«

»

Oct 05

Review Of Open Positions – Stocks

The recent pullback and rotation in the major indices this week has produced a tricky environment for anyone without a systematic process to help them navigate. If over the weekend you are asked ‘What did the market do this week?’ it would be fair to respond ‘Which one?’ The NASDAQ finished up 0.7%, the Dow fell 1%, and the S&P was barely changed. While that might help feed the media narrative of the market hating uncertainty, given the backdrop of a government shutdown and debt ceiling negotiations, if one is able to remove themselves from the noise and just concentrate on price action alone, this rotation in the context of a lengthy bull market should still be considered constructive until proven otherwise.

I’ve seen many instances of stocks that have pulled back from their highs, bounced without retaking them, and are now somewhere inbetween. In such cases it’s often possible for them to cross below their MA’s without invalidating their uptrends. This is why I often stress that while the 50-day MA can be useful to quickly eyeball a trend, or as supporting evidence if it coincides with a stop at a key price level or pivot point, a break of the 50-day alone isn’t enough to conclude a trend is over. You’ll see examples of this as we go through this week’s review.

We had two signals this week; exiting $EMC for a loss of 0.6%, and receiving an exit signal for $TASR which will be executed at Monday’s open. As this report is always for positions as at Friday’s close and we don’t yet have an exit price for $TASR it will still be shown as an open position here.

Here’s the summary of all our positions lifted from our performance tab:-

SUMMARY AS OF 10/4/13

OPEN POSITIONS:- Total 33: 28 winners, 5 losers. Average win +26.8%, average loss -1.9%.

CLOSED POSITIONS:- Total 53: 21 winners, 32 losers. Average win +14.1%, average loss -8.6%.

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

Total 86: 49 winners, 37 losers (57% win). The average win is +21.4%, the average loss -7.7%.

 

Let’s list our losers first, then go on to the winners. Here are our 5 losers:-

Green Mountain Coffee ($GMCR) -3.1%

$GMCR has been below its 50-day for 2 weeks now but it’s still hanging in above our stop after briefly threatening it on Monday before rallying strongly and closing higher. A clean break and close below $73.93 sees us exit.

AlphaCapture

 

CIGNA Corp ($CI) -1.3%

$CI sank lower Monday and looked to be taking out the low closes of July and August that marked our stop but recovered well to reclaim its 50-day. A close below Monday’s close of $76.86 now becomes our stop.

AlphaCapture

 

Iconix Brand Grp ($ICON) -2.3%

Apache Corp ($APA) -0.9%

Suncor Energy ($SU) -2.0%

 

Here are our 28 winners:-

Valeant Pharma ($VRX) +67.1%

Another great move for $VRX, stretching away and posting a 6% gain on the week.

AlphaCapture

 

On Assignment ($ASGN) +31.6%

Fifth & Pacific ($FNP) +39.5%

Microchip Tech ($MCHP) +10.0%

Packaging Corp ($PKG) +36.7%

Michael Kors ($KORS) +30.7%

$KORS put in a solid performance this week following through on its bounce from first support to finish just shy of all time highs. That $73.18 level now becomes our stop and should soon have the 50-day for company too.

AlphaCapture

 

C.R. Bard ($BCR) +11.4%

Tesla ($TSLA) +78.2%

One thing is for sure with $TSLA, it’s always entertaining to watch the news and commentary on its price action. This week it was amateur footage of a car on fire after an accident. It happens. What was particularly impressive was the company’s reaction, swiftly giving a clear and detailed response which only further highlighted its aplomb in such situations as opposed to the head in the sand denial we are used to seeing from corporate giants. But what really matters here? Let’s look at price. It was the first decent test of the 20-day since the steep decline of 7/16 (which we detailed here) and led to a swift resumption higher. So far, this looks no different. Our stop is a meaningful close below the 9/9 level of $160.70, which currently coincides with the 50-day and an ATR trail.

AlphaCapture

 

SS&C Technologies ($SSNC) +18.1%

Qihoo 360 ($QIHU) +91.9%

$QIHU finished with a small gain on the week and looks to be setting up for higher prices again having traced out a relative narrow consolidation over 3-4 weeks after a huge run. The ascending trendline, the 50-day, and our current price stop of $77.93 are all in close proximity making this an excellent risk/reward position from here.

AlphaCapture

 

GNC Holdings ($GNC) +22.0%

$GNC briefly broke out to all time highs this week, possibly a lack of volume made it look less than convincing as it eased back again later in the week, but the longer term uptrend is clear. Our stop is currently at $50.87, but if the stock can edge higher again we should be able to move that up to $52.71.

AlphaCapture

 

Lockheed Martin ($LMT) +15.8%

$LMT continued its decline from the September high, slicing through the 50-day and briefly threatening to take out our $122.34 stop. An exit signal looked assured with further weakness on Friday until a late rally materialized.

AlphaCapture

 

Illumina ($ILMN) +12.8%

LinkedIn ($LNKD) +29.7%

Actavis ($ACT) +17.3%

$ACT extended last week’s breakout to all time highs allowing us to move our stop to the 9/11 close of $135.15.AlphaCapture

 

Under Armour ($UA) +33.1%

Netflix ($NFLX) +39.2%

$NFLX continued its advance to all time highs, gaining 5% on the week. For now our stop remains at the 8/30 close of $283.91 which currently coincides with the 50-day, but we should be able to move that up to the 9/17 close of $299.55 (let’s call it a clean break of $300) on any further advance from here.

