50 burger, Grade A-

Boom boom bing. The rally rolls on I gain about 5%, now up 53% for the year. Grade for this trading month is another A-.

ETFs year-to-date, best to worst:
QQQ +37.2
SPY +28.3%

IWM +24.0%
EEM +14.2%
TLT +12.5%

GLD +15.1%
SLV +10.5%

Equities top the list. All these asset classes are having a good year. Again, my trading account is up 53%, so it is happy time.

I feel like I have been relatively conservatively positioned for a while now, with a lot of dry powder. When making adjustments I sometimes buy at the money options. For example, if I am short a batch of 10 delta calls on SPY, and SPY rallies. I might buy atm call(s) to rebalance to delta neutral, turning the overall position into a ratio spread (long the atm, short multiple otm options).

It is a time to reflect, to hopefully take in the lessons from this bull year in stocks. One big lesson is not to listen to Chicken Little. Yes, corrections and even crashes are inevitable, but rarely occur when large numbers of novice and amateurs are out of the market. Much more common at tops is novices writing about how leveraged long is the smart play, and believing it.

Merry Christmas to all. I’ll post a year end wrap up soon.

Monthly:Stocks surge ahead, Grade A-

Stock surge to record highs for most major indices. SPY is now up almost 25% for the year. Earlier this year, more than few moved to sidelines after the market was up 12% or 15%, thinking it was a good year. I researched it and during the last thirty years, there was about a 25% chance of a 25% gain or better. Yes, there are years like 2018 when a nice gain goes south.

As for me, I am amazed at my 46% up year. Grade is A- with over a 4% gain for the November option cycle. More than a few stocks ran too hot and I covered many of the call sides of sold strangles for a loss. Some were rather big losses. AAPL DIS ROKU TSLA were among those that ran too hot as well as QQQ and SPY.

For the year, AMZN TSLA continue to be the lead winner tickers, BA and now ROKU the big losers. I made some small winning plays in BYND DB and a dozen others. I am out of AMZN for now, not wanting to push my luck. If anything, I’ve been too cautious, but up 4% in a month is not bad.

Here are some etfs I track, ytd for 2019:

QQQ +31.5% Nasdaq 100, mostly US tech stocks
SPY +24.8% S&P 500 US big cap
IWM +18.7% Russell 2000 US small cap

GLD +14.0% gold
TLT +13.4% US 20-year treasuries

EEM +10.4% Emerging markets equity1
SLV +9.2% silver

dividends are not included

Everything is up. I often ask, would a person take a certain percentage gain at the beginning of the year and sit it out. Most market participants would gladly sign up for +9% if guaranteed. Again, I am up about 46% for 2019. Yippee! By far my best year in many moons.

I continue to be cautiously optimistic, slight delta positive on sold strangles. I have a lot of dry powder, especially after the third week option expiration. I am recovering from a lingering cough, and extremely busy with other activities, so my time and energy for trading continue to be limited.

The North 40, Grade B+

This trading month, impeachment news sent the market lower for a few days. The market came back on strong earnings. Some bad news from Boeing and Johnson and Johnson made for a muddy closing Friday.

For this option cycle, I was up about 2.8%. Up about 40% for calendar 2019. Yippee! Best year in recent memory for me.

As readers know this is not a small play money account where 100% monthly returns, or 80% drawdowns occur. Especially the last few months, I have moved more money into cash reserves (BSV Vanguard Short Term Bond).

Here are a few ETFs that I track, year to date, dividends not included:

QQQ +24.3% Nasdaq 100 US tech focused
SPY +19.2% S&P 500 US large cap

GLD +15.9% gold
TLT +14.9% US 20 year treasuries
IWM +14.0% Russell 2000 US small cap

SLV +13.0% silver
EEM +7.5% Emerging markets equities

US stocks leading an up year for all the ETFs. This is a marked change from 2018, when money market funds were the best performing asset class. Bonds gave back a little this month, as tech stocks rebounded in a big way. Again, my account up 40% for 2019, so I am having a banner year.

Going forward, I don’t have any great insights. I will keep doing what I am doing, it is working. I am selling way out of the money options, with a slight bullish tilt. As adjustments need to be made, I add layers, sometimes roll up, roll down, sometimes on gaps buy calls or puts. If strike prices are crossed, I tend to close or roll.

The year is not over yet. However, way too many public and private pundits are playing it cautious so a replay of 2018’s late year tumble seems unlikely. What might frustrate the most market participants is a decent rally into new highs. As always predictions

Weekly: Impeachment

Just when I thought the market rally was going to continue, impeachment news sinks the market.

