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Jun 23

Review Of Open Positions – Stocks

We took a trip to Stop City this week, and ended up making a long weekend of it, exiting Sprint ($S) +18.6% on Thursday, followed by 4 more exits Friday; Corning ($GLW) +11.2%, Stryker ($SYK) -3.9%, Exxon-Mobil ($XOM) -1.2%, and Marathon Petroleum ($MPC) -10.9%. By Friday’s close we had 3 additional exits triggered in Hertz ($HTZ) +27.6%, Broadcom ($BRCM) -7.4%, and Pier 1 Imports ($PIR) -3.5% which will exit at Monday’s open.

Hopefully from the figures above you can see that we have no problem receiving exits signals or stops, we’re cutting small losers, and taking profit on winners we have run for long periods whose trends are now coming to an end. This is what we do. After Monday’s exits we will be down to 24 open positions, from 32 last week. By simply following our process the market acts as a natural filter for us, reducing our risk and exposure as our number of positions decreases.

Here’s the summary of all our positions lifted from our performance tab. Note that the ‘open positions’ as of Friday will include those mentioned above that we’ll exit Monday morning.

SUMMARY AS OF 6/21/13

OPEN POSITIONS:- Total 27: 20 winners, 7 losers. Average win +11.1%, average loss -3.0%.

CLOSED POSITIONS:- Total 32: 11 winners, 21 losers. Average win +13.8%, average loss -9.3%.

ALL POSITIONS SINCE INCEPTION (1/27/13):-

Total 59: 31 winners, 28 losers (53% win). The average win is +12.1%, the average loss -7.7%.

 

As always we’re all about risk management so we’ll go through our losers first, then highlight some winners. We’ve already seen a lot of exits this week, and we have plenty of others that are very close to invalidating so in this week’s review where possible we’ll highlight those levels.

Adobe Systems ($ADBE) -0.8%

$ADBE had a positive reaction to better than expected earnings, popping back above its 20 and 50-day MA’s before giving back some gains later in the week. The good news is we can move our stop to the top end of the support level around $43 even, a deep test of the MA’s that isn’t immediately reversed should give us warning a bigger test may be about to unfold.

AlphaCapture

 

Tesla ($TSLA) -2.0%

Probably one of best looking charts I’ve seen for a losing position, and we’re now in a position where we can move our stop up to a clean break of that $92.59-$91.50 level, so the risk/reward remains very attractive.

AlphaCapture

 

Qihoo 360 ($QIHU) -4.5%

$QIHU staged a big break of its 20EMA Friday, but it’s still above our current stop of that $41.05-$40.22 range.

AlphaCapture

 

Ambarella ($AMBA) -0.8%

Lockheed Martin ($LMT) -1.9%

 

Here are the winners:-

Green Mountain Coffee ($GMCR) +60.0%

$GMCR closed below its 20EMA on Friday, a close below $71.90 could see a quick test of the 50-day.

AlphaCapture

 

Google ($GOOG) +16.1%

Computer Task Group ($CTGX) +10.1%

PolyOne ($POL) +9.1%

Valeant Pharma ($VRX) +27.1%

$VRX staged a late recovery preventing our stop being triggered. A close below $83.36 may do it now.

AlphaCapture

 

Visa ($V) +13.1%

On Assignment ($ASGN) +5.9%

Fifth & Pacific ($FNP) +15.0%

We came very close to an exit on this, a clean break of the $20.41-$20.09 level would do it.

AlphaCapture

 

Microchip Tech ($MCHP) +1.6%

HCA Holdings ($HCA) +0.5%

Cerner ($CERN) +1.8%

Another one with a clear invalidation point; a clean break of $94.74-$94.05 will take us out.

AlphaCapture

 

Packaging Corp ($PKG) +15.3%

$PKG survived another strong test of the $48.70-$47.60 range which now also houses the 50-day.

AlphaCapture

 

Michael Kors ($KORS) +1.3%

Goldman Sachs ($GS) +3.8%

C.R. Bard ($BCR) +5.6%

Weatherford Intl ($WFT) +0.5%

$WFT held support at $13.40, a clean break of that level will trigger our exit signal.

