27th May 2022 - Trading Journal
Bullish bias today, as mentioned yesterday I felt like we are at the beginning of at least a bear market rally and those can be powerful. My focus is not to try catch countertrend rallies and it remains centred on getting through this period of the market unscathed (and hopefully in the green) and ready for the next bull whenever that may be. That said I am looking at high probability opportunities and remaining flexible in my thinking.
If you are going to be dogmatic in your strategy in a bear market then you are better to simply remain in cash. If you wish to trade through it you must be opportunistic and flexible.
Pre Market Work:
As mentioned yesterday I was looking for a red or muted open in the $QQQ in order to place a call spread trade to give me exposure to a potential follow through rally. Unfortunately that is not the case. I went through my Stage one watch list and noted $AMPL & $ZM as two stocks that both look like they have bottomed to me (at least for now) and could be good alternatives to betting on the Qs.
I also brought some other names into my main watchlist - notably $GTLS, $IRTC, $EGLE, $GNK. The latter two are shipping stocks which have been setting up as a group.
I also spent a few minutes trying out some Traderlion Scripts from Richard Moglen. These are freely available to any Tradingview user. I liked their volume script which is like normal volume indicator but emphasises higher or lower than average volume. See below:
$QQQ did not setup right for me so I decided to leave it until EOD (End of Day) to see how we closed. Usually with options I never want to chase. It's not like buying stock. If you buy when the volatility is up you get crushed if it drops. I much prefer positioning myself in advance of any move with options and unfortunately in Ireland I cannot trade ETFs as stock. I am only allowed use leveraged options! (Makes sense right?!)
I noticed some action in $ZM that I have seen before. It was teetering on flat for the day but ZM does that and then rips hard. The stock had caught my eye before earnings as it seemed to be well on it's way to a bottoming formation and the strong earnings emphasised that belief. We had very strong volume after earnings (450% above average) and a nice pop above the 50 day. Today the stock was just sitting on the 50 day.
As mentioned above, my priority is to pick stocks on a stage two uptrend and catch those stocks. This takes time, if I am to participate in this rally I need to be flexible. $ZM has shown strong fundamentals, strong accumulation and a tradeable setup off the 50 Day MA that could potentially see the stock test it's 200 MA for the first time since August 2021. To put in perspective is only the second close above the 50MA since August. Also note the bullish cross on the 10EMA against the 20MA
I placed a trade early in the day August 19th $150/$170 Bull Call Spread paying $1.49 per contract. Again I've chosen a spread because it hedges me somewhat to the downside while also enabling me to capture a lot of value if the trade works in my favour. See the optionsprofitcalculator below for any idea on how it can play out:
For a trade like this where I do not want to commit a lot of capital and want to protect myself in a volatile market options work well. My risk is limited and I am able to use a spread to reduce the overall cost. Happily the stock rallied 3% after I placed the trade. My timing intraday was perfect.
Near the close I looked again at a $QQQ trade but I felt that I would be chasing. I will revisit on Monday. we can easily just gap up again on Monday but I would be very bullish if we gapped down and recovered.
End of day Thoughts:
Long weekend, I am content with my trading this week. I have been conservative and I am making a strong effort to not get carried away. I can already see the FOMO and excitement on Twitter. I will continue to participate and position myself conservatively in opportune times to profit and to minimise my downside risk if the trade does not work. That is how to compound an account. Ignore what anyone else is doing.
Notes & Open Trades:
- $NOC - 5% Stock Position - Entry $464.50 - Stop: $459
- $ZM - August 19th $150/$170 Bull Call Spread - Cost $1.49 per contract
Please note I operate my risk with options that I can lose 100% of the premium. This is the safest way to trade them in my opinion. Even if I cut at 50% once I am setup to lose 100% within my risk threshold then I will stay ahead of my required R:R.
24th May 2022 - Trading Journal
I have decided to move my Daily Trading Journal from DayOneApp to Commonstock. I hope that this may be useful to others in both it's format and the content. Writing a trading journal is a very good habit to get into and enables the writer to reflect on their thoughts, mood and bias. I will attempt to post this journal each day that I trade or study the markets in real time.
I have only just begun looking to trade actively again after a hiatus due to market conditions. I have spent all of this time studying styles that I hope will suit me. Mainly along the lines of Minervini, Weinstein & O'Neill. I have consumed a huge amount of information in the past few months and feel confident in my ability to weather this storm and be well equipped when the market eventually sees sunshine again. This is a generational moment in the markets and I want to be one of the bubble class of 2020 left standing.
- Situational awareness:
Situational awareness represents my feelings and awareness of the bias of the market going into the day. Clearly today that bias was bearish. We are in a strong bear trend, the SNAP results last night seemed to kick off a reverse to the downside. I suppose this was a bellwether or possibly some leveraged whale just blew up! Who knows...