I lose a bit more than 1% for the week. As I have been saying, I am relatively cautious.

Monthly: lowering risk, grade A

I am on the road and forgot to bring exact figures. I believe I am up 4 to 5 percent for this option cycle, my self grade is A. Now up about 35 percent for 2019. That’s good.

A few etfs ytd, not counting dividends

QQQ +25.6 US tech stocks Nasdaq 100
SPY +21.6 US large cap S&P 500

TLT +18.1 US 20 year Treasury bonds
IWM +16.9 US small cap Russell 2000

GLD +16.8 gold
SLV +14.4 silver
EEM +6.9 emerging market equities

Again, my account up about 35 percent. Yippee. I lowered my risk by moving more money into BSV Vanguard short term bond etf. I took a loss on some ROKU options. The chart formation looks like a parabola, now into the waterfall decline stage.

AMZN and TSLA continue to be my most profitable tickers this year. BA continues to be the worst. DIS has been disappointing. Some small plays in SHAK SHW produce small profits.

Because I am on the road, because last year turned nasty, because I will have less time for the markets, I am reducing risk. I’m still in, but playing smaller.

Weekly: Hot Apple

Apple was all over the place this week, lower then higher, then lower. Overall, AAPL ran too hot and I covered layers of calls for minor losses. Overall, the market continued to climb higher. My account is near all time highs, with a modest gain. Bonds and gold had a sharp correction.

I continue to be cautious. I move more money into BSV Vanguard’s short term bond etf. Last year’s experience, where a decent gain for 2018, turned into a loss, is influence. Of course, more than a few people may feel the same, so an up market is more likely. I’ll be traveling for a bit, so updates may be even shorter, even more spotty.

I am likely going to change to monthly updates, because blog readership is down. It’s not as if I have a lot of exciting to say. Many people are looking for trade ideas, and most of my trades are not appropriate for beginners. My track record isn’t anything to brag about, even if 2019 has been a very good year for me.

Weekly: bears scurry for cover

A Tuesday dip is followed by a decent rally. Bearish traders take cover. I rolled down on the Tuesday decline and bought some QQQ and SPY calls to rebalance to slightly bullish as the market rallies. It is half a loaf to be sure, but I still finish the week with over a 2% gain. This despite a neutral then bearish stance on many underlyings. 

I reinitiate a small position on LULU post earnings. I roll up on AMZN and many others. I am close to all time highs as is the market.

Weekly: bounce back rally

Market rally, up about 3% for the week. I was caught net short on Monday, quickly reversing to net long. I end the week, up about 3% just like the market. One new long was selling puts on BURL Burlington Coat Factory. I added to longs in COST Costco, TGT Target, and some others. Retail is chock full of winners and losers. I will look at beaten down stocks such as M Macys in December when tax selling peaks.

Marketwatch.com has a feature article about September being the worst month. However, down 1 percent is the average loss, which is close to nothing. I deployed a bit of buying power this past week, but still have a healthy reserve. For SPY the main position is a ratio spread, long the atm calls, short multiples of the 10 delta otm calls. For the U.S. readers, have a nice long weekend. 

Weekly:Shelter from the storm

I keep taking losses or rolling down to reach my target deltas. I lose about 2.5% this week. It is a bumpy ride. Just when I thought it was safe to go back in the water, the Jaws shark music started up again. I had some small winners, post earnings in Target TGT, pre earnings in Nordstroms JWN. Positive news from Boeing BA, had me covering calls for big losses. Reduced my risk on AMZN, at a big cost.

Friday opened higher, then round 27 of tariff wars triggered a massive sell off. I took my lumps through out the day. Just before the close I bought puts on SPY and QQQ, near the worst possible levels. So I ended the day net short QQQ SPY. We will see what next week brings. Damned if I know.

Monthly: Going Down, Grade C

A tough month, most equity markets moved lower. Bonds rocketed higher. I ended with a modest loss of 2.7% or so for the month. Grade is a “gentleman’s C.” Not good, but respectable given the difficult markets. Most of my earnings plays did mediocre to poor. Deere came in okay, but so many others, such as AMZN DIS TSLA, were losers on earnings day. AMZN and TSLA remain my big winners for 2019. BA remains the worst loser. I had some small post earning positiongs in SHAK SHW CMG SWK.

For the week, a big 800 point Dow drop, was made better by an up Friday. I ended the week with a modest gain. On Friday, Deere earnings weren’t great, but the stock moved higher. 

This month saw big changes in the ETF standings for 2019. Bonds and gold move up. Small caps and emerging markets move down. SPY still holding a respectable +15.6% ytd, but down over 3% for the trading month. Same with my trading account, down 2.7% or so. 

