No changes this week.
Funny Not To Care
This lead singer is really good, love her voice, close your eyes so it's not marred by her white girl dancing .. she deserves a better backing band than these hipsters.
Dissecting a Madaz Play
Madaz shorted $TCCO this morning and I wanted to dissect the trade.
First, we know he was watching $TCCO because it was the number one Up Gapper:
At 9:39 AM he tweeted that he had "nailed" it for $5,200 having shorted "4ish average" and covering $3.50.
Now let's look at a micro timeframe chart here, 10 second bars ... that should read "pre-open high $3.70" not "high $3.70."
Later at 9:54 AM he tweeted that he covered his final 2,000 shares at $3.20 bringing the total gain to $5,800 ... $3.20 is 30 cents below $3.50, times 2,000 shares is $600 additional, that makes sense, I guess.
Here's the chart again with the $3.20 level marked.
Finally, he tweets his P&L, which he does every day, win or lose.
What's revealed in the P&L is that he realized $5,942.85 by shorting $TCCO, generating 10 tickets and trading 66,096 shares. I'm not sure if the shares and tickets numbers mean he bought and sold 33,048 shares or bought and sold 66,096 shares, or 5 buys 5 sales, 8 buys 2 sales, 9 buys 1 sale, etc.? Maybe some kind reader can enlighten me via email (or Twitter).
Let's assume that he bought 33,048 shares and sold 33,048 shares to make the $5,942.85. That's almost exactly 18 cents a share. So we have to assume that he is averaging into the position and averaging out of it, and was able to walk away with 18 cents of profit.
If he simply shorted 33,000 shares at $4 and covered 33,000 shares at $3.50, he would be making over $15,000 on the trade, not $6,000. I'm not sure how much of a difference the final 2,000 shares covered at $3.20 can make.
I'm just thinking aloud here, I'm trying to make sense of this.
A bigger question is *why* did he begin shorting where he did to build a 30,000 share position with a 4ish cost basis? Was he "reading the tape" and built the short based on that? This thing traded up to $4.40 ... if he were short 30,000 shares from 4 and it ran on him, would he get out at $4.40? How much slippage would he suffer? Was he willing to risk $12,000 to make $6,000?
I'm just thinking out loud here, trying to make sense of this. I'll update the post as I continue to think about it, and incorporate any other wise people's thoughts, with credit of course!
Two readers have written in with their comments, both full-time traders with many years of experience:
“As to his trading TCCO today your guess is good as mine as to how those 60k+ shares were distributed within the 10 tickets you mention. What I find odd here is that based on his strategy as explained in his various YouTube videos, he doesn’t short unless price is at or below VWAP and below pre-market highs. Maybe he has some nuances to his strategy that I am not aware of, but this particular TCCO trade is opposite of how he “normally” trades short. If he goes long its almost a reverse mirror image of this TCCO short trade. I believe most of his trades are cleared through ETC.
Based upon one of his recent tweets about getting enough rebates to cover commisions, I am led to believe he probably hits bid/ask for entry/exits about half the time, otherwise why “advertise” you covered your commissions with rebates.
From my viewpoint, if his trades are real, he is scaling in and out hiding share size but what is sketchy to me, based upon experience, is that he is able to move 5k-30k lots without moving price dramatically and getting full fills. The volume in the majority of the low floaters he trades in my opinion can’t absorb the share size he is using and getting filled without adversely moving price. I trade them from time to time but the only way I can get multiple thousand lot fills is to piece it out hiding shares at various price levels and even then I end up not getting full fills and have to cross the book and hit bid/ask to close position.”
“First off, it’s 33,000 in and 33,000 out for his total shares. And yes, his risk to reward is completely skewed. I’m not a fan of how he trades. If he got short on this around 4 and especially because of the super low float he could have just bid whacked 10,000 share blocks and knocked the price down himself easily.
There was no reason to cover where he did. He claims to use the three minute chart and if you take a look at it there was no reason to only get such a small piece of that move. I really think the only reason why and how he has made money is because of the sheer size of his positions.
An answer to your question of why he would short there is because we are familiar with the name and also super low floats. You get to know these things over time and this is textbook: it hit half dollar resistance and pulled, and once these pull it’s over and can be pretty safely shorted.
Especially if you look at that last green candle and how big it is on the three minute chart. It’s going parabolic and that’s a dead giveaway that it will pull back. These stocks are a completely different world, but once you get to know them, they are highly predictable. He does know his set ups, but I really think he gets scared out of his trades because he is using too much size. He would be way more profitable if he sized down even a little bit.”
He Grabbed His Pants, Took A Better Stance
Here's the silver-tongued Sammy Davis, Jr. in an amazingly tight brown pantsuit singing Jerry Jeff's great song:
Trailing a Stop in LBTYK
I sent out this short set-up in $LBTYK for April 27 to everyone who signed up for my free Daily Trading Idea ... sign up now if you haven't already done so.