AlphaCapture

 

CBOE Holdings ($CBOE) +2.1%

SS&C Technologies ($SSNC) +2.7%

This was a really impressive performance on such a weak day for the market, a brief test of the 50-day at a previous support level and it bounced and never looked back with good volume throughout.

AlphaCapture

 

GNC Holdings ($GNC) +3.2%

 

 

7 comments

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  1. Sebaco

    ALL POSITIONS SINCE INCEPTION (1/27/13):-
    Total 59: 31 winners, 28 losers (53% win). The average win is +12.1%, the average loss -7.7%.

    Given your results to date, net 4.4% up for the year, it seems its under performed against the S&P (up 12% ytd). Really enjoy your work and was curious if you are satisfied with the system plan changes or anticipate outperforming passive indexed through the rest of the year?

    1. Jon Boorman

      Not sure where you get any of those numbers from, as you can’t know the position size, and the index is up less than 6% since the blog started on 1/27, when only 3 positions were entered the following day. But to answer your question, yes I’m satisfied with the system, I do not plan any changes, and I anticipate to continue outperforming the index. :-)

  2. Sebaco

    I produced my estimate by reviewing your totals (31 winners/28 losers) and average win vs loss (12.1 -7.7). I agree that without weighting it’s impossible to know your true performance. Glad to hear your outperforming. Could you share how you manage to more heavily weight your winners vs losers? Do you add to winning positions or scale into losing ones? Thanks – S

    1. Jon Boorman

      The initial position size will be dependent on how far away the stop is, ie, buy at 20, stop at 18, means 1R is $2, divide that into risk% of portfolio = size. If the stop was at 19 instead of 18 although you’re still only risking 1R it’s now twice as many shares. Position size is bigger, risk is the same. Beyond that initial entry, yes, I also add to winners, and I never scale out, you can’t be a little bit pregnant, the position is either valid or it isn’t. Run and add to winners, and cut any position win or lose in entirety when invalidated.

  3. cwn

    If you assume Jon is risky, and seeks to bet 0.5% of his account on each trade, and take the average win/loss as the value of every trade, Jon would be up over 120%. Even taking 0.25% position size each time, the account would be up over 60%. Yes I know that obviously trades were higher/lower than that average, but its not a ridiculous estimate – and doesn’t include any of the current open positions (which will have the greatest gains).

  4. Adam

    It would be nice to see overall system/portfolio performance. What I always look at during these posts is the closed positions line, because to me, that’s what really matters in the end. Especially of recent, there have been some good winners that have turned sour, while others have gone against him fairly quick.

    Total 32: 11 winners, 21 losers. Average win +13.8%, average loss -9.3%.

    If that line isn’t informative, maybe we need more info. Not that we should expect anything, but I read this for the education and insight, and I get plenty of both.

    1. Jon Boorman

      Unfortunately if you’re still thinking that way I haven’t done a good job of providing education and insight.

      I’ve already explained why I can’t give a portfolio performance number, and when someone truly understands the reason why then it should click why it would be meaningless if it were provided. What do you think having a portfolio performance number would tell you? What would you do with that information? What if I told you it was 20%, or 40%, or 16%, or 9.5%? What do you do with that? Because nothing else has changed, the performance of every position, every entry, exit, is exactly the same, so what would the performance number add? It is meaningless to anyone but me. You wouldn’t achieve the same number unless you had the same position size so what use is there in providing it? You have to tailor something to your own objectives and risk tolerance, to your own position sizing strategy.

      when you look at the data the emphasis should be more on open positions, not closed ones. What’s done is done, what we have in our control is to run winners and cut losers, and only the open positions can tell you we’re doing that. Good winners do not turn sour, think in terms of positions either being in valid trends, or not. Regardless of win or loss. When they’re not valid any more, we close them, regardless of win or loss. When it comes to tracking performance I think I’m producing one of the most transparent blogs out there, as much as I’m able to within financial regulations. I can lead people to water but I can’t make them drink. The information is there, but people need to do some heavy lifting of their own and take another step forward to truly realize its value.

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