2019 year to date (not including dividends)
TLT +20.3% US 20 year treasury bonds
QQQ +20.2% Nasdaq 100, tech dominated equities
GLD +17.8% godl

SPY +15.6 S&P500 US large cap stocks
IWM +11.0 Russell 2000, US small cap stocks

SLV +10.3% silver
EEM +1.2% emerging market equities

My account up 30% for 2019, so I am holding my own, even with the modest loss this trading month. I wish the way forward were clear, but it is cloudy. The bear case remains substantial, but the market remains relatively resilient. If the market was going to crash, this week had the ingredients for a crash. I regret mostly missing the huge move up in bonds and gold, but up 30% for 2019 is good, if not great.

Friday’s big rally has me net short on AMZN and SHOP. Most others I am neutral or net long still. I can and will adjust as needed. I am staying with what I see as a conservative course, with significant reserves.

Weekly: Wild week

It is a wild week in the markets. A manic Monday, timid Tuesday, wild Wednesday, torrid Thursday, capped by a fade on Friday. Major indices finish the week mildly lower. I eek out a small gain for week. 

This past week, Disney earnings were meh. I lose a modest amount. Some other pre or post earnings plays include SHAK SHOP SWK UBER. I take a loss on SWK Stanley Toolworks. UBER comes in with a mild disappointment, but I sold strangles far enough out of the money to profit.

It hasn’t been an easy market. I continue to be cautious. Next up is earnings for Deere, I am leaning bullish going into the event.

Weekly: Powell Trump punch

A one two punch sends markets lower. I have a bad week, losing more than 4%. I close some positions near the lows on Friday. It is painful, but it is what I do. I close and take losses to reduce my risk profile going forward. We will see what comes next.

Weekly: Swing and a miss

I leaned long on three stocks that reported earnings this week. I was short strangles on AMZN BA TSLA, leaning bullish. All three went down, so the subject line is: swing and a miss. Thankfully, I didn’t swing for th fences, so end the week with a tiny gain. 

All three earnings plays were losers though.
For next week, I may play DE SHOP TWLO. I’m not in any at the moment, and will go way out of the money, and play really small.

Monthly: Boom boom boom, Grade A

Another up month for me, self-grade is A. There are always minor nits to pick, but up more than 7% for the month. Now up 34% for 2019. 

Here are a few etfs ytd, best to worst, dividends not included:

QQQ +23.9% Nasdaq 100, mostly tech stocks
SPY +18.9% S&P500 US large cap
IWM +14.9% Russell 2000 US small cap

GLD +10.9% gold
EEM +9.7% Emerging Market equities

TLT +8.4% US 20 year treasuries
SLV +4.5% silver

Gold moved up, IWM is now lagging. My account up over 34% ytd, so I am having a great year. All etfs on the list are up. Easy monetary policy tends to push up all boats.

I am now up for the year on Boeing. I did not get hurt by some of the big earnings movers. I currently have relatively large long positions in AMZN and DIS. I am cautiously bullish on most of the rest, short strangles with a slight bullish tilt.

The stock market sputtered after Netflix and Microsoft earnings. MSFT acted poorly, gapping higher, closing with a small gain.

Weekly: Hat trick SPY 300

SPY QQQ DIA all reach record highs, taking me along with them. My recent tactic of buying calls to offset other options has worked fairly well. I was able to ride the elevator up, without taking on the huge downside that comes with selling bundles of out of the money puts. The latter is how I used to offset the delta.

To be sure, some stocks ran too hot, and I had to roll or buy more calls. Overall, another nice up week, up nearly 2%. I still have some reserves allocated to BSV. They will stay there for now. Again, TINA is the bulls best friend. There is no alternative, with bonds also high, CD rates coming down, foreign markets underperforming.

Weekly: Bull lurches forward

The zombie bull continues to lurch forward with more new highs. My account benefits from the upward tide. Some discomfort is caused by too much up movement against sold strangles. Boeing continues to want attention. I sell some strangles on UBER with a slight bullish tilt. I continue to sometimes buy options to rebalance back to desired delta.

The long list of warning signs remains (CAPE, GDP to market cap, inverted yield curve, hot IPO market, people quitting good jobs to trade, people that have ignored the market for decades now interested), so I continue to be cautious. I won’t lean bearish until the technicals break down, or there are signs of a melt up in the overall market.

Weekly: more ratios, another warning sign

This week I did a call ratio with SPY at 292.6 or so:
buy SPY Jul 292 calls
sell 3x SPY Jul 301 calls
for about a $150 per unit debit. Best case is a rally up to 300 by July expiration. Worst case is a runaway rally. A flat or down market means the debit is lost.

