long term position trading -primarily etf's-

[sowterdad]

This Friday 10.2.15 , The futures looked grim and the jobs report came in weak-well below expectation- One of the reasons for the price reversal heard is that the market interprets
this weak jobs report as an incentive for the Fed to not make any rate raise in the next month-
A logical concern would be the larger picture of a weakening jobs report and what that infers for this economy going forward-. That's not a positive- The thinking that goes along with the market rallying because the Fed's hand may be stayed by the employment weakness- is similar to a company stock that has been in decline rallies when the CEO announces ways to reduce cost by laying off employees-In the short term- it appears to be a positive for the company's cash expenditures- but the real message ignored is that the company has to cut because it's business model is not productive.
I think I heard that 50% of the s&P stocks are down more than 20%. And energy has been really beaten down far beyond that-
That's a substantial pullback- and perhaps it's worth those with a longer term investment view to be thinking about choosing to put some capitol back in.
I don't think we're near that panic type sell that may mark a bottom-and the question becomes do I have the willingness to make position purchases willing to sustain a wider volatility?
Today's larger size trade entry back into a favored ETF sector -Pharma- is one example .....

I didn't get to see the intraday price action- but a reversal in sentiment occurred today, and a bullish up move occurred. Based on that, and getting online just ahead of the close- I sold the Dog trade for a loss at $24.24- purchased 100 PJP-but it took a few moments to fill- and tried to purchase DTN- order limit was higher than the ask- but it never executed.
My assumption is that this is a decent entry in PJP- recently having sold off, based sideways for a few days, and now appearing to move higher +3% while SPY gained 1.5%.
I don't think this is near the market bottom though- so I will try to make a more aggressive follow to this trade and lock in some gains if possible.

 

[sowterdad]

This Friday 10.2.15 , The futures looked grim and the jobs report came in weak-well below expectation- One of the reasons for the price reversal heard is that the market interprets
this weak jobs report as an incentive for the Fed to not make any rate raise in the next month-
A logical concern would be the larger picture of a weakening jobs report and what that infers for this economy going forward-. That's not a positive- The thinking that goes along with the market rallying because the Fed's hand may be stayed by the employment weakness- is similar to a company stock that has been in decline rallies when the CEO announces ways to reduce cost by laying off employees-In the short term- it appears to be a positive for the company's cash expenditures- but the real message ignored is that the company has to cut because it's business model is not productive.
I think I heard that 50% of the s&P stocks are down more than 20%. And energy has been really beaten down far beyond that-
That's a substantial pullback- and perhaps it's worth those with a longer term investment view to be thinking about choosing to put some capitol back in.
I don't think we're near that panic type sell that may mark a bottom-and the question becomes do I have the willingness to make position purchases willing to sustain a wider volatility?
Today's larger size trade entry back into a favored ETF sector -Pharma- is one example .....

I didn't get to see the intraday price action- but a reversal in sentiment occurred today, and a bullish up move occurred. Based on that, and getting online just ahead of the close- I sold the Dog trade for a loss at $24.24- purchased 100 PJP-but it took a few moments to fill- and tried to purchase DTN- order limit was higher than the ask- but it never executed.
My assumption is that this is a decent entry in PJP- recently having sold off, based sideways for a few days, and now appearing to move higher +3% while SPY gained 1.5%.
I don't think this is near the market bottom though- so I will try to make a more aggressive follow to this trade and lock in some gains if possible.

 

[sowterdad]

A good friend responded to my posting of the PJP trade pointing out several valid reasons that perhaps i should not be trading at all at this point in time-
Ability to be focused on the act of trading is #1-My focus is divided between the day job, the never-ending home project, and some added medical conditions in the Family. To step into a trade was doing something "normal" - that perhaps gave the illusion of having some control in the ability to make and execute a decision- Psyche 101 - It also came at a moment when things seemed to be improving on multiple fronts- Since the psyche part of trading is likely the major component of our failure or success- I don't want to be defensive- just analytical.
There will be more trades beyond today's trade.
Perhaps the volatile market environment is #2.

