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Positive Expectancy
- Joined
- 24 September 2008
- Posts
- 3,588
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- 133
How is trade 31 going? Did you close it out our are you still riding the roller coaster?
How is trade 31 going? Did you close it out our are you still riding the roller coaster?
EOD
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A poorly closed trade in BLY/ASL even though that it was a win. I tend to close pairs early if the pair has gone offside by a fair bit. BLY/ASL was down ~8% at one stage... it's as much psychological as anything else as I look for the relief of avoiding a large loss. Something I need to work on.
Trade #29. Long FWD / Short UGL. FWD is leveraged to the mining boom with a good portion of its business in the manufactured building space for mining developments and had a remarkable run from the bottom of the GFC. Because of this leverage it will likely run harder if the market stays in risk-on mode. FWD is threatening resistance at $12.1 and if broken offers a potential ~$12.5. UGL is also at a sloping resistance and has retraced ~50% of the recent downleg. Profit target ~4%.
Well, I know exactly how you feel cuz I closed it off yesterday too, though my excuse was to free up the margin for new trades
New trade #39 opened. Long ILU @ $11.63. Short MDL @ $5.205. Size = 10%.
Trade #28. Long CPU / Short IRE. Both companies are stock market activity levels - CPU benefits from capital raising and corporate events, while IRE from trading volumes. Fundamentally both stocks have similar place in my mind - former market darlings priced for growth that are now being re-rated. On the charts, IRE has enjoyed a 10% bounce from recent lows right into resistance zone in $6.6-$6.8. CPU is only up ~2% and if it manages to get back above $7.6 it can potentially retest $8.20. Profit target ~6-7%.
Trade closed. Sold ILU @ $11.62. Covered MDL @ $4.995. Profit = 3.95%.
The target was ~6% so 2/3 of the way in one day. MDL is quite a thin and tricky stock and there was only a few thousand shares on the ask for exit before the spread jumps anyother 3%. ILU looking like it's headed towards a strong close.
New trade #40. Long PPT @ $22.82. Short IFL @ $6.08. Size = 12.5%.
New trade #31 opened. Long SGP @ $3.12. Short CQR @ $3.41. Size 12.5%
Trade #41 opened. Long PTM @ $3.88. Short IAG @ $3.56. Size 7.5%.
Analyst downgrade causing PTM to fall 5% in a flattish market. I am not sure if the selling is done yet so will look to increase the position if there are further falls on PTM.
Got a little bit more. The line now reads: Long PTM @ $3.86. Short IAG @ $3.545. Size 10%.
Trade #33 opened. Long MIN @ $8.88. Short CPB @ $55.48. Size = 10%.
Trade #30. Long ENV / Short SKI. Gas vs electricity distributor. The utilities / infrastructure sector makes good pairs trading as they tend to have lower risk of company-specific shocks. The main fundamental factor I look is the dividend yield (and the ex-dividend date). ENV enjoys a higher yield, and the ex-div dates are both far enough away for it to not matter much yet. ENV is hitting lower bounds of a 5-month channel between 76 and 81c. SKI's chart is a bit scary for a short as if it breaks $1.54 there might be a 10% run in it - but I do intend to fade the break and build the position further if it happens. Hopefully the resistance will hold SKI back while ENV rotates back towards the top of the channel. Profit target ~5%.
EOD
View attachment 47828
34 closed trades vs 7 open trades at small loss.
This portfolio has been lucky - it dodged ILU by a day, and PTM's profit downgrade didn't really affect the share price too much. But I am pleased to be out of the trade with very minimal impact - the market can be savage against profit downgrades.
Charts...
STO/OSH - Normally I avoid any stock that has recent fundamental news and STO last week announced a cost blowout (which they denied) on their LNG project which caused the share price to fall sharply. But the chart suggests that there's good buying below $10.50 plus it's always a takeover target. The OSH chart is right on resistance at $6.80 and I can see a possible retracement back into $6.4-6.5. The STO/OSH ratio is at 6 month low.
Full convergence up to 8%, but profit target ~5% depending on price action.
Only did short LLC vs long MGR today, which is kind of a reverse trade of long SGP vs short MGR earlier.
Otherwise I have both long DXS vs short GPT and long MRM vs short NWH in heavier loss than your pairs
FGE/NWH - Two smaller mining services stock that have decent fundamentals if the mining boom doesn't disappear overnight. NWH is up 18% from the recent low, FGE is up only 7%. If the market stays in risk-on mode, FGE can possibly find $5 again, while NWH is looking at $3.6. So with good luck and timing there'd be a profitable time to exit the pair from now till they get there.
Full convergence is a massive 13%. Profit target ~6-7%. Position size kept small as FGE can be thin at times.
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