P2 US Equity Portfolio

[peter2]

The US markets rallied during the UK session and opened significantly higher. The markets tend to drift down a little after such a gap. I've taken profits on all trades at their T1 levels. TNA went higher and I was able to raise TS to T1 which was hit about two hours later.

Why take profits at T1? This thread is in a beginners thread and taking reasonable profits frequently builds confidence in the trader. We can argue whether +1R profits are reasonable and this largely depends on the W% and frequency of trades. Our watch list (approx 30 stock codes) will provide plenty of opportunities as we can trade the markets in either direction. The W% has started high and will fall as the market conditions change. If it falls below 70% then taking profits at T1 is not a reasonable payback for the risk.

I set an unannounced goal for this thread of +1R /wk or +4R /mth and in less than 1 month earned +10R. Hitting reasonable goals regularly is also important as a sign of progress towards the much bigger goal. As the gold/sliver trades were late Dec I'm allocating them to Dec19 (+5.4R) and these recent trades for Jan20 (+5.1R so far).

I won't be taking a two week vacation for the rest of Jan. I'll spend the usual 20 minutes before the US open going through the watch list. A few more winning trades would keep us ahead of plan and offset the losses to come.

 

[peter2]

Update on this trade book:

The only open long was LABU (biotech) and this was closed today for a full loss (-1R) as the market reversed. This move down triggered a long trade in the inverse LABD. A bit more follow up selling is required to offset the loss from LABU.

Gold (GDX) and silver (SLV) triggered long trades.

The US indicies triggered 123 low setups on the hourly charts of the inverse ETFs. The best looking chart was the inverse SPY ETF - SPXS shown here.



I'm still bullish the US markets and will look to take quick profits on this dip.
The current trade book;

 

[peter2]

The US market opened gap down on coronavirus concerns. This means the open trades on the inverse ETFs gaped up. Both LABD and SPXS opened higher than T1 so I was able to place a very tight exit stop in case they went down soon after the open. They both did as the market traded higher and I grabbed the profit soon after the open. LABD +1R, SPXS + 1.5R

GDX and SLV also opened higher but not by enough to consider taking profits. Trailing stops moved higher on both trades to reduce heat.

The trade I did miss out on was shorting the China index last week when news of the virus was first released.

 

[peter2]

D'oh! Typical newbie mistake. The weakest US index is the Russell small cap index and I thought the market would fall further after the open so I bought the inverse ETF - TZA at the open. Moved my exit stops on the swing trades to lock in profits as posted. Then noticed that the TZA trade was being toasted. Closed it soon after for a loss. The newbie mistake; thinking that I knew what would happen and started the trade without a setup pattern and trigger. Dumb. Got all excited by the open profits on the swing trades that I ignored the intra-day trade plan.

This day trade loss should be included here but it would mess up my stats. This post will remind me of today's mistake. I've closed the platform down as my head isn't screwed on tonight.

 

[fergee]

D'oh! I've closed the platform down as my head isn't screwed on tonight.

These words are very sagely P2. Thank you.

I think newbies and vets alike should be reminded of the physiological strain that trading entails. Having that understanding of self and what frame of mind you are in is so important in regard's to when to trade and when not too.

 

[peter2]

Thanks @fergee I think it's important to be proactive not reactive when trading.

The two open trades in GDX and SLV were closed last night as the prices fell.
GDX closed at BE, SLV closed for full loss as price opened below trailing stop.

The last five trades produced a small overall profit (+0.6R).



It seems the coronavirus dip only lasted one day as the contagion has been limited to China.

China will get on top of this situation soon and their market will recover. There's opportunity to trade the recovery with the ETFs EWH (Hong Kong) and FXI (China large caps). I'll keep an eye on the 1hr charts for a 123 Low setup.

 

[peter2]

Had a quick look through the my US ETF list and there's probable opportunities in two sectors that have been sold off. MJ (Cannabis) has pullback approx 50% so I'm watching for 123Low patterns on the hourly charts of MJ, CRON, CGC, TLRY, ACB.

The other beaten down sector is oil (XLE and XOP). They are at double bottoms now and I'll need to see the 123L pattern on the hourly charts first.

UNG (nat gas) they can't give it away.

 

[fergee]

@peter2 I was wondering how you interpret/use the vix in your trading? I have seen you mention it in your ASX portfolio threads.

 

[peter2]

I'll comment on the VIX in the WE review.

Another trade started. This time it's in the inverse semiconductor ETF - SOXS. I've market the 123 Low in the hourly chart. Since it started well I've raised the trailing stop to reduce downside risk.


I'll leave the T1 sell order in the market for the day only.

 

[hallph]

Had a quick look through the my US ETF list and there's probable opportunities in two sectors that have been sold off. MJ (Cannabis) has pullback approx 50% so I'm watching for 123Low patterns on the hourly charts of MJ, CRON, CGC, TLRY, ACB.

The other beaten down sector is oil (XLE and XOP). They are at double bottoms now and I'll need to see the 123L pattern on the hourly charts first.

UNG (nat gas) they can't give it away.

Peter - why buy, or even look at, things going down when you could buy one of the hundreds of charts going up?