I attended the local CANSLIM meetup. One of the long time attendees announced his retirement from his fully tenured professorship, to do stock trading full time. Yikes. He looked like he was about 50 years old.

People giving up secure high paying jobs such as a full professor, for the complete uncertainty of the stock market is typically seen at market tops. So add yet another warning sign to the long list. (CAPE, GDP to market cap, inverted yield curve, transports leading the way lower, bad breadth, speculative IPO market).

Be careful out there.

Monthly: Record highs, Grade B+

I mostly match the gains in SPY this month, up a bit over 3%. Like SPY, my trading account reached new record highs.

Year to date returns (dividends not included for etfs):
QQQ +22.2% Nasdaq 100, mostly tech
SPY +l7.6% S&P 500 US large caps

IWM +15.0% Russell 2000 US small caps
EEM +9.5% Emerging market equities
GLD +8.8% Gold

TLT +8.2% US 20-year Treasury bonds
SLV -1.1% silver

My account up 25.2% for 2019. Yippee! Let the good times roll. Gold accelerated to the upside. Bonds have had a good year. Quantitative easing will tend to do this, inflate almost all asset classes.

The zombie bull continues forward. There are signs of a top, as I wrote in last week’s post. The inverted yield curve, CAPE and Buffett valuation indicators, speculative IPO market, more people wanting to go all in on leverage, a person that never did much with stocks wants in, after decades of ignoring the stock market.

TINA (there is no alternative) may be the strongest argument for the bulls. Sub 2% 10-year bond yields, most other major markets, Japan, Germany, China, have serious structural problems. There still are a large contingent of scaredy cats waiting for the US stock market to drop. Some have been waiting a while. Others cashed in after a strong first quarter in 2019.

I don’t have any great insight as to direction. I continue to be cautiously bullish, slightly delta positive on most underlyings. Biggest winners in 2019, continue to be AMZN and TSLA. Biggest loser is still BA. I continue to roll up, roll down as the market fluctuates, trying to stay near the target delta. This month, buying at the money calls was often the best way to rebalance after a big gap up. Call buying had mixed results, but overall a nicely positive month. Up more than 3% in a month is a good month.

I made small forays into BYND, CAT DE WMT, mostly for profit. I got burned by CRM. I covered many sold calls for losses during the Powell fueled rally, staying slightly delta positive on most underlyings. As cautious as I have been, it is a bit surprising that I am keeping up with the advance. As long as there are green plus signs, I’m not going to change much. Especially because I feel like I am being relatively cautious.

Weekly: The bear case is substantial

It was a frustrating week. The big rally early Monday, had me scrambling to cover sold calls for losses. Later in the week DIS moved higher after analyst comments. Overall, I eek out a small gain, a bit less than the gain in the indexes.

At the anecdote ranch, a friend asked me about the stock market. He is an older man, never did much in the stock market, has done relatively well in real estate. This is the kind of person that gets interested in the stock market at tops. Market tops form with a relative maximum number of buyers.

The bear case is substantial. The Buffett indicator, total market cap vs. GDP, the CAPE or Schiller PE10 both are at red line. The inverted yield curve, the failure of transports to make new highs, and semiconductors falling are all red flags. The large number of speculative IPOs, relatively poor market breadth are two more.

So what is on the bull side? The AAII sentiment indicator remains in neutral. Large numbers of newbie investors fear the bear. A few are asking about all in on leveraged long ETFs, but far more talk about selling everything and waiting for the inevitable bear market.

One of the stronger bull arguments is about alternatives. With bonds also at nose bleed valuations, cash paying only a little, gold remains far off its highs. 2% or 3% just doesn’t cut it, so people are forced to take on more risk.

Weekly: Fed relief rally

The Federal Reserve rides to the rescue, causing a booming relief rally after six down week. The overall markets were up about 4% this week. My account up a little over 3%. My brief foray into buying puts, mostly ended up with losses. That is often the case when hedging via buying puts and the market doesn’t go down. I closed some short calls for losses to stay mostly delta positive on most underlyings.

Tesla and many other stocks had booming rallies off their lows. Overall the market ran a little too hot for my taste. Still, a 3% gain is good, even if I lagged the major indexes on this up move. BYND Beyond Meat soared after its earnings report. I played it very small, selling some way out of the money puts. When the market heats up and moves up quickly, delta neutral strategies aren’t the best place to be.