- Pre Market Work:
I am in no rush to place trades and I have no intention of placing new trades each day. I will be selective especially in these conditions. I spent the morning doing the same routine I have for the past few days. Looking through charts on longer time frames and highlighting anything that came up that looked like it was ready. The only sectors primed for moves are Aerospace/Defence, Shipping/Transport & Commodities (Oil, Gas, Coal). I am reluctant to dive heavy into commodities as the trade is a bit long in the tooth and everyone and their auntie is trying to trade them. Once participation reaches peak then the trades will begin to fail. That said there are setups and they are worth considering with tight stops.
Mainly, I would like to spend my time identifying the stocks in Stage 1 that may move to Stage 2 as the market turns. Tech is still being decimated but there are a couple of very early signs of bottoming in $ZM also interesting bottoming forming on weekly charts in $AMPL & $JOBY. These could just as easily leg down again, only time will tell.
- Trading Day:
Once the market opened I used my sector lists to indentify what was holding up. $NOC was a clear RS name today and was already on my focus list with a nice VCP (Minverini) setup. My entry was more anticipation than breakout but I like the setup and the solidity in the name and sector. Also the Moving averages all converged suggest a strong setup in my favour. With a minimum 2.5:1 Risk:Reward I opened a 5% position which is quite small but I am starting slowly.
- End of day Thoughts:
I am still trying to structure my watchlists better at the moment they are a bit messy apart from the focus lists. I need to work on these. Also I have updated my TraderSync so that it is cleaner with better tags and settings. Long overdue.
I had several Shorts on watch today $COIN, $NET, $CELH all of which look like absolute manure and IMO will probably half from here but as volatility gets more crazy I am reluctant to press shorts too much and am uncomfortable holding them multiday and don't want to day trade much.
- Notes & Open Trades:
$NOG - June 17th Call $30
$NOC - 5% Stock Position : Entry $464.50, Stop $455.50
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This is so insightful! I don't really know much about a trader's routine so it's really interesting to learn what your daily actions consist of. I agree a journal is a great way to record your decision making and your thoughts at times. Really love the format and clarity of the first post. Look forward to next one.
Portfolio changes - update 7
Hello friends, I've been continuously evaluating my portfolio over the weekend and I want to share with you what my end actions/conclusions are:
- I sold $AMPL. For those not familiar, Amplitude is a leader in product and behavioral analytics which puts seemingly random data into a perspective. They compete with players such as Mixpanel or Pendo. All of those are pretty strong competitors, which on its own isn't a deal breaker, in theory all of those could win simultaneously as the space is huge. But, those insights get sent over into CDPs or Customer Data Platforms. Customer data platforms are basically a software which combines the data from all sorts of tools - like Amplitude - to create a centralized customer database containing data on all touch points and interactions with the product/service. Segment is no.1 in the space, used by huge players, acquired recently by Twilio (which I own). Now I realize that regardless of whether Amplitude, Mixpanel or Pendo wins the customer, they are likely using Twilio already for at least something and so the network effects kick in. Therefore I decided to play this space through $TWLO which is more diverse and not focused on just one product, but instead has a lot of functionality and owns the top player in the CDP which is where that data from Amplitude and others comes from anyways. So I'll have exposure. I just prefer that upper layer over the end layer.
- I spent basically the whole day yesterday trying to understand $SNOW better, evaluating their first mover advantage when it comes to data evolution in cloud vs legacy, their relationship with SMBs and overall the culture of the company. I'm very impressed and the company fits a lot of my checkmarks. Frank maybe isn't the most visible CEO out there, but I somewhat admire his laser focus on innovation, not getting too comfortable with yourself, ... basically pushing the limits at all times. Both $MDB and $SNOW fit many of investing themes I build my portfolio around and give me an exposure to broad set of customers, even better so to those just scaling up whose success will be reflected in the amount they pay to those because of their usage based pricing. $PLTR does something similar, but their Data Mesh is way more early in the process and Palantir overall has way less clients (although more capitalized) than those two. These 3 companies I believe are the best of breed when it comes to anything data. In conclusion, I essentially dismissed Snowflake due to the valuation since the listing, I knew something but not nearly as much as I do today. Now that I'm better informed I decided to add this one into my portfolio. This no doubt is a very HQ company!
- I also added more shares of $PATH today as I believe this is an incredible opportunity to load up more shares of this incredible beast!
Brief news 14/4/22
$AFRM published a research that shows a major generational division when it comes to American's response to inflation.
- 73% of GenZ/Mills and 66% of US consumers in total are concerned that rising costs will prevent them from being able to pay for the things and experiences they want to achieve this year
- The highest amount (38%) to prioritize purchases for the home
- When it comes to deprioritization, 53% to spend loss on restaurants, 47% on entertainment and 34% on beauty
- 53% of GenZ/Mills to spend less this year in reaction to rising costs
- 81% of GenX/Boomers to spend the same or more this year
- As a result of rising costs, about 23% GenX/Boomers are likely to use a "BNPL" option like Affirm over the next month, even larger amount - 41% in GenZ/Mills demographics
$AAPL announced that their suppliers more than doubled their use of clean energy over the last year, with over 10 gigawatts operational today out of nearly 16 gigawatts in total commitments in the coming years. This way, they avoided 13,9M metric tons of carbon emissions last year. Today, 213 of Apple's manufacturing partners have pledged to power all Apple production with renewables across 25 countries, and made joint investments into renewable projects all around the world, including 500MWs of solar and other renewables in China and Japan. In Europe, 11 suppliers made such a commitments bringing the impact to 25 European countries, for example in Austria, Germany, the Netherlands and Denmark. In the US, they made investments into solar plant in Texas and made commitments with companies such as DuPont and Micron. These commitments should enable Apple to become carbon neutral across their whole supply chain as of 2030. As a reminder, their global operations are carbon neutral since 2020.
