Trading this Market

On Monday, JP went through all the Canadian stocks and gave me a list to check out. I went through it and thought the following were great charts:

  • RME.TO
  • FRU.TO (A royalty company.)
  • LCS.TO (A fund)

The next day, he asked me which one(s) I was going to buy. I told him none of them. He couldn’t believe I was just going to sit on a bunch of cash without investing it. Of course, I had some explaining to do. It was very simple: I didn’t like the market. I figured the market was going to offer hokey bullishness all week which it did, ending with a big hoorah day on Friday.

 

Market Monthlies

The XIU, SPY, QQQ, and DIA ETFs on freestockcharts.com

Here are the monthly charts for the Canadian XIU ETF, and the U.S. ETFs: the SPY (S&P 500), the QQQ (the NASDAQ), and the DIA (Dow Jones Industrial Average). There are seven trading days left in this month. If we close at new highs with lower volume, then I will happily wait for a correction next month.

I noted on the charts the months when we last saw a correction or a reset. On the DIA chart, I put a star over March 2017. Even though there wasn’t a proper sell-off/ correction, it consolidated and traded sideways for the following three months, which is often a good setup for another run.

Out of all of them, Canada’s XIU looks the best. If the U.S. markets undergo a correction, then trading Canadian stocks could be the next best play. I’d keep a close eye on the Canadian financial stocks, though, to see whether they reset or have a substantial sell-off that could weigh down the Canadian market.

For the rest of the week, JP kept asking me for my contribution of picks in return. I flat out declared I’d rather sit on cash than to buy anything right now. (Honestly, I was too lazy to look, but we both knew that.) He agreed that although the market looks overbought, sector rotation could keep it churning and that unless something fundamental changes in world economics (like a big war), we’re going to keep going.

I found some charts worth watching over the next week or two:

  • CCO.TO (Needs better setups on daily, weekly, and monthly timeframes.)
  • MX.TO (Could tighten up on the monthly, but decent daily and weekly charts.)
  • ALA.TO (Nice monthly, but it went up a lot already on the daily and weekly.)
  • ATZ.TO (I own this already. This must set up on all timeframes.)
  • H.TO (I own this already. The monthly chart is meh.)
  • DRT.TO (I own this already. The weekly isn’t that clean.)

JP’s picks definitely look better than mine. However, I feel these are worth watching as they had more recent corrections on the monthly timeframe. None of these have great patterns on all their daily, weekly, and monthly timeframes. I find that often when the pickings are slim, we’re due for a correction. By the time the correction or reset comes around, these picks could be even tighter. That’s the benefit of having cash ready and waiting in your account: you’ll be ready to go once the best opportunities are there. You can always afford to be patient.

 

 

 

 

 

Stock Markets and Stock Picks

Marks

Monthly charts of market ETFs: XIU, DIA, SPY, QQQ on freestockcharts.com

The Markets

I typically like to analyze the XIC ETF as it consists of more TSX stocks. The XIC is very much like the SPY ETF for the S&P 500 index. When I want to know how the tech-focussed stocks are doing, I check out the QQQ.

I admit, I rarely look at the XIU (the TSX’s top 60 large cap stocks) or the DIA (the U.S. ETF for the Dow Jones Industrial Average). It’s an old habit of mine as my trading background was more focussed on shorter timeframes and bigger price action. There is less price action in these indexes that cover the large-cap, blue chippy stocks. Molasses moves faster than some of these stocks’ prices — this is because there are so many more shares to go through at each price level before the price moves up or down. Less price action, though, doesn’t mean less money. It’s just more stable. I really should watch these ETFs more because this is where big money, like funds, tends to go. With investing, it’s often good to follow the big money.

I drew horizontal lines on the charts for the XIU, DIA, and QQQ to show where those stocks had reset. The XIU has been “resetting” for a long while now, pretty much since February. The DIA (often called “the Diamonds”) had a reset in April and the Qs had one in July. Look at the SPY’s trendline that goes straight up. When is the SPY going to take a breather? If we’re going by season, then perhaps in the fall?