Weekly: Buying puts for a ratio spread

I have been buying at the money puts on QQQ and SPY to hedge the out of the money puts. With the gaps at the open, I find this to be easier than selling more calls. With each choice there is a cost. Buying puts reduced the potential income from theta decay.

One positive is that if a decline accelerates, the negative delta from each long put increases. As almost always, it is half a loaf. The overall position is similar to a ratio spread. For a simple example, long one atm put, short 5x puts with 10 delta, for a net near neutral position. Ideal would be a minor decline to the strike of the 5x sold puts.

Markets fall again, now six weeks in a row. My losses are minor, less than 1%. I continue to aim for a slightly positive delta on most underlyings. New positions include CAT DE. One of the TV talking heads suggested buying puts. That’s often a pretty good signal to go long. Summer is almost here. The year seems to be going by very quickly.

Weekly: Fifth week lower

Market moves down for the fifth week in a row. I lose about 1% this week. Biggest problems were Tesla, Qualcomm and Apple, but the overall tone is negative. I’ve lost about 6% from my peak account value for 2019. I continue to be cautious, with a lot of dry powder.

As I often do I am linking the Trace Adkins song, Arlington in honor of Memorial Day (link).

Monthly: Music in me, grade C

It was a tough month of sledding. The Dow posted four weeks of losses. I gave back quite a bit from the record high. Grade for the month is a gentleman’s grade of C. I lost about 2% for the month, off about 1% for the week, up over 20% for 2019.

A couple of songs seem relevant to this trading week, Manic Monday (link1), and I’ve got the Music in Me (link2). The first because of the 600+ point decline on Monday, the second for the line, I heat up, I cool down. This week, I roll up, I roll down, and end with a loss of about 1%. For the year, I am up 20.4%.

Here are some etfs and their year to date (not including dividends).

QQQ +18.7% US mostly tech
SPY +14.4% US large cap stocks
IWM +14.1 US small cap

TLT +3.7% US 20-year treasuries
EEM +3.1% Emerging markets equities

GLD -0.5% gold
SLV -6.9% silver

So at +20.4% I am having a good year. I was having a better one, before the tariff tweets, but the give back has been modest after such a big run up.

This week, new longs include tiny positions in BYND and WMT. Tesla caused some heart burn, but is still above my mental stop level of 200. I got whipped around by the wide swings. I often rebalanced closer to delta neutral only to have to redo or undo trades as the market went down, then up, then back down again. I lost about 1% for the week, about 2% for the trading month, up 20% for 2019.

For now, I'll stay in the middle of the stream, staying near delta neutral on a lot of underlyings. I am cautious, as nearly always. 

Weekly: Tariff two step and Disney

What a week. Tariff tweets moved the market lower on several days. Despite no agreement, the market recovered some on Friday. My many short strangles on Disney came in for profit, when the stock didn’t move much after earnings. I could have exited better, but DIS boosted an otherwise dismal week. I was down about 2.2% for the week, but it could have been much worse. I took a lot of losses, especially in AAPL, cutting long exposure as the market moved lower. I am slightly long most underlyings. I survive an earnings miss as TTD TradeDesk.

The recovery on Friday, despite the failed IPO by UBER and no agreement on trade, is discouraging for would be bears. If the market can’t go down on that news, the path of least resistance may be higher to neutral, so that’s how I am positioned. It can all change in an instant. I continue to focus on my desired delta. Once in a while I slip back into the mode of counting wins and losses, but come back to my 2019 focus on net delta.

Weekly: Spring showers

A brief selling squall had me scrambling for cover. My brief foray into buying calls ended with mixed results. Overall, a small profit for the week, so I’ll take that, when I felt like I was trading poorly. I continue to be relatively cautious. I made a lot of trades on Disney and Apple this week. Not much profit involved, at least not yet, but a lot of activity.

Weekly: Big Dogs AMZN TSLA

My most profitable two tickers for calendar 2019 are AMZN and TSLA. This week both reported earnings and my big dogs led to another week of profits. I was up a bit over 1% for the week. I didn’t trade all that well, taking some losses in FDX, XLNX among others. My long position in DIS did well, but on that underlying I am still underwater for the year after getting blown out on short calls, on the huge gap up.

For Amazon and Telsa, being way out of the money on sold strangles, was the secret sauce. Overall, I remain relatively cautious, but am willing to make modest amounts of hay while the sun is still shining. Way too many novices fear the bear. We had a bear on QQQ in late 2018. SPY missed by one percentage point. If we count the new bull market as having started on Dec 26, 2018, it is only four months old. Way too many people cite the ten year old bull as a reason for being bearish, when but for a technicality, the new bull is only four months old. It certainly is for QQQ.

