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Robert Weinstein's Trading Journal 2017

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Robert Weinstein's Trading Journal 2017

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I've been doing so much short term, hit-and-run trading, I haven't been in a position long enough to report it. I certainaly am trading though, although my results have been someone modest and I anticipate they will continue to be as I'm primarily a short seller, and this market doesn't lend itself very well to short selling when volatility is low, and the market seems to move up ever so slightly every day.

So, that said, I am in a position I want to tell you about. It's Enbridge Energy, (EEP), and I might add more today. I think it's oversold due to panic over a distribution cut. The only problem for those selling, is that they have now pressed the price so far down, it appears they've totally abandoned the idea that there's any value at all. As if the drop was more important than what the final result will be. I go into greater detail why I think fear is pushing the stock, and why the divident justifies an allocation in my article Enbridge Energy Powers High Yield Opportunity

Wall Street doesn't enjoy or value uncertainty, and EEP is full of that. In other words, the blood is on the street, and all one needs to do is simply reach down, pick up the money, and wait for the blood to dry. Even with a 40% drop in the distribution dividend, and I don't think anyone is predicting a drop that much, the yield remains way oversized, and it's a matter of time before the fear is pushed aside for greed. 

We're already starting to see the panic disapate, and that's my motivation to buy shares on Monday. It's not a quick trade, but rather a holding I expect to get well above $20 for in realtively quick order. But, and this is were it gets good, even if it doesn't manage to quickly find an equalibrium much higher than the low $18s, even the management isn't providing numbers to suggest a yield below 6% in 2017. That means, I'll still receive an oversized yield while I wait.

I believe this is a heads I win, tails I break even, and the risk of buying into fear is grossly outweighed by the potential for a rebound in the next month. There's enough potential here that I'm willing to take the time to write about it because I feel just about any type of account can hold at least a few shares, including retirement accounts as long as it's not an unreasonable size.

The next stock I'm holding long is Twitter (TWTR). I'm not actually a share holder, but rather selling volatility via selling puts. So, I have a net long bias, and will continue selling puts as long as I believe there's the hint of a takeover, and people are willing to keep volatility high.

The battle for (EEP) seems to be heating up a bit. There was a large block trade for $18.05 after the fall to the (up to now) lows of the day after bouncing just below $18.. The stock appears to be finding a bidder based on the price jumping around and the ticker moving. 

This is after the paint drying was the only excitement provided for well over an hour.

I know it's early, and stocks take the stairs up and the elevader down, but I can't help thinking based on some of the aggressive buying (which is met with inventory), that the panic is quickly fading.

Bottom feeders, such as myself are willing to take a bite in this area and the only real short suggestion on Twitter I saw was to short at $17.99. Those shorts aren't exactly getting their faces ripped off as it trades about $18.15 as I write this, but the intraday MAs are starting to flatten out. I wouldn't be surprised to see it trade in the green by the end of the day once again. But it takes a lot of confidence to buy in the face of so many others running for the exit. So we'll see if bargain hunters come out today or not.

Currently long and short (SHLD). I was long via shorting the $6 put that expires next week. Small position, albeit interesting to see the quick decay.  I tried to bid a penny to close, but no takers. It's amazing that even while it trades over $7, no one was willing to sell the $6 put for a penny (at least not to me as a few contracts did go off at a penny)

Shortly after the open, I shorted and traded (SHLD) back and forth (again leaving the other put position on). So far so good. As I write this, the stock is trading just over $7, and appears ready to crack through below (once again).

My short (TWTR) puts went back into the red today, but just barely.

--- update ---

The market is now closed. The drop in SHLD near the close rang the register for me nicely. Good way to begin the weekend.

Still short (SHLD) $5.5P, short (TWTR) $16P, and long EEP $20C (which appears to be doomed)

I remain long (SHLD) via the $5.5P. I was bidding a penny today hoping for a fill, but it wasn't to be. I think I saw a few (maybe one or none) at three cents. No biggie as I'm small and green.  It's not something I feel a great desire to over stay my welcome though. Who knows with Sears.....

