Banks are Dominating!

I started this blog with my thoughts on trading, and then let it rot for a while given I was caught up in a lot with work, a big move and a growing family. I feel bad, as every trader should have a journal to keep themselves in check. This blog was meant to be that journal, and for you to read if you feel like it!

So anyway, I’ll try to get back to it, and I will change direction slightly to cover my trading in my two accounts, rather than go through everything I’ve learned in a theoretical sense.

Cast Your Net

 

Almost every day I’ve been running a filter that shows me potential breakouts on US stocks. It’s not perfect, but I cast the net a little wider open to make sure I catch all the goodies while letting in a few oddities. The Amibroker-coded filter basically performs the following:

  1. Verifies overall market conditions
  2. Verifies the stocks are in what Minervini describes as Stage 2, which means they have emerged from being range-bound and are now trending upwards
  3. Verifies the stocks are close enough to their all-time-highs but not over-extended
  4. I then try my best to filter out ‘weird’ stocks, such as those with minute or extreme volatility, are illiquid, etc.
  5. They are systematically ranked as well, however I’m still not satisfied with it’s results to bother publishing. For now I do this by eye and also check IBD SmartSelect ranking, but only the technical ones: Relative Strength, Group Relative Strength and Accumulation/Distribution.

This gives me a decent amount of charts per day to review, without inundating myself with 1000s of stocks to review by eye per day. What’s interesting is the health of the market can be indirectly measured via the breadth of stocks that make it through the filter. Ugly weeks bring few opportunities (0-5), while since the Trump rally, the average daily cull has been much greater (10-100).

Portfolio Status

In any case, here is my current RRSP portfolio, which was started mid-September, 2016:

BuyDate Ticker BuyPrice InitStop Stop Close R at risk Profit R Profit %
2016/09/15 FNSR $28.11 $25.50 $25.18 $33.75 3.2 2.2 20.0%
2019/09/20 NVDA $63.87 $58.76 $85.74 $107.23 4.2 8.5 67.8%
2016/11/10 OSK $61.00 $51.00 $55.65 $68.16 1.3 0.7 11.7%
2016/11/10 WAL $40.99 $36.00 $38.86 $49.61 2.2 1.7 21.0%
2016/12/06 PLAY $49.18 $44.50 $44.51 $58.19 2.9 1.9 18.3%
2017/01/06 SHOP $47.00 $40.00 $41.08 $61.52 2.9 2.1 30.8%
2017/01/09 TSRO $145.93 $125.00 $127.33 $190.36 3.0 2.1 30.4%
2017/01/20 NFLX $139.44 $123.40 $108.68 $142.22 1.2 0.2 2.0%
2017/01/26 AGX $76.20 $64.54 $56.49 $71.20 0.6 -0.4 -6.6%
2017/02/06 BEAT $24.00 $21.00 $17.66 $24.95 1.3 0.3 3.9%

… and here’s the LIRA, which started mid-January of this year:

BuyDate Ticker BuyPrice InitStop Stop Close R at risk Profit R Profit %
2017/01/17 AAOI $28.89 $25.00 $24.73 $37.27 3.2 2.1 28.9%
2017/01/19 BBD-B.TO $2.61 $2.50 $2.50 $2.53 0.3 -0.9 -3.8%
2017/01/19 CGNX $67.46 $57.96 $51.59 $76.44 1.9 0.9 13.3%
2017/01/19 SYMC $26.45 $24.83 $21.48 $28.80 2.5 1.4 8.8%
2017/01/20 AGO $39.91 $34.83 $30.22 $41.01 1.2 0.2 2.7%
2017/01/20 MIME $22.75 $18.32 $16.77 $19.54 0.3 -0.7 -14.2%
2017/01/20 NFLX $139.44 $123.40 $108.68 $142.22 1.2 0.2 2.0%
2017/01/20 TMUS $60.54 $54.30 $46.67 $63.92 1.5 0.5 5.5%
2017/01/23 IIVI $31.10 $28.63 $27.99 $39.00 4.2 3.2 25.3%
2017/02/15 SFBS $41.98 $38.07 $30.34 $41.87 1.0 0.0 -0.3%

As you can see, this bull market is very strong and seems very amenable to long-term trend-following (for now!). However this has been after an autumn of stagnation and some ugly reversals. In any case, both portfolios are decently profitable given their lifespan, giving me some hope that 2017 will be more similar to 2013 than the years that came after it.