My friend is correct-
When trading- one should be focused and totally on their 'game' . To trade otherwise is to be trading with a handicap.
The environment- The trading environment changes over time- recognizing when that environment supports one's approach- and when it does not - is likely the key to long term success. Adapting to the market's volatility is a guessing game as no one can foretell when the market is going to react with volatility against one's position instead of in favor of it-
Take the Jobs report this Friday-
In Rough terms, the expected jobs report was for 200k jobs and only 150k were reported- That should be a significant disappointment as it portends a very soft economy .
The initial reaction was a sell- and that was reflected in the drop in PJP at the open-
but then a major reversal to the upside occurred. I assume that the Market assimilated the negative jobs report as a positive in that it weakens the Fed's position for initiating a Rate Increase this month- and perhaps the next- and thus the Rally.


Expanding on the chart- and my use of price action to justify the belated trade-
Following a Fast sell-off that coincided with market weakness, price dropped down , tried to initially pause and rally- and then dropped lower- This 1st rally on weakness is common-
The following drop lower- set the LOW- and from there every trade can relate back to-
We have a following move higher, a pullback with a higher low, a move higher at resistance- a potential close higher- a lower open, and a following intraday extremely stong momentum move from a failure position to an extreme bullish position at the close-

In Hindsight /backtest trading- we all can be the consumate trader- The question becomes- can we do it in real time?
Since i am normally an EOD trader and not following the markets intraday- My entry on Friday is justified-near the closing HIGH.
Since this dialogue is getting long- I will post here and continue-

 

[sowterdad]

A good friend responded to my posting of the PJP trade pointing out several valid reasons that perhaps i should not be trading at all at this point in time-
Ability to be focused on the act of trading is #1-My focus is divided between the day job, the never-ending home project, and some added medical conditions in the Family. To step into a trade was doing something "normal" - that perhaps gave the illusion of having some control in the ability to make and execute a decision- Psyche 101 - It also came at a moment when things seemed to be improving on multiple fronts- Since the psyche part of trading is likely the major component of our failure or success- I don't want to be defensive- just analytical.
There will be more trades beyond today's trade.
Perhaps the volatile market environment is #2.

My friend is correct-
When trading- one should be focused and totally on their 'game' . To trade otherwise is to be trading with a handicap.
The environment- The trading environment changes over time- recognizing when that environment supports one's approach- and when it does not - is likely the key to long term success. Adapting to the market's volatility is a guessing game as no one can foretell when the market is going to react with volatility against one's position instead of in favor of it-
Take the Jobs report this Friday-
In Rough terms, the expected jobs report was for 200k jobs and only 150k were reported- That should be a significant disappointment as it portends a very soft economy .
The initial reaction was a sell- and that was reflected in the drop in PJP at the open-
but then a major reversal to the upside occurred. I assume that the Market assimilated the negative jobs report as a positive in that it weakens the Fed's position for initiating a Rate Increase this month- and perhaps the next- and thus the Rally.


Expanding on the chart- and my use of price action to justify the belated trade-
Following a Fast sell-off that coincided with market weakness, price dropped down , tried to initially pause and rally- and then dropped lower- This 1st rally on weakness is common-
The following drop lower- set the LOW- and from there every trade can relate back to-
We have a following move higher, a pullback with a higher low, a move higher at resistance- a potential close higher- a lower open, and a following intraday extremely stong momentum move from a failure position to an extreme bullish position at the close-

In Hindsight /backtest trading- we all can be the consumate trader- The question becomes- can we do it in real time?
Since i am normally an EOD trader and not following the markets intraday- My entry on Friday is justified-near the closing HIGH.
Since this dialogue is getting long- I will post here and continue-

If I was using a Daily chart- I would use the same Entry- If I had access intraday,
and real-time charting- I would have selected an entry above the prior closing high above the resistance bar that occurred Thursday.
That being established- the $69 entry was belated- but Valid- because my expectation is that this will provide more than a 1 day reaction move- based on the market psychology it took to move the market from fear and disappointment to positive .
I could very well be wrong in my Friday assumption- and by the Monday open find that the market reassessed the importance of the jobs report- or the meteor heading for Earth that just came into the galaxy just beyond PLUTO and is headed for Earth-\
and that the market opens gap down 10%.
OR... I could wait it out - and fish in more temperate waters- when I can be more diligent.

I still think this has the potential for upside momentum- but this is an over the weekend guesstimate-

Here is where guessing and chance come into play: and position sizing:
I purchased a 100 share position at $69.00 - $6900.00
The position value is over 50% of the account value. This could be considered Black or White- on the Wheel.