Observing the timing of these corrections demonstrates well the cyclical nature of markets. To get a better idea of what drives these differences means to take a closer look at the sectors and specific stocks that dominate their respective markets.

I worry that if the SPY makes a correction, it will affect the Canadian market. If I didn’t concern myself with the U.S. market at all, I have to say that I like what the charts tell me for the Canadian market. It’s been rationally pulling back for over half a year now and moving sideways for three months. It could be gearing up for another bullish move up. Let’s hope that if and when the SPY comes down, investors move into the Canadian stocks and start a new investment cycle.


Stocks to Check Out

Here are some stocks with nice-looking monthly charts:

  • TCW.TO
  • CVE.TO
  • SJR.B.TO
  • HSE.TO
  • IPL.TO
  • POU.TO
  • MG.TO
  • THCX.V (I own shares of this one already.)

Now, keep in mind, most of these are oil stocks. If you’re considering trading any of these, keep a close eye on the sector. And as I always advise, do your own necessary research on the company, the sector, and the markets. Consider how your choices fit into your grand plan and decide on the appropriate time horizons and how much you can safely risk for your portfolio.

Catios

wp-image-771511536

Our catio. We’re halfway there!

This week, I barely remembered to do my monthly deposit of $150 into my RRSP. I admit I have not paid any attention to the markets nor my investment accounts. This happens from time to time, and I’m mostly okay with that. I’ll get back into it this week or next week.

Instead, I found myself doing a lot of personal stuff that I’d put off all summer, such as returning and exchanging items, pursuing refunds, cancelling magazine subscriptions, closing useless accounts, etc. I’m also trying to stay on top of my study schedule. What has taken centre stage though, is the designing and building of our cat enclosure, also known as a catio. Yes, we’re nutty cat people.

JP and I relocated this spring/summer. It was a long, gradual process. Unlike our other moves, this one involved a lot of research trips and planning in the beginning. Once we officially decided to move, I ventured out first in the spring. I sublet an apartment in student housing, and boy was that a shift in lifestyle! After moving into a room smaller than my bathroom back home, I looked for work and found a job. After that, I found a house for us to move into. This house needed a lot of cleaning and fixing.

During the week after work, we cleaned and painted the new place and then on the weekends, went back to our place in the countryside. JP and I had to clean, repair and re-paint with the goal of getting our own house ready for renters as of September.

The biggest job was the decluttering process, which actually took a couple of months. We’d been holding a lot of stuff on behalf of our families. We adopted a ruthless policy in deciding what was coming with us and what would be sold on Kijiji or in our big garage sale. We made several exhausting trips to the dump and donation centres. Even after we moved everything, we still got rid of unwanteds as we unpacked. Overall, we got rid of over a third of what we had at our old place. There is nothing more freeing than having in your possession only the things you really want and need.

Our next priority was figuring out what to do about our cats. They’re both wild, country boys who moved in with us on their own — we discovered that this is how many cats and dogs become pets in the countryside, by the way! One moved in five years ago one very cold winter and the other started coming in on his own as of last summer. We had an open door policy with them that allowed them to come and go as they pleased. They were undoubtedly going to have a hard time adjusting from five acres of farmland to a city with so many neighbours around, in addition to being around a lot of traffic. There’s a good chance of them wandering far, becoming lost, or much worse.

We first tried to put collars on them with trackers. They HATED the collars so much, that no amount of positive conditioning was going to work. Introducing a leash led to many traumatic moments, and we nearly lost one of them. So, we opted to build an enclosure in our backyard. We got a lot of ideas from YouTube where people posted handy videos on how they designed and built ‘catios’ on their own. Some of the designs were a little weak, but others were so creative and simply amazing.