$AMZN launched their first Amazon Kids+ original mobile games.
$AMPL appointed their first Chief Customer Officer - Lambert Walsh, who previously worked for 6 years at DocuSign $DOCU.
$DDOG expanded their Watchdog AI Engine with 2 new capabilities - Log Anomaly Detection and Root Cause Analysis.
$ENPH expanded Battery Storage offerings in Iowa.
$GOOGL published some 2021 Google Cloud stats - stating managed cloud services grew at a 73% CAGR + Google Cloud partners globally averaged an 86% ROI for their Google Cloud business.
$NVDA added new games to their GeForce NOW, notably Need for Speed HEAT and Plants vs. Zombies Garden Warfare 2.
$PLTR set to unveil a new suite of products available withing the Apollo platform on Apollo Demo Day on April 27th.
$SPOT has renamed their live listening feature to Spotify Live, says Spotify Live can now be found both as a stand-alone app and as a livestream function inside the Spotify app.
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Spotify Live is the old Greenroom right ? Also you calling that Brief ? nice Sam :D
'The Market' Stock Pitching Game is this Friday, April 8th at 1:00pm EST!
"The Market" stock pitching game is a bracket-style elimination tournament for investors.
Six brave contestants will each give a three minute pitch on an investment idea.
Quality discussion ensues—
The audience decides the best pitch of the day!
Sign up to get the Zoom link for the Friday, April 8th game HERE
Here's the awesome lineup!:
@youngmoneycapital — Iteris $ITI
@growthinvesting — Amplitude $AMPL
@strib — Mcdonalds $MCD
What is the best investment idea of the month? The Market will decide!
Since I'm having issues with IBKR connection again, I'll share what happened with my portfolio, for those who are interested.
- I got rid of $VLTA as I didn't like recent developments... they revised Q3 results, found accounting irregularities, also moved Q4 earnings to an unknown date, and then we got a news about CEO/Founder and President/Co-founder leaving at the same time from executive positions and board of directors, that's something that rings my bell and thus I sold. I'm planning to put that money instead into $TSLA which has a great supercharger network, and then $PLTR since they are invested in Tritium $DCFC which is a charger maker, partnered with many larger brands and for example a popular EV charging network in Europe - Ionity.
Have a nice day! ✌️
My Wartime Portfolio: 02/24/22
A few notable changes in the past 3-4 months:
- $RBLX - New position, I see this as a $100B company
- $NU - New position, A true gem similar to my $AFRM position
- $IOT - Disrupting fleets and building an IOT monopoly
- $WRBY - New position, disrupting the vision industry successfully
- $BIRD - New position, disrupting the footwear industry
- $AMPL - Powering Product Led Growth for Modern SaaS Businesses
- $PLTR - Its a privilege to be a part of Peter Thiel's vision for enterprise software
Ask me any questions you have about any of these, looking to learn and add value to the community!
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I like the short summaries, sometimes better than a 20-page report is just knowing, in one sentence, why you own it.
Both play in the enterprise digital adoption space that i am long-term bullish
$WKME is an awesome category with an above-average product. Stock is now cheap at ~4X revenue while growing 30%, after today's 20% drop
$AMPL is an awesome product in an awesome category. Stock fell 50% based on a horrible and confusing forecast (how can growth fall from 65% to 35%, when RPOs are healthy). Ironically stock is still around 8-9X revenue. I'm going to assume a bit of sandbagging, but regardless I think this is a great company to own long term and I'm not passing up a 50% discount even if they 'only grow 35%'
The 3 stocks I'm not buying even though they got hammered in the last couple of days post-earnings
$FSLY Always thought their technology was subpar to $NET and $AKAM and customer concentration. Stock is cheap, but i think company still is below-par
$WIX again stock is cheap, but I'm not knowledgeable enough on this market, especially the impact macro has on the SMBs they serve.
$PLTR I don't get this company or stock. Too mystic. I don't think the 'AI' is all that. It's still not cheap. They are making non-strategic investments etc. I don't think highly of their management. Their customer concentration risk is insane (and yes I'm pretty sure I will get tons of push back on this darling stock:)
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Awesome summary. Always appreciate your comments on software and technology. Incredibly valuable insights.
Commonstock is a social network that amplifies the knowledge of the best investors, verified by actual track records for signal over noise. Community members can link their existing brokerage accounts and share their real time portfolio, performance and trades (by percent only, dollar amounts never shared). Commonstock is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors.