DIA

The Dow is still going.  However, the trading range is narrowing.  I'm continuing to move the stop up to follow.

Stopped out today.   Support failed to hold.     The problem with this trade was stock selection,  there was no way I should be trading a stock that doesn't average even 100 thousand shares a day.   

REE: Update

REE continues to tick down.  It closed over 6 on what appears to be a doji,  but the doji doesn't feel like a reversal, there was hardly any volume,  The MACD is still bearish and is staying steady.    There is a lot of congestion in this range from January's move.   It's bounced here last week but then faded.    

PZE update

PZE was starting to show signs of promise last week but two days of sells offs changed that.  It came within a penny of my stop.    It's likely I get stopped out tomorrow and if so, I'll triage the entire trade.

QIHU: The Option Fiasco

I'm not in the right frame of mind for trading because of other commitments and am not planning on taking new positions for a couple of weeks.    However, I have open positions that I am managing.  

For QIHU, I have June 15 puts.  Because the puts were expensive due to the fraud allegations I put on nearly a 2 R trade.  That's too much for an options trade and the stock rallied after earnings.   I decided to hedge that risk by selling some June 17.5 puts (fewer than my June 15.)    I don't see much risk in this closing between  15 and  17.5 in june.  Either the growth story is believed and the stock takes off, or the fraud comes to light and this crashes.     

However,  in my haste to put on the spread, I sold the June 17.5 calls.  for 3.80.  (like I've said I'm distracted with other commitments)  I caught my mistake once I reviewed the trade log.  Selling the calls  and being long puts was a very bearish bet, which I wanted to avoid.   I immediately put in a limit to purchase for 3.70, which was filled after 15 minus.    So long story short, I made .10.      It was a "win" for the wrong reason.

Chart observation.   Doji  at the 200 MA, also looks like a selling zone on the chart.   I wouldn't be surprised to see consolidation if it goes higher, or a complete reversal if  the sellers take control.

DSX: Stopped out

Stop hit at $8.96.  Traded as low as $8.80.   

Summary:
Entry
I rushed into the trade before the down move was finished and hoped for a snap back.  That didn't happen.

Exit
Stopped with a small loss just a few cents of slippage.  I could have held a wider stop with fewer shares and kept the R the same.  Or, I could have increased R beyond to at least 1 R to allow for a .70 stop.   It now looks like a reversal bar as it traded positive stopping me out.

Rules:
I had a plan and I traded it.  it didn't work this time but the damage was minimal.

QIHU

So its Earnings Day.

A new report from Citron alleging fraud.

Earnings beat by .08, AH run.  wild day.      These are the type of stocks where I'm glad I have options
Instead of short shares.  Either it's fraud and its worthless or it's actually putting up the reported numbers and which case it soars.   Anyway, it's likely that the momentum buyers make a run at it tomorrow.  We'll see.

DSX

DSX pulled back to value today after a nice run.  I'm in at 9.23, with a stop at 8.99 which is the PAR Stop.  On a trending stock that type of stop works pretty well.  Obviously, this is a very tight stop and well below the 2% rule.  However, if DSX is legitimately starting a run, rather than a flash in the pan, then buyers should be moving in.

Pulled back to the 13 EMA.    The Theory is that this would be the "value zone"  and since I bought on the pull back, my odds are in my favor assuming the trend is a legitimate move

DIA: When it goes right

My trade of the year was in the DOW after a period of extreme moves.  I'm up over 21 points on the last 25% of the position.   By selling off a portion of the trade after nice profits on the volatility it allowed me to hold through a failed breakdown and let DIA go into a trend.

Position Updates

After 5 red bars, the impulse bars  went blue for 2 bars, on an up move.   There was no follow through after the up move,  closing down on the second bar.  The MACD did not go positive.   No reason to cover yet.

PZE:   This was a poor stock choice.   On the chart, it's setting up decently with a nice  flag.   However, the volume is terrible.  Only 17.7k shares on Friday.  This was a trade that is too thin for trading and I should have passed.    I'm slightly down on this position.

