Jun
17
2009

  USO = Successful Trade

I took profits on my USO (oil ETF) on the 15th, and consider that a successful trade. I made an annualized profit of 31% on that one. This brings my overall performance for executed trades to a 22% annualized profit for 2009. If we look at my UNrealized trades (positions I still hold), my profitability isn't quite so high, but I'm not counting those since my trades aren't "done" for those yet. I'm still waiting for the charts to point to a sell sign, and I haven't seen it yet. But I still think it's coming.

Now that I'm out of oil, and it will probably take some time for the price to come down enough to invest in that again, I'm looking for a replacement commodity for my portfolio. I've got my eye on DBA. I owned some last year and made a nice profit trading it. It's an ETF with a basket of various agricultural commodities (corn, etc.). It's recently come off a relative high, and just completed a buy setup. The setup isn't perfected yet, but I might go ahead and buy once that happens instead of waiting for a countdown to complete. I base this decision on the fact that the sell setup did complete, but not the sell countdown, so the price action in this ETF is too fast for a complete countdown. I'm finding that in this volatile environment, not many securities make it through the full countdowns, either for buying or selling. In fact, the reason I profited so well when I sold the USO is because I did NOT wait for the full countdown to finish. I waited until the setup was perfected, then observed the price and the day it threatened to breach its near-term support level (which happened to be around day 7 of a 13-day count) I sold.

I've been following charts that I haven't traded, just to see how the patterns play out, and am gaining more "instinct" about the look of the charts and stock price behavior in the current market. I'm disappointed that I missed the springtime rally AGAIN this year, but know it was the prudent decision, given the whole giving-birth thing in April. The rally could have ended at any point, and I didn't want to be caught when it tanked. As it turned out, the rally continued (although is within a week or two of ending, in my estimation) well past my non-trading days, but there was no way of predicting that given my current charting skill. So I traded within my abilities, and am satisfied with that.

While I'm doing pretty well on a % basis, the raw dollars of profit are pretty anemic. I've been trading small positions since I've not had a lot of conviction which way the market would move, not to mention physical restrictions causing me to nap during the day (I was out for about 2 hours this afternoon) that affect my trading. So I've been conservative. I might get bolder this second half of the year, the debacle with UUP* notwithstanding.

But I have now at least made enough to cover the entire year's worth of property taxes, so that's not too bad. And I'm pretty sure we're living within our cash-flow and not drawing down capital since I do have a bunch of cash invested in interest-bearing accounts and we're not spending much lately. Although the COBRA is pretty darn expensive, we might be over-budget for that, but I haven't done a close analysis. We're planning on taking a vacation in August, heading out to the left coast to escape the humidity here. It would be nice to have a sweet trade to cover the cost of that (like I worked out for Anguilla last year), but whatever, it's more important that we get away. Both Terry and I are feeling a bit stir-crazy here on the farm for months at a time.

*Remember I was trying to buy that at the close of trading, but taking care of screaming William cost me my entry point by a penny. The next day the price was up enough I couldn't get a fill even at a higher price. You make money when you BUY the stock more often than when you sell it, and I know better than to buy above the prudent price point. Now I just have to watch the price go up and up, mad that I don't own it when I KNEW the right time to buy. I need to devise an execution strategy that will work even when I have to leave my order screens to take care of the baby. A pain-in-the-@#$ but it's probably necessary; if it's not a wet diaper I'll have to deal with, it could be bee stings, or vomit, or who-knows-what and the threat of trading interruptions won't go away for 18 or so years now. . .