September 13, 2015

Holy volatility!  So if you’ve been following my twitter feed, I fired too early into the massive 3 day decline that started on August 20th.  I had little firepower to buy to market opening on August 24th, but put what I had to work.  Since then I’ve traded a lot… there’s been a lot of buying and selling and the cash position has varied from 0% to ~65% from day to day.  Trades based on the technicals were there to make, so I made them.  Swing & intraday trades have been there for the taking.  Overall, trading the volatility has gone well.  The portfolio is up 0.72% year to date.  The S&P 500 total returns (including dividends) is -3.39% year to date.  So we’re beating the index by 4.113% year to date.  An excellent score if I do say so myself.

I traded the wedge range (S&P 1990-1900 range, zig-zagging to equillibrium around 1945) in the S&P 500, shifted the risk out of the index into Apple & Facebook, and recently shifted again into defensive names Altria, Honeywell, Proctor & Gamble… along with growth defended best of breed stocks NXP Semiconductors, and Goldman Sachs.  I like the extremely beaten down names, United Rentals and Viacomm… which have both performed very well.  I also hold Disney,the cyber security ETF, HACK, and the home builders $XHB.  I also put on the Labor day to Black Friday retail trade with Best Buy, Walmart, and Costco.  Buy near Labor Day, sell near Black Friday.  Disney & Celgene is also in there, Disney has been traded… Celgene a recent addition resulting from shifting out of Palo Alto Networks after their earnings spike.  I like to sell after big gap ups and go into another excellent name that could gap up.  Bristol Myers is currently in the portfolio as a trade.

The trading wedge is narrowing, and we are going to have resolution one way or the other very soon… probably coinciding with the Fed meeting on Thursday (9/17).  I’m not making a bet on that news and will probably be 100% invested, pegged to the S&P 500 index as much as possible.  I think we resolve upwards in the short term, but I have no clue really.

I can’t stop looking at the 20 year monthly chart… It tells me that we are going into a bear market.  But a bear market has never occurred without a recession.  The U.S. is nowhere near a recession. The U.S. economy is strong.  Most of my client companies are hiring, growing, and thriving.  But damn, I can’t stop looking at the long term charts.  Maybe we resolve upwards for the next several months (maybe 6 months), reach / make the all time market highs, then something happens and we enter a bear market.  The market is overextended relatively in terms of velocity, valuations, trends, nearly everything on the 20 year monthly (or were, still are on the high end).  I know others have said this, but I’m officially on board, we are due for a bear market.  If the S&P 500 index hits 2220, I’ll put on a bear suit and start dancing.  Until then, I’m favoring defensive names and best of breed names that won’t get hurt as much on down days.  I put my faith in math & the universal law that things regress to the mean… I think we begin regressing to the mean on the longer term charts.  I’m not chasing profits with excessive risk and my main mode of being of is capital preservation and defense.

09-13-15 – Statement

Portfolio Snapshot:

09-13-15 - Portfolio Snapshot