I think it is important that I Note that I have ignored the position sizing formula
that i have had available -and chose-recently- to take the greater - and lower probability gamble type trades-
There is a good reason to follow a more moderate trading approach across the years or decades ahead. You may survive and prosper- given the market return over time.
Never-the-less- I am believing this trade will record in the net profits-
The chart suggests:

 

[sowterdad]

If I was using a Daily chart- I would use the same Entry- If I had access intraday,
and real-time charting- I would have selected an entry above the prior closing high above the resistance bar that occurred Thursday.
That being established- the $69 entry was belated- but Valid- because my expectation is that this will provide more than a 1 day reaction move- based on the market psychology it took to move the market from fear and disappointment to positive .
I could very well be wrong in my Friday assumption- and by the Monday open find that the market reassessed the importance of the jobs report- or the meteor heading for Earth that just came into the galaxy just beyond PLUTO and is headed for Earth-\
and that the market opens gap down 10%.
OR... I could wait it out - and fish in more temperate waters- when I can be more diligent.

I still think this has the potential for upside momentum- but this is an over the weekend guesstimate-

Here is where guessing and chance come into play: and position sizing:
I purchased a 100 share position at $69.00 - $6900.00
The position value is over 50% of the account value. This could be considered Black or White- on the Wheel.

I think it is important that I Note that I have ignored the position sizing formula
that i have had available -and chose-recently- to take the greater - and lower probability gamble type trades-
There is a good reason to follow a more moderate trading approach across the years or decades ahead. You may survive and prosper- given the market return over time.
Never-the-less- I am believing this trade will record in the net profits-
The chart suggests:
View attachment 157683

Watching this trade for a couple of days, The price weakness that was evident when the larger market sectors rallied and closed higher did not bode well for this position-
As they say, -a 'rising tide' floats all boats - and if your boat does not participate when the rest do- better check the chinking in the Hull!

I actually made a conscious decision Yesterday- and decided that since i presently don't have the time , energy, and perhaps fortitude -for short term trading EOD- that I would consider PJP as a possible long term investment within a larger diversified portfolio. This was not my intent when I started this thread- but I've got too many Irons in the fire and not enough daylight to allow me to do what I'd like to do.

It's had a nice decline % wise- but a further deeper decline is not out of the question-
Could it decline an additional 10% further? YES- so, I have a limit order to Buy another 100 shares at $60.00.
This would average my cost to $64.50 on 200 shares- and that represents a sharp drop to a prior lower support range from $84.00 or about a 30% decline to the $60.00 level.
What is interesting about this chart, is that Price never paused on the way down at the prior breakout level- dropped straight though- which points out that the faster the chart- the more illusion is in what we choose to see as possiblesupport and resistance levels-
We like to try to define them on a chart as having some real significance- but in times of market duress- or higher emotion- they may mean little or nothing- to the market participants.
We all hate to lose money- and the Investment approach suggests buying when Blood is in the streets- If this added position fills at the low $60 price- there is likely panic selling occurring in the markets- an additional -10% decline
That lower position entry would pretty much fill out this specific IB account's free cash-
I won't bet the Farm on any single position- but that becomes the FARM as far as this IB account is concerned! I would need to move into a separate account for a larger portfolio position to get a wider allocation- That ideally will be with Vanguard.
and a diverse port mix for the longer term- I'm only partially there-
I cannot foresee this position declining hugely - because it is comprised of multiple companies in the Pharma & Biotech sector- so I have a Bias that may lead me incorrectly into holding too large a position in a market that puts this segment into disfavor- Much like Energy with a huge decline- Remind me to Buy some Energy positions in the weeks ahead-perhaps XLE- for a longer term hold?
Will the market oversell this once favored sector? Quite possibly- Am i Risking alot ? Yes.
Will it succeed in the long term? Yes- Is it just part of a larger market approach- and not all of the eggs in one basket?- YES. Can i hold this in a 10-20% decline for 1-2 years? Yes. At least i think so....
Do I expect better? Yes.
Have I ever considered myself an Investor? NO. no prior attachments- This may be difficult .
But, Thought i'd post it here to keep it Real and honest- It may change in the weeks and months ahead- If the trade turns positive and i get a bounce in November- I may then resume becoming a more active short term trader- i think my limit sell was $74.00-
WHEW.......
I think the only thing I have proven during the course of this Thread, is that my application of a short term approach has not worked well in this environment and I would have been better-off to stand flat and not go into the leveraged trades!

Still, it's been a good learning experience- to discover my own limitations - and to pay a smaller discount for a bit more of market education.