I entered short (TSLA) again today after it breached $999999, or might as well have given the P/E ratio could give a Sherpa a nose bleed from high altitude. It's easy to see what's going on as we've all seen this movie play out. Well, if you're over 45 you have, and I guess that makes me old, but wiser.

I related Tesla with yesterday's Crocs (CROX). I still have a pair of Crocs on my self after I shorted it (sold calls) around $65 to $70 ish. 

Back in the day, Crocs were revolutionizing the world too. Only Crocs had an advantage over Tesla, namely the market for Crocs was larger. It didn't long before the hysteria passed and the cheap Chinese knock-offs showed up at the dock though. You couldn't tell that to a shareholder when Crocs first passed above $60 though. 

What's the key similarity between the two? Both stocks, Crocs then, and Tesla now are largely moving up due to dumb money and short covering. You see, for a lot of people, Tesla's stock CAN'T go down. Mentally, they're not understanding the concept because of this thing, or that thing, or Musk is running the company (I do think Musk is great though), but it doesn't matter.

The stock isn't the company and the company isn't the stock. The stock is the dream, and above $100, that's all it is, a dream. And it's as clear as the words on my screen.

Tesla doesn't have to worry about cheap Chinese knock-offs, Tesla has a bigger problem.  Other car makers will soon begin to close the gap. And you have to remember that when it comes to investing, stocks are very much forward priced. No one on Wall Street cares what you did yesterday, or even today, they want to know about tomorrow.

So even if it's two years from now, once it becomes clear Tesla's market growth story is no longer expediential growth and maybe even a glimmer of hope for a profit, the dumb money will begin to exit, or rather take leave from pushing the price up further. Once the pressure is off the short sellers to cover.

I will continue on the next post....

All that said, it doesn't matter much because my position currently isn't based on that. I think I'll be able to sell my puts at or near the open, even if the price is about the same as the close because options tend to price the highest at the open (when many retail traders are buying), so the stock may even be 50 cents higher and I may be able to get more by holding overnight (and I wanted to hold overnight as I bought into the close due to the indicator signal).

The indicator is the Tom DeMark TD13 recorded today on the daily combined with the upwards pattern.

I also shorted (HAIN), albeit maybe a little early as it continued to gain lost ground as the day went on. Drops like this tend to have follow through. At the most (usually) they may recover for a day or two after, but then it's back towards the abyss and that's what I'm betting on. Have the position is designed to get out in a couple of days, the other half I would like to hold until next week and see if it retests the low of today.

Still long (EEP), it's not doing much and I'm underwater with it. Thinking I may have to chalk it up in the loser column.  

 

Still short (HAIN) and was able to cover some during the massive down spike that quickly recovered. I added to the position the same after the recovery with the thought it will start to trend lower. Hasn't happened yet to the extent I expected, but it's still way early.

The real motivation for this update is my trading (TSLA) back and forth all day. I short on spikes, and cover on drops. Trending about even, to slightly in the green, but my average is greatly improved and a solid move lower will ring the register loud given the size I'm holding.

Entered into a short with (FSLR) that I held over the weekend. Looking to exit sooner than later. As First Solar approaches the 200 MA the short thesis increasingly makes greater sense. With the company's choice to skip gen 5 panels, 2017 is going to be boring at best, making for a scenario that is likely to create greater selling than buying pressure.

Part of the management's motivation is expected weak industry sales in 2017, allowing the company to take the time to leap frog to gen 6. The problem and elephant in the room over this is the fact there's nothing that says 2018 will be anything more than a continued blood bath in the solar industry. The current and expected to remain low oil and nat gas energy prices will continue to cast a cloud on solar. The current US administration is unlikely to push solar in the face of the coal industry.

I'm also net short via a bear position using options with (HAIN) and (TXRH), both I expect to exit this week, or next.

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