Monthly: the train keeps rolling Grade A-

Happy Easter. It was another up week for me. New longs include PEP QCOM. For the April trading month, I made about 5%, now up 23% for calendar 2019. So despite a few big loses such as BA, DIS, UNH my overall profit/loss is in good shape. Self grade is A- as the bull train keeps rolling for now.

A few etfs ytd:

IWM +21.5% Russell 2000 US small cap
QQQ +16.2% Nasdaq 100
SPY +16.0% S&P 500 US large cap

EEM +14.1% Emerging markets equity
TLT +1.1% US 20 year treasury bonds

GLD -0.7% gold
SLV -3.2% silver

So my gain of 23% is really good. Especially because I feel like I being relatively conservative. Biggest winners include Amazon, Tesla, biggest loser Boeing.

I remain relatively cautious. I have been buying some calls in the out months, as a way to offset some delta from sold calls on the front month. This decreases the profit from theta, but reduces tail risk vs. selling more puts to get to the delta I want.

Weekly: Disney plus, Lyft, UNH

It was a tough Friday for me, as I cover positions in sold Disney calls, Lyft puts, UNH. DIS went up, LYFT and UNH went down and all were bad for me.

UNH was down after presidential candidate Bernie Sanders outlined his healthcare plan. A third of the high profile Democrats for president support similar plans. The chances of Medicare for all, or similar passing in 2020 are remote. However, in ten years, I’d give it at least 30% chance. The legislation poses an existential threat to UNH and a host of other companies.

One analogy is to buying coal stocks in 2000. At the time, the coal lobby was strong. By 2012 when Obama ran for reelection, most coal stocks were down 90% off their highs. Similar can happen to UNH.

With the rough Friday, I eek a tiny gain for the week. So a cup half empty kind of week, positive, but could have been a lot better.

Weekly: Taking some off the table

Good news. Market up, my account up over 2% for the week, new record high for my net liquidating value. I reduce my risk profile another small notch. Bought some more BSV (Vanguard short term bond etf). I survive the drop in Tesla because my positions are way way out of the money. The strong rally pressured some sold calls. I continue to rebalance back to slightly delta positive as the rally rolls on.

As I have been writing, a lot of ducks are in place for a market top. The inverted yield curve, weakness in transports, stretched valuations. However, that doesn’t mean the duck will quack soon. A term I used a lot in the past in zombie bull. The zombie bull doesn’t seem to run on logic or food, or need sleep. It just keeps lurching ahead. The market may be entering a more speculative phase. A lot of big IPOs are coming to market, a lot of them are high risk situations. The huge run up in marijuana stocks discount many years of potential growth.

As always, market tops form with a relative maximum of buyers. This means that the majority of all in, all out timers are likely to be wrong at the turn. So where does this leave us? One foot in, one foot out. Options give ways to play this, but the picture is muddy. For the first time in a while, this week, I went long premium in a significant way, for a bit. I closed the positions quickly, because it now feels so weird to be long premium. I’m not saying go whole hog on anything, because it feels like a high risk situation.

Weekly: Slightly Bullish

A good week for me, up more than 3%. Mostly I kept adjusting my positions, staying near staying near delta neutral on most underlyings. with a modest bullish skew. As volatility contracted, I profited.

Some newer positions: I took a small long position in TLT, also sold puts on LULU after earnings, sold a skewed strangle on KL. The big positions continue to be in AAPL AMZN BA QQQ SPY TSLA.

I have a bunch of other stuff, including DIS ETSY FB FDX NFLX NVDA PANW SPG W. Again, mostly short strangles, slight bullish skew on most.

I continue to be cautiously bullish. I am keeping some powder dry. A lot of pieces for a potential market top are in place. The inverted yield curve, transports weak, bank sector rolling over, valuations stretched, big IPOs coming to market. Its more than enough to be cautious.

As always, all in all out market timing is a low percentage game. Market tops occur with a relative maximum of buyers, so the majority of all in timers are likely to be wrong at the turns.

Weekly: Fed whipsaw, pieces of the top

It was a frustrating week. I got hit on both side, both by the big post-Fed rally on Thursday, and the sharp decline on Friday. Lost a little over 2% for the week. Boeing continued to be a problem as it made a new monthly low. The booming rally in some stocks, such as Apple had me scrambling. I kept rebalancing back to delta neutral. As volatility increased that didn’t work out.

Several pieces of a market top are now in place. The inverted yield curve, poor relative strength in the transports, lots of big IPOs coming to market, extended valuations as measured by CAPE and GDP to market cap (Schiller PE10 and the Buffett indicator). The one missing piece for a major top is popular sentiment. AAII weekly sentiment is still middle of the range. Stock market chatter at the local level seems muted.