Weekend Filter

 

Running my filter on Sunday, February 19th, gave the following results:

Ticker Sector Industry
LOPE Consumer Discretionary Diversified Consumer Services
CBS Consumer Discretionary Media
LBAI Financials Banks
STL Financials Banks
CATY Financials Banks
CBSH Financials Banks
BRKL Financials Banks
TRMK Financials Banks
CME Financials Capital Markets
COF Financials Consumer Finance
KRNY Financials Thrifts & Mortgage Finance
WAFD Financials Thrifts & Mortgage Finance
NWBI Financials Thrifts & Mortgage Finance
XNCR Health Care Biotechnology
LNTH Health Care Health Care Equipment & Supplies
TBPH Health Care Pharmaceuticals
BA Industrials Aerospace & Defense
ITW Industrials Machinery
UNP Industrials Road & Rail
COMM Information Technology Communications Equipment
ANET Information Technology Communications Equipment
CGNX Information Technology Electronic Equipment, Instruments & Components
GOOG Information Technology Internet Software & Services
SWKS Information Technology Semiconductors & Semiconductor Equipment
AVGO Information Technology Semiconductors & Semiconductor Equipment

As usual, since this Trump rally gave birth, financials are killing it. They are a daily occurrence in my filters as they continue to break new ground. Information Technology is another hot sector. This is also reflected in my portfolio. The stocks doing very well seems to be in either of these two categories. Also 26 stocks is a pretty large output for this filter, signifying strength in the markets.

Charts

Here are some marked-up charts I find interesting to close out this post.

New Ideas

Here are some definitely possible buys: $LBAI (financial) and $LOPE (for profit education), although the latter suffered a harsh fade after a fantastic gap-up. Early-stage gaps can net you solid returns, even better if you catch it before (as you’ll see with $PLAY below)!

lbai

lope.JPG

Portfolio Angels

Here are my portfolio angels for the week:

$WAL (a bank, that’s all I know) breaks out of a flat base, glad I held onto it (my stop is nowhere near the price action anyway). Financial stocks just continue to impress:

wal3

$PLAY (Dave and Buster’s, basically Chuck-e-Cheese for adults) breaks out of its flat base after a nice gap (one in which I magically bought the day before!). Volume is light and the breakout is not so convincing, but the price is moving up, that is what’s important.

play2

$SHOP has just been awesome since it broke out of its long-term range with a high of 45$. It’s also a recent IPO and has a lot of hype after appearing on Dragon’s Den (Canadian Shark Tank). This thing has just been a diagonal line since.

shop

Other nice moves of the week for my stocks include $TSRO, $CGNX, $TMUS.

tmus2tsro2cgnx2

Portfolio Duds

$LOGM is a dud I had to sell this week. It slammed through my stop, but seems to now be getting support at the 150 day simple moving-average. If it breaks out again and I have the capital, I may buy.

logm3.JPG

Never forget a stock that stopped you out previously! Take the case of NVDA, I bought it once at 33.74 and quickly got stopped out at 30.67. Then I tried again at 40.77 and sold it at 58.76, and only because I was reorganizing my accounts and had to sell everything. I kept my eye out on it, and then bought again at 64.50 and have been holding since. That’s a potential compounded return of 117%! If I would’ve forgotten about it, I would have just lost that initial 10% or so.

nvda7

That’s it for now!

Terminology

Some key terms if you’re not familiar:

“R” = You’ll see “R at risk” or “Profit R” from my holdings indicate how many multiples of my original risk for which I’m up (or down). So if I bought a stock at 100$ with a stop loss at 90$, if the stock is at 120$, the R-multiple is calculated as such: (120-100)/(100-90) = 20/10 = 2 R. I got this idea from Van Tharp like most others, here is a good read on it.

RS = IBD’s relative strength measurement, which ranks stocks against all other stocks. Not to be confused with the similarly-named Relative Strength Line, which compares the stock action to the S&P500.

GRS = IBD’s Group RS, which ranks industry groups against each other. A good chunk of a stock’s strength relies on the performance of its industry and sector.

A/D = Accumulation/Distribution, as measured by IBD. Indicates how heavy the buying or selling is of a stock over the last 13-weeks.

 

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