Happy late Sunday night!!! I hope you all enjoyed the Super Bowl and from what I’m seeing on social media it was a really good game. Unfortunately, the Pats fell a little bit short to the Eagles. The interesting thing about this is that the Super Bowls that the Pats (Tom Brady) have last have been to a quarterback that looks like a kid that lost his mom at the grocery store twice and another one that looks like Napoleon Dynamite. Random thoughts that have nothing to do with the stock market. So let’s get back to it.
What a week!!! I want to start off by saying that what happened this last week had to happen and I don’t believe this is over. This crazy run the market started the year with was fueled by nothing more than emotion. Now you all know I don’t get into fundamentals, but I have a hunch that fundamentals don’t support the current environment, but that is nothing more than my opinion. The good thing is that my strategy is designed to make money in any market so this week was a great opportunity to work on my short game.
If you remember from previous posts, selling short makes me feel a little uncomfortable. It seems as though whenever I had sold short in the past the market immediately went up. So when it came time to execute on that part of my strategy I got nervous, but I know for me to become a millionaire I need to make money in the down market. So this week I jumped in head first and sold short more than I ever had before. The results were mixed, but before we get into all the numbers, I want to write about the mindset behind my strategy.
There has been a calmness in anticipating a week like this last week. I believe being and REMAINING calm is key to succeeding in stock trading. Everyone else is already emotional and we have to be the opposite. So there are two things I am aiming (emphasis on aiming because I’m still missing as you’ll see later) to do to stay cool:
- First, I try to go into every day with a clean slate. What that does is that I don’t have to worry about taking a beating as soon as the market opens. That means I don’t have to push past being rattled and can easily get to my short opportunities.
- Secondly, every day is an opportunity!!! Before I was at the mercy of the market opening up and going up. If it didn’t, I would just sit idly by and wait for tomorrow. Now instead of allowing the market to control my activity, I control what I do because I trade on the down days.
All told, this opens up a world of opportunity. For those of you who do this on the regular, taking bearish positions is nothing. But think about how it sounds to someone that doesn’t know about the market when you tell them you made money when the market was down. It just flips everything. It gets people thinking in a unconventional way. And you know I’m all about opening new pathways to success. So for me this week was a good learning experience in terms of training mentally to execute on the down side. So let’s get to my summary.
Since we have been talking about short selling, let’s start off with detailing my short activity:
- Monday – Shorted ADI, PSX and SYMC for a total of $35.27.
- Tuesday – Shorted NFLX, BP and GE for $4.15. I hope you are thoroughly entertained by now.
- Thursday – I continued picking on GE, all for even money.
- Friday – Shorted PSX, SYMC and GE again, as well as FHN and EA for $53.21.
So to sum up my short sales this week, I made a grand total of $92.63. I know it’s nothing earth shattering, but this is going to open the floodgates for me. It is a good foundation to build upon for what I need to do to make this happen. Especially, getting past that mental block and discomfort that will catapult me to millionaire status.
As for the long side, that was actually more eventful than I would have liked. On Wednesday, after 2 straight down days I thought the market would surely bounce back. And it did, sorta, just not for me. Because I made 2 mistakes:
- MCK – I made the mistake of buying the day before they reported earnings and my 3% trigger hit. You may recall in a previous post that my goal is to stay away from stocks on the day before, or the day of earnings announcements. And you may also recall that I wrote to stick to whatever your strategy is. I really don’t know what I was thinking when I thought I would be able to turn a quick profit before earnings.
- HD – This was an excitement trade thinking the market as a whole was going to correct that day and it ended up being a dud too. By the end of the day I was down 2% and decided to hold it overnight. MISTAKE!!! My 3% floor hit on Thursday.
So those are the 2 big mistakes for the week that caused the 4 week winning streak to end. On the other hand, I hit over 1% on KEY, MTG and JBL. I also had a few small profits in GS, BAC, GNTX and STX.
Bottom line is that the streak is over at 4. My account balance at the end of the week was $29,006.51. Included in that is a withdrawal of $191.74, which will be used to give to my church to meet a pledge I made to give 20% of all my gains. So needless to say I have some ground to make up this week in the amount of $1,411.54. I believe it’s very doable as long as I eliminate mistakes like MCK and HD from this week. There will be plenty of opportunities on either side with earnings season continuing. Finally, I will be posting my activity on Twitter @_imstocks and StockTwits @imstocks since I know it’s hard to wait for the weekly recap. So to updates throughout the week so be sure to follow me to see how my trades are doing.