AlphaCapture

 

3D Systems ($DDD) +10.6%

FEI Company ($FEIC) +13.7%

McKesson ($MCK) +12.0%

Evercore Partners ($EVR) +14.5%

FleetCor ($FLT) +28.6%

Proto Labs ($PRLB) +25.3%

$PRLB was another stock that staged a strong reversal on Monday, following through strongly throughout the week to finish at all time highs, up 5% on the week, and up 10% from Monday’s lows.

AlphaCapture

 

Dunkin’ Brands ($DNKN) +0.7%

Nucor Corp ($NUE) +4.5%

Apple ($AAPL) +3.9%

TASER Intl ($TASR) +50.4%

We got an exit signal in $TASR at the end of a tumultuous week that triggered an ATR stop. As per my comments in our exit post “…this could possibly be my favorite because of the many lessons it contained and underlined; the placement of a stop, taking an entry after a big breakout move, being prepared to let a winner turn into a loser by not moving our stop up too quickly, continuing to run a winner in the face of severe skepticism and extreme overbought conditions in a market that was weakening, and finally, being able to recognize when it’s over and take that exit with as much discipline and conviction as you entered.” You can read the full post here.

AlphaCapture

 

Total SA ($TOT) +1.5%

 

 

 

10 comments

Skip to comment form

  1. Adam

    An observation, most of the oil based positions are losing or exited along with oil. Given how they tend to correlate, is it an understatement of risk to play them all at 1R? It’s sort of like one oversized position. Of course it’s not that simple, but it can’t be ignored completely.

    If I would make a request (that I would understand ignoring!) for transparency and the sake of learning, it would be to note when positions are added to. I get when it makes sense to add, but am unsure if you do so systematically with all positions when you move up stops, or if there’s other criteria.

    1. Jon Boorman

      We have 3 oil/energy stocks and they are -0.9%, -2.0% and +1.5% so they’re probably not as correlated as you might think. They are all based on weekly charts and are only 3 weeks old so aren’t of concern at this stage. Sector risk can be monitored at the portfolio level, some people limit a sector to say 5% or 10% of your total portfolio. For some people if you only had 10 positions and all of them were in one sector that might be a concern, then again, you could argue if that was the only area that’s trending wouldn’t you want as much exposure to it as possible? It really comes down to personal preferences on risk.

      Adding to a position is a fairly simple process as it’s exactly the same as when you enter initially. To visualize it you can imagine you don’t already have a position, what would need to happen to have you enter afresh, whatever it is that’s your place to add. In commentary in the weekly reviews and during the week via social media I state when an opportunity to add to a position presents itself, but I don’t make an official post on it, therefore I don’t record it in the performance. That is intentional. I want to maintain the simplicity and integrity of the performance data and keep it as user-friendly as possible. As I state at the top of that page, this is not meant to be a record of everything I ever do, but it is a record of everything I ever post about. It’s really about being accountable for what’s posted, just as I believe everyone should.

  2. Steve Rose

    Thanks for the excellent post again. If you can find the time, could you elaborate on setting up an ATR trailing stop.

    Steve Rose

    1. Jon Boorman

      Thanks Steve, it’s one of those things where it’s really down to personal preference depending on your risk tolerance and timeframe. This link goes through some examples. http://www.incrediblecharts.com/indicators/atr_average_true_range_trailing_stops.php A 3x ATR is standard for most people, for long term trends you might find higher than that more appropriate. For some stock trends I’ve used 6x ATR. In Andreas Clenow’s book ‘Following The Trend’ for replicating CTA’s performance in futures he uses 3x 100-day.

  3. Andrew Karizat

    Thanks for your weekly updates Jon! I am curious why you have not chosen to invest in Invensense. The trend, as far as I can tell, is up, and the fundamental story is compelling. I am already invested but would be very interested to learn your perspective.

    1. Jon Boorman

      Thanks Andrew, there’s absolutely nothing wrong with it, and it’s been on my watchlist a couple of times, it’s just never quite triggered for me, or it’s had others come ahead of it. You just can’t have them all. It looks to be setting up yet again, via a close above 18.75 and a stop at 16.57.

      1. Andrew Karizat

        Well, you have your close now Jon! I just wish I had been able to talk you into buying some INVN sooner, but it is certainly not too late if you have a mid to long term range..

        1. Jon Boorman

          Yes I saw that, that’s a nice move, well done.

  4. Jim

    I know I have read somewhere on the site your philosophy of holding into earnings, but I cannot seem to find it. I know you hold through all, but I cannot seem to find your explanation.

    Also, do you at all stay away from entering a position close to earnings, say if a company was supposed to report this week?

    1. Jon Boorman

      http://jonboorman.com/why-i-hold-positions-through-earnings-2/

      The question of entering a new position when they are about to report can be slightly more nuanced. If it’s setup like LNKD was for our first trade, like a consolidation waiting for a catalyst, then that’s certainly a more attractive risk/reward proposition than a stock that’s gone up 20 days straight and then gives u a buy signal when it’s set to report the next night. Those kind of decisions you can tailor to your own risk appetite. The main message of that post is not that we’re intentionally taking on positions b/c of earnings, but rather that we’re holding existing posns through earnings as it’s simply a brief volatility event in a long-term trade.

Leave a Reply