QIHU:

I have July 15 puts.  The chart does not look terrible as there MACD is showing divergence and the selling pressure has been lower on subsequent downward moves.  

That being said, Picking up puts  was not a "chart" trade.   This company has been dogged by fraud allegations.  Some of the research that I reviewed for this trade includes:
Stock Citron
Delloit Watch
The Street.

If QIHU is a fraud then it will fall regardless of the chart.  Earnings come on on Feb 22.

Update

Dow down 100. Biggest drop of the year. No big moves in positions. If dia trend line breaks sell final tranche Ree continues to drop, but no test of 6 support yet. Small rally on pze with increased volume turned elders daily bar to blue.

PZE

Found this in a multiple bottom scan at finize.com. It had a nice pop to 17, and then pulled back to the value zone.  If value holds, the uptrend continues,   otherwise, I'll look to exit quickly.

Weekly, Impulse gives the okay to buy,  13 Day EMA ticking up.  Bullish divergence on MACD and Force showing weaker sellers.

Buy at 15. 61, w stop at 14.94,  target 16.75




Day 2.

Got the stock this time but not sure I wanted it.  Got hit with a big red candle.      I manually pulled the stop when I had mistakenly put a stop limit, instead of a stop.  The specialist traded right over it.

Lessons learned:
Use stops, not stop limits
Don't trade light volume stocks.

The entry scored a 19.   Perhaps splitting up the buy order would help get  better entries.   Rule No. 6 was broken on the entry.

The drop today turned the impulse bar Red.  If no rebound get out at market

MACD shows a series of higher lows since Oct.   But should have I waited until the signal line crossed again to the upside?   More research needed.

UNG update

No real rebound.     If I were trading the stock I would sell as there as the impulse system went red on the dailies.  The Weeklies would still permit the buy.     My position is a 1 X 3 option back spread,  so even though the stock has traded down pretty significantly,   my position is  still even.    I will make money as long as this trades below 6 or above 7.95.

Of course, its not exactly a great trade to hold through july expo for a .05 credit.

REE: When it Works

This is what I like to see in a short

The high to 8 was with a worsening MACD.   That's what you look for in a top.   No follow through and then a big sell off.  Down another 6.3% on Friday.     Next step look what happens in the 6.0 -5.50 range.  If the elder bar stays red  this could go down in a hurry.     I would expect to see 4s

DSX

Daily Chart up 7%, ARRRGH!

Correct analysis, buy limit  was too low to get on board.   Will continue to follow and look to buy on a pull back to EMA

Buy order update
Moved stop up to 8.64, which is just on the 13 EMA

Update

No new trades today.
DSX  ship still has not come into my buy order.  
IDCC further sell off, confirms that closing position yesterday was the right thing.
GLL,  Still in came within .02 of my stop and then rallied.

REE continues to trade down.

IDCC

This is what happens when the sirens call and no plan is in place.   IDCC was a take over candidate after  it announced it was on the auction block.    The announcing of the auction, bid up to massive levels.    The Nortel patent auction recently obtained around a $5 bid.    Commentators were saying that IDCC portfolio was better and it could fetch higher valuations.  Common consensus at this time indicated around $118 a share.     In other words, a huge profit!!

Looking at the chart, there appeared to be a base forming.

Position initiated on 8/11/11
Chart at time of the initial position

Bought s at 70.51 and again at 68.10  I increased my position as I got caught up in the bullish move and doubled the position.  

It appeared to work.
Within days IDCC ran up to 76.82,  meaning I was up to a $751.5

It was a wild week,   I had a big run up and then NEWS!  Google announced that it was buying Motorola for 12 Billion.    Google was perceived as the best potential bigger and IDCC got smacked.

The next day it traded as low as 58.38. but within days backed over 70.  I held on.   Over the next few months it was a bumpy ride but definitely a ride lower.  IDCC appeared to be making a base in the 40s.