 

[peter2]

@hallph Thanks for the question. One of the problems people have when considering trading on the US markets is the huge number of stocks available to trade. When I scan the US markets for perfect setups there's plenty of them. I get hundreds when I only need a few.

As this thread is in the beginners section I started with a short list of approx 30 ETFs. It's very easy to look through a short list every day before the US open and place the orders on the few possibilities that appear in the charts.

I plan to increase the number of opportunities as the thread progresses. The first sector that I've expanded is the cannabis sector. The ETF is MJ and the main components are CGC, CRON, TLRY and other cannabis companies. Instead of looking at SMH (or SOXS, SOXL) I could look at AMD. MU and other semiconductor stocks. It wouldn't take long to expand the list to >100 stocks but would one spend the time looking through 100 charts every day like we do with 30?

Of course I don't buy stocks going down but it's worth looking at them for possible reversal setups. The cannabis sector will rally again one day and when it does we'll be onto it.

I hope this thread will show that one can do quite nicely with a small selection of companies and ETFs when one has a trading plan and the discipline to follow it consistently.

 

[willoneau]

Hi peter2, do you use IB as your broker in US?

 

[peter2]

This handy little feature on Trading View indicates the number of days to the next earnings report.
I don't want to start a short term trade in CGC this close to earnings when the price tanked after the last three earnings' reports (unless I want to short it?).

 

[qldfrog]

This handy little feature on Trading View indicates the number of days to the next earnings report.
I don't want to start a short term trade in CGC this close to earnings when the price tanked after the last three earnings' reports (unless I want to short it?).

View attachment 100138

That is indeed very convenient and explain why you are using this tool
I was all happy with AB and mydata feed, but i understand how this facility and maybe the days to go ex dividends can be important ?

 

[peter2]

Joe kindly moved this thread to this subsection of the forum as it seemed more appropriate. I intend to be more active in this thread in order to take advantage of the bullish US markets.

I have considered a range of trading strategies for this thread and haven't settled on any one. As this thread is no longer in the beginners section I think that I can do what I like. This means that I'm not restricted to one strategy or one tactic. The aim for this thread is to increase my US account by accumulating lots of short term results. The monthly goal is to earn +5R/mth and the base level trade risk starts at 1%. I'm going to compound profits quicker by adding 5% of total profit to the initial trade risk (max 2%) and stop it if DD gets to -4R. I'll recommence the aggressive compounding once the DD is erased.

Living on the east coast of Aust the US markets open at the awkward time of 0130am during summer. This gives me plenty of time in the evening to find some setups to trade. I'm going to start with the Russell 3000 list. I'm going to preference the lower priced stocks as I want to get into explosive moves that can generate high R multiple results.

 

[frugal.rock]

The other beaten down sector is oil (XLE and XOP). They are at double bottoms now and I'll need to see the 123L pattern on the hourly charts first.

Have been wondering about oil myself. Any ideas on why the spot price is low? Was nearly 20% higher a few weeks ago.
Makes me realise, there are seasonal factors to consider.
IE, Europe, US, China (northern hemisphere) are all coming out of Winter, maybe the lower price is season based?
F.Rock

 

[qldfrog]

Have been wondering about oil myself. Any ideas on why the spot price is low? Was nearly 20% higher a few weeks ago.
Makes me realise, there are seasonal factors to consider.
IE, Europe, US, China (northern hemisphere) are all coming out of Winter, maybe the lower price is season based?
F.Rock

Really??? Seen a picture of the traffic in BJ, Shanghai or Shenzhen right now?
China consumes 12,791,553 barrels per day (B/d) of oil as of the year 2016. China ranks 2nd in the world for oil consumption, accounting for about 13.2% of the world's total consumption of 97,103,871 barrels per day.

 

[Warr87]

@peter2 , a slight segway but I've wondered about this. When you trade your US stocks, are you opening an account in the US and transfer your money over into a US based account (effectively hedging your currency risk as well), or are you buying on the US market through an aussie broker a number of aussie brokers offer some US stocks or ETFs?

 

[peter2]

What do I think about the current price of oil (or anything)?
My standard reply to this question is; I don't have an opinion, it could go up, down or stay the same for a while. I could create a narrative to explain the current lower price but this is a waste of time (unless I was paid to express an opinion).

Opinions prevent proper chart analysis. If I've a bullish opinion then I'm looking for reasons to support that opinion rather than being open to both bullish and bearish possibilities.

A good recent example of this was in the P2 Wkly/Dly thread. I posted a bullish setup in AMS:asx. @Trav. questioned me on this view and after reviewing the chart again I turned neutral (50:50) much less bullish than I was earlier. I even pointed out that if the gap up doesn't hold then price could fall below 1.30. As it turned out this happened.

I'm neutral on the price of oil. I'm bullish the price of nat gas but I still have to wait for a bullish setup for a trade.

 

[peter2]

Most of the trades done here will be through a US based equities account. I funded the account when the AUDUSD was 0.87. I'm not concerned by currency fluctuations.
I will also use an Aust based cfd provider for trades in larger cap US stocks.