We knew some parts of the construction would be beyond our abilities so we spent a couple of weeks finding a contractor. Try explaining what a catio is to anybody…then try having people take you seriously after you tell them all this trouble is for your cats! Honestly, with many cities implementing new by-laws that don’t allow you to let your pets roam free, these pet enclosures are going to be the next hot thing. They solve a lot of problems from losing your pets to preserving bird populations. Also, your pets will be happier and healthier not being stuck indoors.

Through a connection at JP’s new job, we found some willing contractors who were more curious than anything. We had a great time working with them yesterday and hope to be completed next weekend. The head carpenter even wants to take JP under his wing for upcoming jobs and teach him the tricks of the trade. If he gets good, who knows? Maybe catio designing will be our next side business! Look at the catio empire this couple has started.

This project was not ‘cheap’ but it’s worth it as we’re investing in our pets’ health, safety, and happiness!

 

MOVING IN

Buddy and Tiny, my cat babies

 

 

Some Predictions: The Markets and the Big Fight

The Markets 

Up and down charts

Price charts for ETFs: SPY, QQQ, XIC, and GDX on freestockcharts.com

The US markets have only started their decline since the last month. The Canadian market has been going down since late February. That is no surprise since it had gone up for an entire year since February 2016. The gold sector has been starting to trend up since mid-July. Whether gold breaks out or just jogs sideways is hard to tell at this point.

The trade volume in the US markets has been very high this summer. A lot of selling happening, particularly in the tech sector. Tech had been going up since last summer, so like the Canadian market, after a year of bullish trading, it was bound to sell off.

I think the US markets are going to continue trending downward until the end of September, maybe even going into October. If the selling is heavy enough, it could trigger a longer bear market until the new year. If this happens, it’ll be tough on the Canadian market as it will only get weaker.

For the time being, I’m going to be really reserved about buying anything. I would like to see a substantial correction in the US markets before feeling confident in the next uptrend.


Mayweather vs. McGregor

Any predictions? No doubt, there is a lot of betting on this fight! I don’t believe in betting on sports. Instead, I just argue over who I think will win. My brothers and I got into a fun debate over Mayweather and McGregor. Two out the three of us siblings think that Mayweather will win, though we’re all kind of rooting for McGregor. It’s just really weird that one is a pure boxer and the other is an MMA fighter. McGregor really is the wild card.

I grew up watching a lot of boxing and wrestling. Eventually, I started watching UFC, Pride, and K1 fighting. One time, ages ago, I had a short stint working with a K1 promoter in Japan. I was in my element talking to all the fighters and getting an inside look into that world. I hung out with them all for a few days, some of whom I’d recognized from TV: Mike Bernardo, Jan the Giant, Alexey Ignashov, and Canada’s own Mike McDonald and Gary Goodridge. Some of these guys started out boxing and eventually got into other forms of fighting, especially since there was money to be made.

The day of the tournament, things got intense. At ringside, I could hear every punch land and every kick connect. These fighters, my new buddies, were really hurting each other. Whether they won or lost, everyone got hurt. After that, I couldn’t watch fights with the same enthusiasm.

Well, JP twisted my arm and got us tickets to watch tonight’s fight at our local Cineplex’s VIP theatre. I do think that Mayweather has a better shot at winning unless McGregor can get a few really hard punches in early enough. If he can’t, I think Mayweather will tire him out until he goes in for the kill. It’ll be bad if McGregor accidentally resorts to MMA and disqualifies the fight. We’ll soon find out!

The Transparent RRSP: Relative Strength

The Week of August 14
  • On Wednesday, August 16th, I bought 100 shares of Bombardier (BBD.B.TO) at $2.65 per share.
  • With $1 in commissions, the whole purchase was $266.00. I now have $18.47 in cash in the RRSP account.

I actually meant to buy the shares on Tuesday, but I totally forgot to put in an order! So, on Tuesday night, I put in a limit order to buy 100 shares at $2.68, a couple of cents above the current bid/ask price. I was peeved by my sloppiness, but I’d been stalking this stock all month, watching it against the market. I wanted it that badly that I was willing to pay more than I knew I should have.