A lot of birds are chirping online about the imminent recession. The inverted yield curve has a lot of people looking for a market down turn. This and the relatively good economy are what bulls can hang on to.

Monthly: Grade B-, Boeing down, market up

I lost a small amount this week mostly due to Boeing. For the trading month, I eek out a tiny gain. Self grade is B-. For the year I am up 16.8%. Compare to some etfs:

QQQ +15.6% Nasdaq 100 mostly tech
IWM +15.6% Russell 2000 US small cap

SPY +12.6% S&P 500 US large cap
EEM +10.3% Emerging market equities

GLD +1.4% gold
TLT +0.2% 20-year US treasuries
SLV -1.3% silver

So I am still holding my own, though the lead has shrunk. YTD, I lost about 3% of the account on various Boeing trades. Made a boat load on AMZN. The sharp rally had me rolling and closing to stsay near delta neutral. I have a slight bullish bias at the moment, but anything can happen. I don’t have anything remarkable to add. I’ll repeat rule number one:

Live to trade another day

I’ve been blogging a long time, trading much longer. While some see selling naked options as extremely risky, position sizing and taking losses have kept me in the game. Hopefully, I continue to learn and adapt as markets change. Happy Saint Patricks Day.

Weekly: A little rain, more on the way?

Markets down. Looks to me like a normal retracement after a big up move. I lose about 2% on the week. Are we on the way to new highs? That’s a stretch, but one down week doesn’t mean the market is toast. I took the head fake on Monday morning rally, then had to adjust most of the week. Took a big loss on leg of sold Amazon puts. I sold some way otm puts on Costco after their good earnings report. I got a little too negative and had to readjust again.

I’ve been writing for years on this blog about the red flags of a market top: look for an inverted yield curve, look for transports to lead the way lower, popular sentiment too bullish. Only the last one seems still okay, bullish sentiment hasn’t reached the masses yet. Sentiment is not a requirement for a decline, but big tops often have a lot of people bullish at the top. The other two are redline, transports are leading the way lower, the yield curve is flat, with slight inversions. So I am not overly bullish.

It is a “show me” market, and I remain mostly delta neutral on many positions. I have a slight bullish bias, but not much. So we got a down week, is more on the way? I am thinking any selling will be contained, that we are going to push higher. I remain cautious, as almost always.

Weekly: Leaning higher

Markets lean higher, as does my account. I take a loss on some more sold calls in Boeing. The massive run up has cost me on at least two legs of BA this year. I initiate longs after earnings on BBY ETSY W (Best Buy, Etsy, Wayfair). There is some follow through on the breakouts.

Someone noted that a remarkable 90% of S&P 500 stocks were trading above their 50 day moving average. This has been observed 11 times since 1950. Every time stocks have been higher a year later, average gain another 11%. Obviously, with so many stocks above the moving average, the market has already rallied some. The straight up move has many people nervous, including myself. This stat makes me less nervous.

Don’t fight the Fed, don’t fight the tape. The path of least resistance, and causing the most consternation is likely higher. Too many feel like I do, that we have come too far too fast, but the tape remains strong, the market is leaning higher.

Weekly: Same story, same result

It is more of the same, as the stock market has its ninth straight up week. I make decent gains, right around 2%. I grow increasingly nervous, and fight the urge to raise cash. I play Walmart on the post earnings breakout. WMT flops, but I come out okay because I am way out of the money on sold puts.

So going forward, same old same old: rebalance back towards near delta neutral on most underlyings, sell premium way out of the money. Be ready to adjust and/or take losses as needed.

Monthly: boom goes the dynamite, grade A

Market booms ahead, erased the losses from December 2018.
Here are a few etfs, ranked best to worst for 2019 year to date (dividends not included)

IWM +16.7% Russell 2000 US small cap
QQQ +11.5% Nasdaq 100, mostly tech

SPY +11.0% S&P 500 US large cap
EEM +7,8% Emerging markets equity
GLD +2.9% gold

SLV +2.1% silver
TLT +0.4% US 20 year treasuries

My account +16.7% right there with IWM. This despite what I consider a relatively cautious market stance. Many days, I tried to rebalance towards delta neutral by the end of the day. Amazon accounts for a lot of the gain. Some days the market ran too hot. This past week, I was lagging the bulls, because I had sold so many calls.
Notable new long for this week is ANET Arista Networks. Most of the earnings plays I did were winners. The one notable flop was a short position in Facebook. Some I played after the news was out.
I could have done better, but up over 16% for six weeks is remarkable, so I give myself a rare grade A rating for the trading month.
As I have said, one recent change is abandoning the count of winners and losers. Win percentage is an interesting stat, but not that meaningful. In past years, I aimed for a high win percentage. Now I mostly focus on delta, possibly the gamma, and the net liquidating value.

