9/20/2020 Indexes down a little this week. Covered TSLA short, and still holding AAPL short. Monthly bearish RSI divergence on SPY.

Hi everyone. I hope everything is going well. 

I find the current price action a bit concerning, but whenever I get this type of feeling, nothing terrible happens and it’s just a simple pullback. Although I am still net short, I plan to add longs aggressively once I think the pullback has ended (~10% lower).

Let’s look at QQQ since the largest holdings in this ETF are dragging down the market. 

QQQ weekly chart below – I think we move ~10% lower from here:QQQ weekly 9_20_2020

Monthly chart of SPY below. Notice the large monthly bearish RSI divergence building up. Unfortunately, there isn’t enough sample size to predict what will happen this time. 

Monthly divergence SPY 9_20_2020

Enjoy your Sunday, and see you next week like always.

 

Doubled short position on TSLA and made a tighter stop loss.

Hi everyone. I doubled my short position on TSLA at 450 today. My original stop loss on the 487 short was at 600, but moved the overall stop to 550 now, with a mental stop at the previous highs near 500. The overall risk on the trade is still the same or less than before.

If TSLA hits the maximum stop, it’s a 1.5% loss, while if I stop myself out a bit earlier near previous highs, it’s a loss of .5% to my account. 

I think there’s a good chance that TSLA powers upwards until Battery day on 9/22/2020, but the risk/reward to the downside is too juicy to pass up on for this trade. The trade idea fails if or when TSLA breaks to new highs, so that is when I will close the short position. I’m looking for a quick continuation of the downtrend here, so if it doesn’t happen within 2-3 weeks, I will exit the trade. 

TSLA Daily Pyramiding 9_15_2020

Have a nice rest of the week!

 

9/13/2020 Stocks down a little this week, with technology stocks leading the underperformance again. Still short TSLA and AAPL, and thinking the market moves lower from here in the next 1-2 months.

Hi everyone, welcome back.

Stocks moved a bit lower this week mostly due to technology stocks / QQQ selling off. Although futures indicate a fairly large gap up, I think we will move lower again this week simply because the momentum has shifted. As a result, I am still short TSLA and AAPL.

Below is a weekly chart of SPY. Notice how the RSI went down while we made new highs. This suggests a momentum overshoot and we are bound for lower prices ahead. I think we retest the high 290s (~10% lower) within the next 4-6 weeks.

SPY weekly 9_13_2020

Enjoy your week! I’ll keep you posted if I decide to scale in or out of any trades. I am considering adding more to my MRO position, but will probably wait until we get a retest of the lows.

 

9/7/2020 Stocks drop a little this week and I think we continue lower next week. I’m up a lot on my TSLA and AAPL short, although I only took a half-sized position.

Hello, I hope you all are having a great Labor day.

Last week I shorted TSLA at 487 and AAPL at 130.8. My original plan was to use a much larger position size and hedge by going long QQQ. However, since the stocks gapped up, I was scared and instead took a half-sized position and didn’t hedge with QQQ. You can see my original thoughts and trade ideas in last week’s posts. 

I’ve been looking at pyramiding into these trades – meaning I add more to the position and lower my stop down to keep the risk the same as before.

I’m still looking for the ~60% correction (target near 200) in TSLA. If I do pyramid in, I will be doing so on a rally upwards and lowering my stop to near all time highs for these two stocks. 

Daily chart of TSLA below:

TSLA daily 9_7_2020

Daily chart of AAPL below:

AAPL daily 9_7_2020

On a final note for the broad market, I expect volatility to be drastically increasing over the coming weeks. 

8/31/2020 Shorted AAPL at 130.8 and TSLA at 487. Decided not to hedge with QQQ and took a smaller position instead.

Hi everyone. I decided to short AAPL at 130.8 and TSLA at 487. I picked the price based off when I woke up today (just now at 11:40 AM mountain time).

My original plan was to hedge the short position with QQQ, but the upward move today made me very uncomfortable, so I decided to use a half position size on my AAPL and TSLA short.

My stop loss and profit exit are still the same – I will risk roughly 2% of my entire account in an attempt to make 6% (instead of the original risk 4% to make 12%). Since this sizing is a bit smaller, I could turn my AAPL short into a covered short by selling puts. 

Have a great Monday!

8/30/2020 Stocks up a decent amount again this week. I will be shorting TSLA and AAPL sometime tomorrow and will hedge by going long QQQ. I will make a post when I take the trade.