Thankfully, on Wednesday, my order was filled at the lower price of $2.65! This happens sometimes; other times it can go the other way and your order will be filled at a much higher price. It’s called slippage when you get filled at a higher price than what you have on order. Slippage tends to happen more when stocks are lightly traded. Bombardier is a heavily traded stock, so slippage is less likely to happen.


Let’s do some chart analysis!

 

BBD analysis

Price charts for BBD.B and XIC on freestockcharts.com

On Chart #1, the pink arrow shows the day I bought BBD.B. No special day and it closed negative. On Chart #2, the pink arrow for the XIC market ETF shows the market on the day I bought BBD.B.

The blue arrows on both charts #1 and #2 show how they closed for the week. BBD.B closed more positive than the market did, showing relative strength. There’s been uncertainty in the overall markets in general with the possibility of war — and then you add violent protests and terrorist attacks to the mix and you get even more negativity. I hope this little stock, along with the rest of the RRSP portfolio (come on, LIQ!), will show resilience in the face of all this.

Chart #3 is the weekly chart for BBD.B. It’s a healthy looking chart with a very bullish setup. (If you’re not familiar with the market lingo, bullish means optimistic and positive because apparently, bulls look up when they’re in attack mode; bearish means negative and pessimistic because bears look down when they’re about to pummel you. There could be more to the meaning of these terms, but all that matters is that you get the picture.)

Chart #4 shows a lot of potential for BBD.B to move up if and when it gets past the previous price resistance points as seen on that pink dotted line.

Of course, all of this can go potty — regardless the relative strength and bullish setups — if the overall markets get really negative and there are more sellers than buyers. No matter what, just try to stay positive and strong!

 

The Transparent RRSP: Market Fears

The Week of August 8
  • I left the RRSP account alone. I wanted to buy shares of Bombardier (BBD.B.TO), but I couldn’t find an entry. There might be an entry on Monday or Tuesday.

 

BBD vs XIC

Price charts: BBD.B vs. XIC on freestockcharts.com

As you can see in the top two charts, BBD.B has been more positive than the market (the two lower charts of XIC). If the market continues to head lower, I’ll either abandon the plan to buy shares of BBD.B or just wait until the market settles down.


Last Thursday, the markets collectively demonstrated anxiety over North Korea. There was a big market sell-off and most gold stocks went up. It’s hard to say at this point if this is a reaction temporary in nature, or if it will signify the beginning of more and more selling due to fear. I’m going to make it a point to pay closer attention to the news and to how the market trades over the next couple of weeks.

Last week, I put together a big watch list of stocks that had promising charts. After last Thursday, only a few of them still look okay:

  • L.TO (Wait another few weeks to a month for this to properly set up)
  • H.TO (I own shares of this stock already.)
  • EXE.TO (I own shares of this stock already.)
  • TCW.TO
  • D.UN.TO (This is a REIT.)
  • CNE.TO (Needs a better setup unless you’re into aggressive, riskier entries.)
  • LIF.TO

Until you know what’s going on with the market, I don’t recommend buying anything. These stocks would be worth looking at while also observing the market. Watch how these perform against the market or their sector. If resilient stocks start to show weakness, then it’s usually a good sign that a weaker market will become even weaker.

There are different ways to play defensive during uncertain times. You can buy gold or shares of gold stocks. You can also buy consumer staples stocks. You can buy nothing or you can sell all your stocks. Whatever you do, don’t lose sight of what you want for your portfolio long term and think strategically.

Since the late spring, I’ve been unloading shares of stock. I’m either selling portions of my positions or all of them to either collect profits or reduce my exposure to the market. I have still been buying shares here and there, but not as actively as I used to. This has nothing to do with North Korea. Rather, it’s more about the market, which has been pulling back since the end of April. Maybe eventually, it will have everything to do with a conflict with North Korea. Regardless of what happens, I’ll let the charts guide me, not my fear.