Weekly: It felt worse than it was

I manage a small gain for the week. It felt like a down week because the market was up early, then faded hard on Thursday. It is the pause that refreshes? Macro news about China trade, Brexit, another government shutdown continue to loom large. I scramble to rebalance towards delta neutral. On some days, several moves are needed. Sometimes the morning rebalance has to be reversed by after noon.

Only notable new long is IRBT. Irobot up on earnings.

Weekly: Boom Boom Bing

Another big up week for my account, up about 4% for the week. I hit on most of my earnings plays, though Apple ran too hot, Amazon too cold. I swung and missed on Facebook. Microsoft, GE, Tesla all came in just about right. I made a small play on Anthem and lucked out.

I changed two things recently. I’ve been balancing back towards delta neutral on many underlyings, and stopped counting wins and losses. Used to be I tried to be net long on most underlyings, and I focused on closing trades for wins. So far this year, support and resistance on the chart have been working this year. We will see if my winning streak continues. One could only imagine the gains, if I had a strong bullish tilt. As is, I’ll take up 4% any week.

Weekly: one step back, two steps forward

Monday was a holiday. Tuesday I lost about 2.0%. The rest of the week I more than made that up and gained over 1% for the week.

I went to my local meetup. The main guy is fairly bearish, in a “show me” state.

I recently took new long positions in XLNX KL IBM. Added to longs in GE. In QQQ and SPY, I try to rebalance back to close to delta neutral, slightly long, by the end of each day.

Monthly: Monster truck rally grade A-

Stock markets start the year with a monster rally. My account is up 8%. Here are a few etfs for 2019:

IWM +10.0% Russell 2000 US small cap
QQQ + 7.1% Nasdaq 100 US mostly tech
SPY + 6.6% S&P 500 US large cap

EEM + 6.4% Emerging market equities
GLD - 0.2% gold

SLV - 1.0% silver
TLT - 1.6% US 20 year treasuries

So equities had a very good month, and some other asset classes declined a bit.

A couple of big changes that I made were to adjust back to near delta neutral on most days. Sometimes I had to make multiple adjustments. I stopped counting winners and losers. I used to really want to book winners, which is human nature. Now, I am more likely to find the quickest way back to near delta neutral and if that means taking losses so be it.

Who knows which way the market goes next? I sure don’t. I am taking some risk, but overall a bit more cautious than I was, say in September 2018. Stay tuned.

Another plus week

I am up nearly 3% for the week. The tumble in Tesla on Friday, prevented an even better outcome. I keep rebalancing to near delta neutral on my primary positions. This meant taking some losses on sold calls on more than a few stocks including AAPL BA NFLX QQQ SPY. The Netflix earnings report came in with a whimper, but I didn’t play it. Tesla has given so many head fakes lately, that I was reluctant to reduce delta on the news. By the end of the day, I rebalance back to delta neutral, but losses for the day were large. I’ll post a monthly recap with harder numbers in a day or two.

Wins and losses no longer the emphasis

On Monday, the market runs too hot. I close several sold calls for losses. The straight up rally can be just as bad for strangle sellers, as a sharp decline. Netflix, Amazon, Apple, are the main culprits, but there are others. The good news is that I finish the week up over 2%, about the same as the increase in SPY.

I’ve shifted my focus to staying near delta neutral. I’m selling options closing in with higher deltas when necessary. I got an email saying my account was flagged because a 20% down move in the market would be very, very bad for me. Selling a lot of 10% probability puts, as was my preference would create huge downside risk.

My overall stance is a shift is away from counting wins and losses. Win percentage is only one metric, and while it can be useful, the emphasis is shifted towards net liquidating value, and risk.

Earnings season will soon be upon us. Netflix showed that big moves can happen outside of earnings. As always be careful out there.

Apple bites the dust, also GE and XON

The year started off okay, then AAPL lowers guidance and the market goes lower. The next day some good economic news and comments from the Federal Reserve chair, ignites a huge rally. I continue to roll up and down. I was mildly long Apple coming into the news. I continued to adjust the position back toward delta neutral. This meant the Friday rally had me scrambling to add long delta. For the week I was up around 2%. I’ll take that.

I take small long positions in GE and XON (the biotech not the oil company) based on some conversations. These are tiny positions. Tesla tumbles on news, then recovers some.