Hi everyone, welcome back!

Markets are constantly going higher and higher each week, but I think it’s a good opportunity to go short now. Risk reward favors a move to the downside, and I will short TSLA and AAPL tomorrow and hedge by going long QQQ. 

My AAPL short target is ~325 and short target for TSLA is 900-1000. These will probably be holds for at least 3 – 6 months. My stop loss will be at about 560 for AAPL (risk $60 per share) and 2600 for TSLA (risk $400 per share). 

Of course, since these two stocks will have their prices lowered due to the stock split, these numbers will be adjusted accordingly. Overall, I plan to risk no more than 4% of my total account on these two positions. I am also thinking about turning the position into a covered short if specific scenarios arise.

Weekly charts of AAPL and TSLA below:

AAPL Weekly 8_30_2020

TSLA Weekly 8_30_2020

Of course, my maximum loss will be based off of my hedge with QQQ. For example, if TSLA drops 20%, but my hedged QQQ (the ETF I go long) drops 40%, I will be be stopped out because I lost 20% (~400 stop loss / 2200 entry). 

To summarize, I’m risking no more than 4% of my entire account on this trade in an attempt to make 12%. The trade profits when TSLA and AAPL underperform QQQ, and loses when TSLA and AAPL continue to outperform the QQQ. 

Enjoy your week, and I hope all is well!

8/23/2020 Stocks up slightly this week while QQQ continues to shine. Thinking about starting a small short position on Tesla.

Hi everyone, I hope you had a nice week.

Stocks are up a little this week, with QQQ / technology stocks leading the way again. I’m thinking about starting a small short position on Tesla or the market in general. 

Here’s the daily chart of Tesla (TSLA) below. I would probably hedge my bet by going long QQQ as a hedge. 

TSLA daily 8_23_2020

SPY daily chart below. I’ve been mentioning the bearish RSI divergence for multiple weeks now. 

SPY daily 8_23_2020

An update on my positions – I’m still long MRO (up quite a bit), long XLF and short SPY in a pairs trade (down a little -> ~ .5% of my account), and looking at the INO/NVAX pair (long INO, Short NVAX).  Thanks for reading! 

8/16/2020 Stocks mostly flat this week, and it looks like we will continue higher in the short term. I’m still not buying at these levels. Looking at an INO/NVAX pairs trade.

Hi everyone, welcome back. I hope you had a nice weekend!

Daily chart of SPY below. I still think we move lower in the medium to long term, but will probably continue higher in the short term. As a result, I am still not buying the index here for a long term hold. 

SPY weekly 8_16_2020

A trade that I have been looking at is the long INO, short NVAX trade. They are highly correlated stocks since they both make vaccines for Coronavirus. The trade idea is that since the spread between the two has widened a lot (~ 2 standard deviations from the mean), going long INO, and simulataneously going short NVAX for a 3 month hold before earnings seems reasonable. 

My position size if I take the trade would be very very small, and I would place a 25% stop loss on the trade. In other words, if the spread between them widens an additional 25% (drops to a ratio of .075), I would get stopped out. Since I only want to risk 1% of my account, I will only use 4% of my account on this trade.

I plan to take profits within 3 months (right before earnings) or if the ratio between them goes to .20. It’s a 25% stop loss and 100% profit exit, so the risk reward is roughly 4:1. 

Weekly chart of the ratio between INO and NVAX below:

INO_NVAX Weekly 8_16_2020

Daily charts of INO and NVAX below:

Ino daily chart below:

INO daily 8_16_2020

NVAX daily chart below:

NVAX daily 8_16_2020

I hope you all have a wonderful week! 

8/9/2020 Stocks continue higher surpringly and nears all time highs, but I’m not bullish medium/long term yet. I think SPY will break out to all time highs, but then have a substantial pullback (~20%).

Hi everyone, welcome back. I hope you had a nice weekend!

We will probably move quite a bit higher above all-time highs in the short term due to the upwards momentum, but then break lower. I still think we head towards the low 270 range once technology stocks pull back.

Also note the large weekly RSI divergence in the weekly chart of SPY below. 

SPY weekly 8_9_2020

I’ll keep you posted with a mid-week update if anything interesting develops.

I always remind myself that it’s better to be patient and not lose money, then to lose a lot of money buying at the wrong time.