 

 

 

 

 

U.S. Stocks

I get this Monday off at work because it’s a holiday. The US stock market, however, is still open, and I really hope to get my trade on.

It’s been so long since I’ve been able to watch the US market live. I still have an active trading account with Interactive Brokers set up just for day trading and swing trading. My US trading account looks a lot like a backyard that needs a lot of tending to: some big glorious trees (a couple of winning stocks) among a bunch of weeds (half a dozen losers).

Regardless of its imperfections, my US portfolio has been outperforming the market all year — a huge reason why I leave my trades alone. I’ve been busy transplanting my life to a new city, anyway. Making any attempts at fast trading while busy and heavily distracted would be bad practice. The US market is full of action, but it’s a hostile environment to navigate. The payoff can be fast and big, as can be your losses. I need to be focused and ready to execute even just one quick trade. Now that I’m all moved in and my office is all nicely set up, I hope to do a bit of ‘yard work’ for the first couple of hours that the market is open.

Half of my money in this trading account has been sitting there doing nothing for a very long time. I hope to open one or two swing trades this Monday – and maybe get a day trade or two in there while I’m at it.

I did a search on finviz.com using the filters and criteria for finding stocks I like based on price and trading ranges. I found a few worth considering:

  • CARA
  • CLR
  • DKS
  • DVN
  • FL
  • NSC
  • TRIP
  • UAL

I noticed some pretty beat up stocks that would be worth considering if a shocking reversal were to happen (a VERY aggressive play):

  • LNG
  • RH

Usually, before the market opens, my brokers provide a number of stocks that are actively trading in the pre-market (before 9:30 AM). These stocks often end up being in play all day, or at least for a big part of the morning session (trading usually slows down around lunch).

My own discipline requires that I only select only a few of these stocks and watch them closely. If and when an opportunity presents itself, then I’ll do a trade that will last anywhere from a few seconds to a few hours. Day trading is not for most people and I would never recommend for anyone to even try it.

I discovered day trading is not for me either. Swing trading (a few days to a few months) and position trading (months to years) is more lucrative and a more realistic way to handle your money. I haven’t totally given day trading up because doing it every now and then (like once a month) keeps my instincts sharp. Most importantly, it reminds me of the value of never risking too much on any one trade. I might win on these trades 80% of the time, but the losing 20% can be such a blow financially, mentally, and emotionally. Losing keeps things real and really forces me to learn from my mistakes.

If the market is too volatile or my choices aren’t great or don’t open well, I might just leave the account alone and not trade anything. Always have a great Plan B so you don’t end up trading just because you had originally intended to. Not every day is a good day to trade — it’s just not something worth forcing. I might just take the holiday off and go to Niagara Falls instead!

 

The Transparent RRSP: Summer Sideways

The week of July 24
  • I took no action for the RRSP. I will be depositing $150 this week because we’re entering a new month.

My next consideration for the RRSP was to buy shares of Bombardier (BBD.B.TO) as it was forming a nice base on the daily chart. It did, however, already break out last Friday on a good second quarter earnings report. I might have missed the move; however, if this forms a base from this breakout, then I will still consider getting some shares. I do already own this stock in my TFSA.

BBD.

BBD.B.TO price chart on freestockcharts.com


The market didn’t do much this month other than hit the levels it was at in November last year – this is what I was hoping for in order to have a substantial enough correction before going up again. If it comes down even more, I’ll be totally okay with that too.

I went through the 100 top weighted holdings of the XIC ETF. The financials look like they’re weakening. It’s hard to say if they’re going through a bit of a slowdown or if they’re on the way to a major plunge. Some of the stocks in the energy sector are starting to move above their bases while some of the other bigger energy stocks are still weak. It’s all very wait-and-see.

