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There is no chaos in WH… it’s only Trump looking for new talents

This morning the stock market opened higher and rallied… until we found out that Trump was looking for new talents by firing Tillerson. But don’t worry, it is not a chaos… it is a new energy!

 
Trumpet
 

However, the stock market didn’t like the fact of Trump reducing the “best collection of talents since the Third Reich” and it started slipping. Later on it sold off and the market lost -0.64%.

In the morning I opened a few trades with SPX underlying which turned against me, so I had to roll them while also opening new call spreads. Some call spreads got closed for 0.05 debit making great profit on them. I then re-opened those trades again. Most of the trades have tomorrow’s expiration so let’s see how they would play out tomorrow.

Knowing when to act (and adjust a trade) is the hardest part and difficult to explain. Many times I do not know myself and there are no set rules. It depends on the market. If I see it dropping like a rock and gaining a momentum I would convert put spreads into call spread and see if it was a right move. If the market is calm and I am unsure which direction it may go but going moderately down, I would probably let it touch or even let it go slightly in the money but I wouldn’t convert into calls yet, rather, I roll it still into put spreads but a few days away. This is really hard to say.

Those trades which are at the money, or near the money, or even slightly in the money, can be rolled into calls and same expiration (when the market is moving down fast) those already in the money (or deep in the money) needs to be rolled away (or sell a call against it – in this case I try to roll 2 DTE or 6 DTE and sell calls, so the calls get bought back for nothing and still provide a necessary cost offset).

The secret to consistency is have enough resources to adjust a trade when needed, not to panic when needed, know what to do in lieu of searching for what the market would do, trade less trades (the amount you can handle) and be prepared for everything and anything out there. If you open a trade and it makes you nervous and stressed and disappointed, and miserable, then that trade was wrong… better close it then. But if you open a trade and it was a bullish trade but the stock or market turns bearish you know what to do and do it, then such change in direction will not affect you.

 

 · Trading activity today

 

Today, a new member of our trading group reminded me of a fact that my recent trades posted do not match my strategy anymore.

Although I politely disagreed and explained why I was trading SPX and AMZN lately, I must admit that he was right. I am deviating from my original strategy in chasing gains! Time to calm down and stop it immediately!

This trading is profitable but can get me into dangerous waters of over-extending myself on maximizing profits, make errors, and lose it all. I must stop trading at this rate and be more patient and humble (as the new member of the group said). It is sometimes good to be in a group where other can remind you of your own deficiencies.
 

A summary of opening and closing trades.
(balance + $795.00)

 
S&P bear market
S&P bear market

 

 · Dividend stocks to buy

 

Out of our watch list of 36 dividend stocks the following ones are a good buy at today’s prices (03/13/2018):
 

AGNC
AWK
CVX
HD
KMB
MCD
OXY
PG
XOM
 

Some members and investors asked me to publish my views on dividend stocks before market close rather than after the market close.

I realized that I do not have to do that.

If you want to see the stocks I deem “undervalued” at any time, you can go to my blog’s watch list and see those stocks at any time as it is updated automatically during the entire day (5 minutes delay).

In the column tagged as “Trd?” those stocks in    green highlight and white text    are the stocks I would consider a buy at current price.

So, I will keep posting the stocks at the end of the trading session and if you need to see it before or during the day, go our watch list page and check those stocks on your own anytime.

 

The spreadsheet is automated taking data from Yahoo finance and Finviz, however, Google sometimes have issues importing the data and it drives me nuts; it then shows “#REF!” error.

To determine the “correction” mode I use offset from 52 wks high and the stock must retreat 10% or more to show as correction. But that mode still does not mean a buy. I also use a fair value calculation which is based on Graham formula (partially) – meaning importing the company’s PE, EPS, desired annual growth, etc. and based on that calculating PV (present value) for the next 3 years. For expected growth rate I use 4%; Graham uses 8.5%, so he is more aggressive or demanding but my theory is that this dividend behemoth stocks are not growth stocks and they tend to grow at the same rate as their dividend increases. Since my combined portfolio annual dividend growth is 3.6% I used 4% for the PV calculation. Then both conditions must be met – the PV must be larger than the current price and the stock must be 10% off of the 52 wk high at the same time to buy it. (for example, lately ADP is shown as undervalued but not in a “correction” mode, so it is not a buy as of now.).
 





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