Here's the image I sent in the email ... I checked my records and I did short $35.10 at 2017-04-27, 12:09:35 on ISLAND, no doubt by accident after transposing the numbers ... I do this at least ten times a day, make trading mistakes I mean ... confidence-inspiring, I know).
Seven days later it looks like this:
So the question is what do you do when it gaps below the target? I'm going to cover half tomorrow morning and trail the stop above today's high of $32.54. I can see this thing going down to $29 or even $26, but I want to take half off the table now. If you have any better ideas, I'm eager to hear them (on Twitter or via email), and I will share them in turn!
Initial risk was 44 cents and the target was over $2 away so the risk/reward was 1:5, and if I cover near where it closed it will be closer to 1:10 ... a "ten bagger."
Sign up for my Daily Trading Idea today, it's free!
UPDATE: @DavidTaggart suggested moving the stop to the high of two days before every time it makes a new low. @Contrahour suggested an Average True Range based stop, which is a little more complicated, so I'll go David's high of two days ago for now.
ETF Trading Portfolio Update -- May 8, 2017
DZZ reversed, but remember that I'm going to switch the GLL once it too reverses. There was bizarre action on April 24 in DZZ which has thrown off the trend following system -- another reason to drop that ticker and track GLL instead.
Make a Paper Boat, Light It, and Send It Out
Mink's bassist sings the Spanish portion ... I always wondered about that.
I also like to say to the rats in the locker room, "Hey Mr. Gym, I can see the shape you're in..."
Sites to Worship Heavenly Bodies
I read Ian Johnson's piece, My Beijing: The Sacred City, with interest since I too first lived in Beijing as a student (in 1991) and then spent ten years there (between 2005 and 2015).
Some excerpts with my comments:
"I studied Chinese language and literature at Peking University from 1984 to 1985 and biked over to [the Ritan park] area because it had become the country’s chief diplomatic district and one of the few places where homesick Westerners could buy chocolate and postcards."
Nutella. That's what we bought (and hoarded) in 1991 ... only available at the Friendship Store.
"I came for the croissants, but stayed for the tree-lined streets and the Temple of the Sun."
My son went to school at Fangcaodi, which was originally set up for diplomats' kids. When we would ride the electric scooter through that tree-lined area every morning, I'd tell him, "there are no other streets like this in all of Beijing."
"I ended up moving into one of the diplomatic compounds and the neighborhood became my home."
He doesn't say what the rent was in 1994, or how it changed over the seven years he lived there. I'm sure today it's thousands of dollars a month, even for a small place.
"This was a time when Chinese parks rarely had grass. Instead, the hard-packed dry earth of arid Beijing was raked by crews every few days. It was odd but had an austere beauty that set off the ginkgo and persimmon trees that lined the paths."
Parks in Beijing still have no grass and there's nothing beautiful about that hard-packed dry earth ... Johnson is clearly a glass-half-full kind of guy. To get that one photo with green grass in it that accompanies the article must have been a real trick shot.
"But this need for green space clashes with another trend in China: the surrender of public areas to the rich."
This is true. I used to visit Longtan Park, which was near our apartment, and goons with earpieces used to chase me out of areas that had been "privatized." It really got my dander up, but there was no way to fight back, 没办法.
"[There are] high-end restaurants, an exclusive social club, a German beer garden, a yoga yard, a strange antique furniture store ... commercial activities that don’t belong in this great old park"
These "money-spinners" have been there for ages and they're on the periphery; I saw no harm.
"I even listen for the screech of the tacky children’s amusement park with its half-broken choo-choo trains."
Those "tacky" amusement parks, with their derelict rides, which can be found in all these sacred parks, were some of my favorite places ... and my kids spent many hours in them (at 30 cents a ride).
"But over the past decade or so, Chinese have been searching for meaning in their lives."
Now that they can afford to, lol.
"The admission fee of $6.50 [to the Daoist Temple] does keep out many people...."
45 kuai is a pretty high bar, it would keep me out for sure.
"Beijing is still the capital of an authoritarian state. Beijing’s message is still the state’s message, perhaps not perfectly but still audibly."
True. But old Beijingers are a pretty rowdy bunch and are quick to tell you what they *really* think, if you're a foreigner who speaks Chinese, like Johnson does.
A Little Piece of Tail
The great Albert King ... Drowning on Dry Land ... words of wisdom for young men.
Dirty Dozen, Long Only Portfolio, End of April 2017
I introduced the Dirty Dozen portfolio earlier this month. I track a dozen popular stocks using a *monthly* trend following system. It might be interesting to know my take on these stocks if you hold any of them. I did settle on Chipotle as the twelfth stock, which readers overwhelmingly nominated.
- Amazon
- Amgen
- Apple
- Chipotle
- Gilead
- Netflix
- NVIDIA
- Starbucks
- Tesla
There are no changes this month, but NVIDIA is at an interesting point ... it's the second longest-held position and the biggest winner ... it will be telling when the monthly trend finally turns down.
