Trade Anatomy Portfolio
-3.65% MTD | +34.70% YTD
1 long | 0 buys | 7 sells
After Wednesday's close, it looked promising that all would be right and the year would end with a small rally. However, that doesn't appear to be the case as the market closed Friday in the middle of the most recent range. In all honesty, it's not so much the market performance that I even care about, it's the price reaction that my long positions are exhibiting during the recent market swings which is most important. In November, as the market waffled about, our long positions continued to exhibit strength in their trends. When December rolled around they again showed strength until Dec. 10th-11th. From that point forward weakness in the price action started to take hold. On Wednesday as the market rallied, the long positions struggled to turn strongly in a convincing fashion, hinting that they weren't ready to resume trending higher.
On Thursday, the long positions started picking up the pace relative to the market, but as the day wore on, prices began to retreat. As they began moving back towards their opening prices, the decision was made to take off the majority of the trades. This brings us to an important topic, which is knowing when it's best for your trading style to look at the situation as a whole instead of its parts. The price action of the individual holdings, as well as, the overall volatility in the trading environment these past two weeks were enough that a decision was made to move almost entirely to cash. When the headwinds become too strong, sometimes it's best to pack it up and wait for a better opportunity then be a hamster running on its exercise wheel, exerting maximum effort but going nowhere.
This week, MXL, IPHI, ABTL, RTEC, ZIXI, SSNI, and MITK were all sold from the portfolio. All positions were either sold for a small gain or small loss, none really making a large impact on our bottom line. As I look across the trades, many of them will likely set up again when the overall trading environment becomes healthier. If that does happen then the trades will be reestablished. Below are the charts as well as a link to the closed positions.
The lone remaining long position is LYTS, which moved back to old highs before settling back a bit on Friday. Below is the chart.
Currently, there are 13 candidates on the list and most still require time to set up more constructive patterns. Typically, as the watchlist shrinks so does our main screen which only has 120 names passing the filters. During healthy market consolidations, this list generally sits between 200-250 names. Below are a few examples from the list that were recently removed and a few that are still potential candidates. Notice how quickly they moved back to their breakouts or failed to remain constructive.
Safe travels this week and maybe Santa and his reindeer will pull off a Christmas miracle.