 

[sowterdad]

Watching this trade for a couple of days, The price weakness that was evident when the larger market sectors rallied and closed higher did not bode well for this position-
As they say, -a 'rising tide' floats all boats - and if your boat does not participate when the rest do- better check the chinking in the Hull!

I actually made a conscious decision Yesterday- and decided that since i presently don't have the time , energy, and perhaps fortitude -for short term trading EOD- that I would consider PJP as a possible long term investment within a larger diversified portfolio. This was not my intent when I started this thread- but I've got too many Irons in the fire and not enough daylight to allow me to do what I'd like to do.

It's had a nice decline % wise- but a further deeper decline is not out of the question-
Could it decline an additional 10% further? YES- so, I have a limit order to Buy another 100 shares at $60.00.
This would average my cost to $64.50 on 200 shares- and that represents a sharp drop to a prior lower support range from $84.00 or about a 30% decline to the $60.00 level.
What is interesting about this chart, is that Price never paused on the way down at the prior breakout level- dropped straight though- which points out that the faster the chart- the more illusion is in what we choose to see as possiblesupport and resistance levels-
We like to try to define them on a chart as having some real significance- but in times of market duress- or higher emotion- they may mean little or nothing- to the market participants.
We all hate to lose money- and the Investment approach suggests buying when Blood is in the streets- If this added position fills at the low $60 price- there is likely panic selling occurring in the markets- an additional -10% decline
That lower position entry would pretty much fill out this specific IB account's free cash-
I won't bet the Farm on any single position- but that becomes the FARM as far as this IB account is concerned! I would need to move into a separate account for a larger portfolio position to get a wider allocation- That ideally will be with Vanguard.
and a diverse port mix for the longer term- I'm only partially there-
I cannot foresee this position declining hugely - because it is comprised of multiple companies in the Pharma & Biotech sector- so I have a Bias that may lead me incorrectly into holding too large a position in a market that puts this segment into disfavor- Much like Energy with a huge decline- Remind me to Buy some Energy positions in the weeks ahead-perhaps XLE- for a longer term hold?
Will the market oversell this once favored sector? Quite possibly- Am i Risking alot ? Yes.
Will it succeed in the long term? Yes- Is it just part of a larger market approach- and not all of the eggs in one basket?- YES. Can i hold this in a 10-20% decline for 1-2 years? Yes. At least i think so....
Do I expect better? Yes.
Have I ever considered myself an Investor? NO. no prior attachments- This may be difficult .
But, Thought i'd post it here to keep it Real and honest- It may change in the weeks and months ahead- If the trade turns positive and i get a bounce in November- I may then resume becoming a more active short term trader- i think my limit sell was $74.00-
WHEW.......
I think the only thing I have proven during the course of this Thread, is that my application of a short term approach has not worked well in this environment and I would have been better-off to stand flat and not go into the leveraged trades!

Still, it's been a good learning experience- to discover my own limitations - and to pay a smaller discount for a bit more of market education.

View attachment 157776

Following up with the PJP position- Had a market rally today and PJP got back up to within $.50 of my entry.
Initial Target is still $74.00
The wide volatility - illustrated by the fast chart- demonstrates how choppy this is, and how fruitless a tight stop would be this past week. So, time to drop back and also incorporate a wider view- Both the Daily - and the Weekly-
Holding the longer term "Invest" mentality is all well and good- but perhaps i'm just massaging my psychology with thinking that I'll get to purchase more for less- and certainly get closer to a bottom on something that could be considered down significantly % wise already from it's 80 high.
And, is PJP actually the position I want to be holding in a longer term hold?
As I consider healthcare as a sector that could indeed roll out of favor-particularly with the US politicians making aggressive anti-profit statements- What is a potentially better exposure to the healthcare Industry with Global exposure? If I'm going to make a more focused sector bet as a trade or an Investment- A diversified global healthcare fund- would likely prove to be less volatile and still rewarding-

 

[sowterdad]