I don’t think the market will do much next month. I think this August, it will just be moving sideways. Summer is always a boring time to trade, but this gives you more time to do other things like work on better trade strategies before it gets busy in the fall, or get out and do more fun summer things. I really hope to find a great long-term gem in the next week or two!

The Transparent RRSP: Summer Reading

The Week of July 17
  • I took no action for the RRSP.

Instead, all week I’ve been stewing and brewing over something I wrote two weeks ago:

This week, I was actually considering buying shares of APH.TO for the RRSP, but it’s not quite ready yet. I know this one is capable of developing really good patterns. Once I see the trading range tighten, the selling volume lessen, and a pattern improvement on the daily and weekly charts, then I’ll pick the price I’d like to enter at and I’ll put in an order. I’ll give it another couple of weeks. If it ends up going up while I’m waiting for these things to align, I won’t be too concerned if I miss the run. It will either set up again later or I’ll find something else.

So, APH had a major breakout three trading days after that post. The setup I was identifying actually happened – just a lot sooner. I took my eye off the ball. So, I went with my next play. Last week, I bought ECN at $4.03 with a strong feeling that it was going to take out a previous low of $3.87, which it did only three trading days after I put in my limit order.

 

APH ECN

Price charts for APH.TO and ECN.TO on freestockcharts.com

 

I was right both times. The problem is, I’m left frustrated, mainly because I missed the stock that had the bigger move. You know what’s worse than losing money for most traders?

  • Exiting a stock too soon and leaving money on the table;
  • Missing out on something you knew was going to happen;
  • Overcompensating for either of the above two reasons.

I actually shouldn’t be frustrated. Let’s say I never noticed APH at all. I would take that ECN trade any day and I’d be okay with it.

Trading Psychology

Trading psychology is actually a ‘thing.’ I once had a trading coach – an infinitely kind, generous, patient, uber positive day trader based out of Colorado. He was really into trading psychology and he consistently banged the drum on the importance of visualization, meditation, and forming a strong belief system supported by mindful practice. He got me reading Psycho Cybernetics and books by Tony Robbins, among many other things. This reading took me down a path of self-exploration deeper than any other self-improving attempt I’d made in the past. This was when trading had changed me.

I learned that most of what drives our decisions is conscious, but so much of what drives our actual actions is subconscious. A common action for traders is to right a wrong. When we lose, we become prone to overtrading or overcompensating for something we should’ve done instead. We try to make back what we lost or make what we should’ve made on something we ‘knew’ would work. The reality is, there is no certainty in markets and everybody knows this. Nor is there total certainty about anything in life.

I finished reading Market Wizards, a great book featuring interviews with top traders in the U.S. These traders all had their own unique strategies, their special recipes for success. What they had in common, however, led to their success: tested strategies, experience, persistence, the need to manage their losses, and learning to deal with the uncertainties of the market.

In this book was also an interview with Dr. Van K.Tharp, a psychologist who focuses on the psychology of trading. It was so fascinating to read about how this psychologist understands the thought process behind trading and has dedicated his work to helping traders get past mental and emotional road blocks in order to achieve their goals for success. Of course, I ordered one of his books from Amazon. I’ll be reading Super Trader – Make Consistent Profits in Good and Bad Markets over the next few weeks as I also read Edwin Lefevre’s Reminiscences of a Stock Operator.

Am I upset about missing the move on APH?  150% yes. Have I missed other amazing opportunities in the past? Yes, hundreds of times. Has that ever stopped me from making other decisions with good payoff? No. Will I miss other great opportunities in the future? Of course. Will I take other great opportunities in the future? You betcha.

The market will always be there. Opportunities will always present themselves. I will try to be ready for them, but I can’t catch them all. Learning and growing from these experiences is part of the fun and adventure of trading. I know I’ll get over this missed trade with APH. I hope that things work out with ECN and that I’ll have another few opportunities to buy more shares of it. One day, APH will present yet another opportunity and I will do my best to be ready.