May 2 Weekend Review

Bflakaz Weekend Review

May 2, 2014

Recap of Previous Week's Trades

• GMCR short 85 shares @ 93.80, covered @ 90.50, profit = $280.50
• IBB short 50 shares @ 234.48, now 229.05, profit (unrealized) = $271.50

Management of Current Trades

GMCR

I have maintained a short bias on GMCR for a month now, and have dipped in and out of short positions since. I still maintain that GMCR is going lower and will eventually gap fill, but I did not want to risk holding over the weekend for a potential gap up on Monday, as GMCR is now reading as oversold on most indicators.

IBB

IBB is the NASDAQ Biotechnology Index, and the biotech bubble is crashing. Came in Thursday when W%R (basically a shorter term version of RSI) signaled overbuying, and IBB hit the resistance level and failed at 235. The short thesis here was outlined earlier this week in my New Trade Ideas post. I expect a bounce at the 200MA around 222, which leaves room for a potential $624 profit.

Trade Setups for the Upcoming Week

QQQ

This is looking like a beautiful short setup on Monday. Markets overall had really nothing to say about the April Employment Report (+288k, UR down to 6.3%, 5.5 year low) so QQQ was not able to close above resistance at 88, and it touched both the 50MA and 100MA, which are acting as resistance and support respectively. W%R is showing overbuying, and due to the fact that the Dow just made another all-time high, I think QQQ will be weak next week. Looking to short 85 shares early Monday.

IWM

IWM is an ETF that reflect the Russel 2000, which I eluded to in the New Trade Ideas post earlier this week. The only problem with this trade is that EVERYONE CAUGHT ON. IWM has been bouncing hard off the 200MA due to buyers flushing out shorts who want to push this thing under the 200MA. IWM shows neither overselling or overbuying on my indicators, and it's kind of in an “airy” area. But it has been in downtrend for a month, and I feel this might be weak next week to in the same way QQQ will be.

Some Side Notes

I will begin to use smaller positions going forward, as I have done so well I'm in almost disbelief. I've been on fire! But these hot streaks never last forever, and sooner rather than later, I will end up being catastrophically wrong and lose a good chunk of change... UNLESS I reduce position sizes. These next few trades will be done on the equities side, since I don't like to use index and ETF options, and to also reduce risk.

In 2013 I made just over $10,000... from a combination of pure luck and gains from good old fashioned value dividend investing. In the first 4 months of 2014 I've made over $12,000, purely from trading, and in much worse market conditions! It's time to ease off the risk and play it safe on the coming months.