Following up with the PJP position- Had a market rally today and PJP got back up to within $.50 of my entry.
Initial Target is still $74.00
The wide volatility - illustrated by the fast chart- demonstrates how choppy this is, and how fruitless a tight stop would be this past week. So, time to drop back and also incorporate a wider view- Both the Daily - and the Weekly-
Holding the longer term "Invest" mentality is all well and good- but perhaps i'm just massaging my psychology with thinking that I'll get to purchase more for less- and certainly get closer to a bottom on something that could be considered down significantly % wise already from it's 80 high.
And, is PJP actually the position I want to be holding in a longer term hold?
As I consider healthcare as a sector that could indeed roll out of favor-particularly with the US politicians making aggressive anti-profit statements- What is a potentially better exposure to the healthcare Industry with Global exposure? If I'm going to make a more focused sector bet as a trade or an Investment- A diversified global healthcare fund- would likely prove to be less volatile and still rewarding-
View attachment 157832

A simple observation : In seeking to apply TA principles to a chart- an assumption is made that Support & resistance levels- exchange of buyers and sellers finding value- is a significant and respected way to view a chart.
The Fallacy within that belief and application, is that the psychology of buyers in an uptrend will differ from the psychology of buyers in a declining trend- When Value becomes
more discerning and under review- and cautious.
I think this is an important concept to grasp- and it explains why perceived established "support" levels in the uptrend are blown through on the downside without barely a pause-
And This then makes one question where Downside 'support' actually becomes more significant than upside support levels.
Perhaps a longer duration in a range- or perhaps an extreme level of "oversold" in the uptrend is more significant-
In the recent decline in PJP- Notice the large support penetration of the past 2 weeks during a market volatile period.- Although price has closed in the higher support range, the penetration into the lower level was significant.
With this thought in mind, The lower $60 limit Buy does not look to be much below the present volatility-

 

[sowterdad]

Thursday -10.8.15
A view of the daily chart and some possible support and resistance levels based on prior price action-
Interesting that the steps lower occur in 8% drops following the initial decline lower- where possible buying support comes in.
Decline YTD is about 24%- So, that's substantial- but could easily go lower in a greater market decline-
Looking at the weekly chart- I modified my added limit buy- Instead of 100 at $60.00 -I broke the order to Buy at $58 and $51.00.
Viewing the daily chart- i think a move higher would be able to penetrate into the prior range- so $74.00 may be a conservative take a partial exit/profit.

 

[sowterdad]

Thursday -10.8.15
A view of the daily chart and some possible support and resistance levels based on prior price action-
Interesting that the steps lower occur in 8% drops following the initial decline lower- where possible buying support comes in.
Decline YTD is about 24%- So, that's substantial- but could easily go lower in a greater market decline-
Looking at the weekly chart- I modified my added limit buy- Instead of 100 at $60.00 -I broke the order to Buy at $58 and $51.00.
Viewing the daily chart- i think a move higher would be able to penetrate into the prior range- so $74.00 may be a conservative take a partial exit/profit.
View attachment 157889

PJP - managed to close up near the prior high range- closing at $68.95- just $.15 off my entry with a high of $69.42 . I'm expecting that it will try to break higher from here- as long as the larger markets still look to be positive - The political climate could certainly derail any enthusiasm this week-
If I happen to be successful and net profitable in this specific trade- I will consider myself fortunate because i was prepared to allow this position to move against me- and to even become a long term position- But i need to shift that mindset and position over to the investment account side and not do that in the trading account-
One issue is not taking the trade itself, but the position size i jumped in with thinking MOMentum was going to rapidly move it immediately higher-
I don't mind taking a larger trade- but the RISK should still be the driver to the position size one takes-
I'll continue that self-criticism & reasoning how i could have made better choices- in another post later- Have to get back to work so the company can get their 60+_ hours out of me- Nice to have a job though!

 

[sowterdad]

PJP - managed to close up near the prior high range- closing at $68.95- just $.15 off my entry with a high of $69.42 . I'm expecting that it will try to break higher from here- as long as the larger markets still look to be positive - The political climate could certainly derail any enthusiasm this week-
If I happen to be successful and net profitable in this specific trade- I will consider myself fortunate because i was prepared to allow this position to move against me- and to even become a long term position- But i need to shift that mindset and position over to the investment account side and not do that in the trading account-
One issue is not taking the trade itself, but the position size i jumped in with thinking MOMentum was going to rapidly move it immediately higher-
I don't mind taking a larger trade- but the RISK should still be the driver to the position size one takes-
I'll continue that self-criticism & reasoning how i could have made better choices- in another post later- Have to get back to work so the company can get their 60+_ hours out of me- Nice to have a job though!
View attachment 157954

Took a week and a bit of weakness to finally move higher-Closed at $69.71- Now, let's see if it can muster some buying momentum next week!