Investor Spotlight

Sunday, October 30, 2016

Managing My Portfolio

I always remind myself that Institutions - hedge funds, mutual funds, pension funds etc - are the ones that account for over 75% of the total daily volume in the market. They determine what the price of any given stock would be on any given day just because of their sheer size of daily trading volume. It takes them several weeks to accumulate the full position in any stock that they favour. When they decide to bail out on stocks during earnings and start harvesting profits, stocks will gap down in high volume. In the last 2 weeks we observed $EBAY dropped (-10%) and $AMZN dropped (-5%) during earnings. Because of the sheer trading volume of these two stocks during earnings, over $1 billion changed hands that day with $EBAY and over $10 Billion with $AMZN This amount of trading volume will drag down all the major indexes as well as stocks that you have in your portfolio. As a retail trader and investor, I am always fully aware of the earnings calendar since that affects my portfolio.

I was 'Cautiously Bullish' in my tone with my Oct 9th blog post. I started raising my trailing stops on my positions to protect my profits. On Oct 16th blog post, we were in the second week of earnings and my tone changed to 'Bearish' I began liquidating my losing positions and stayed with technology names only. That was the only leading sector at that time. Last week I mentioned that I was mostly in CASH This week we have a lot of energy names and 2 tech giants - $FB and $BABA reporting earnings. How the institutions will respond is any one's guess! I know that November thru January are some of the best months of the year for profitable trades. I would much rather be in CASH as a position now to avoid erosion of my capital. Most of all, I prefer to have monies available to take some bullish positions, once the major indexes trend above the 8 day ema (exponential moving average)

Stock on My Watch List

Currently all the 9 major sectors are trading below the 200 day sma (simple moving average) That does not bode well for me as a retail trader. We also have an elevated risk in the market with 14 distribution days between $SPY and $NASDAQ Last week we had only 10. I am constantly scanning for growth and trending stocks that have an RS ratings above 90 and trading above the 8 day ema in a strongly defined channel. Following is a list of stocks that I am currently monitoring:

$AKAM
$FFIV
$NFLX
$NOC
$BHI
$BAC
$GS
$MS
$MA
$PBR

I am also monitoring 2 etf's - $EWZ and $DXJ for an Option position.

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