are currently long 4 positions in our long-term portfolio and 1 position in the short-term trading portfolio. I have made public one of our long-term positions with the release of its research report some weeks ago. Our short-term trading position I have been involved with for about a week. The remainder of our positions are available to members only. Here are the charts, along with commentary: click on charts below to...
PSTR: WHAT NEXT?
The stock is up nearly 20% with more than 2 hours left until the close. I did mention two days ago that it looked ready for blastoff when it was holding near support, with volume increasing and the daily ranges narrowing. The chart below has further details: click on chart to...
PSTR: TECHNICAL UPDATE
A technical update on PSTR. If you aren't familiar, PSTR is a long-term investment position that was recently taken in the portfolios. The research report is available to all by clicking here. click on chart below to...
QUICK THOUGHTS
- Have done nothing with any of "The Gun" trades. Reason being that the volume just isn't there to justify a long position. Doesn't mean that a trade will fail when a trigger is hit on light volume. It just means that the chances of success are not as great. - Strange market today. A very narrow trading range. We simply gapped up and have been sitting around the same levels. - I feel that we are going to chop around a bit here for sometime. If you enjoy trading over the very short term, it's time to look for shorts into a move like this. - The names in our portfolio continue the long consolidation process. Most of them are sitting at the lower ends of their consolidation ranges. These are long-term holdings. As I told members this weekend...when the names within our portfolio do decide to move out of their respective ranges, they will bring in exponential gains in a short period of time. I expect all of them to realize their value over the...