   I never should have been holding a stock that I bought in the high 60s in the 40s.  I knew better but I did it anyway.  I thought that there would still be a buyout.   I sold a bull spread.   March 44C for $4.00  and bought the 48 for $1.90 ($1.10 credit)  The thinking was is there was a buyout my long stock would effectively turn the spread into a 1X2 backspread.


Then IDCC announced that it had failed to find a buyer for the whole company and the stock gapped from about 45 down to 37 in AH trading.   I doubled down.

Its usually not a good idea to double a losing position.    I viewed the additional shares as a different trade.  I like the gap fade trade.  Idcc then traded down to $35.   In retrospect, even from a gap trade, trading in AH was a mistake.  I should have waited until the open the next morning.

I also sold off the 48 march calls for whatever I could get for them, which turned out to be .30.    I decided to hold the 44 short calls.

But as I suspected the big move would put in a bottom, and Idcc began to trade up.   Then the company announced that it missed revenue.    There was another gap down.  I thought it would be possible that it would trade up from there on the theory that the previous gap flushed out all of the sellers.  For a while it looked like that might happen but by the afternoon it started to trade lower again.

I decided to finally throw in the towel.  Sold 1/2 @37.65 and 100 @ 37.58.   I also closed out the short calls for .69.

Chart when position was closed

What an ugly ride down.


Conclusion
  I broke the Rules repeatedly and I paid.   This trade along with Alexander  Elder's book is the reason I started this blog.  I want to be able to assess why positions are taken and take detailed notes through the process.

Gold: Short

Here, is the gold short I took. 

Follow up:

I had a stop at 15.49 (which was filled at 15.50.)   GLL eventually fell to $14.75 before making a major move upwards.    Had my entry been better, I may have been able to ride this out, but it confirms that my stop was appropriate  despite the subsequent rally.

DSX, sinking ship to rise?

DSX is a greek shipper, which has sunk with the rest of the industry.  It has gone nowhere for a while. That might be about to change.

The weekly Chart shows a Kangaroo tail bottom and improving MACD.

Now to the daily:

The Daily shows a break out, on volume.  and a clear uptrend on the MACD.  However,  we will not chase it.  Look for a return to value zone.

Order to buy 400 at 8.51.  with Stop at 8.20,   .31,   R. < .003   Loss If Stopped  =  $124.
 Target.  9.30, or envelop breach.  Profit Target if all sold $316.   (consider selling half)

     Buy order placed at previous daily high of recent weeks,    Sell stop placed at LOD of previous day.

The stop is very narrow.  So there is a likelihood of getting stopped out quick.  But if the trade survives the first day, the likelihood of profit is high.

Ree, looking tired?

Ree looking primed for a fall. Secondary move was much less powerful. Look for entry on a gap up.

Rules and Planning

Risk Management

I Shall Not

1.  Risk more than 2% of portfolio  on any trade

2.  Risk have more than   6%  of portfolio at any one times.

I shall 

3.  Use Hard Stops only

4.  Calculate VaR Daily

5. Use limit orders to initiate positions. 

6. Scale into positions.

7. Keep a Dairy of all positions

8.  Continue to refine rules.

Style

I'm primarily a counter-trend trader. 

I will trade time time frames from 1 day to several months.

A short time frame may be used to fade a gap.

Products

I will trade ETFs, Stocks, options, and currency.

At this time I will not trade Futures or bonds.

UNG, Bottom Fishing

UNG, has absolutely gotten killed over the past year.   However, it looks like a bottom might be forming.

We are going to use a spread trade to try to catch a bottom.   This particular trade involves a 1 X3  back spread.   Sold -1  Jun 6 Call for .68 , purchased 3 June 8 Calls for .21 (.63) for the spread.  Meaning that the entire spread was put un for .05 credit.

Risk
Worst case scenario 
close at June Expiration at 8, which would result in a $195 loss.  (200 -.05)