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.