Reviewing The Week
Q2 2019, Mid-May 2019, Trend Trading Review
|Edward Rooster||May 11, 2019|
So far progress “despite” the “news”. Uber, which was in fact THE UberUnicorn for an entire decade, an entire cohort, of new businesses, has gone public at last. Commentary is likely to be reserved for the end of this post (and may in fact be posted on sibling site, “The Big Stack”, which is also on the substack platform).
Let’s review Rooster360’s trend trading universe, beginning with the “Top 20” lists and then follow through with the “Worst 20” lineups. After this, we will all look at charts from the broader list. But first, here’s the top down summary of the ideas universe, which has now pushed past 500 ideas - a rebound from the doldrums of Q4 2018. Shared below is this weekend’s top down summary and update, followed by the previous week’s top down summary.
The first thing we can see is how notional profits* for LONG ideas has dropped from about 50K for 329 ideas down to 31K for 350 ideas. Notional unrealized losses for longs has jumped up from 18K up to 31K. Unsurprisingly, notional losses have rocketed from just 800 (100 ideas) to 12K (150+ ideas).
*(“Notional profits” are estimated from the difference between this week’s closing price versus the closing price of the week an idea is added to the list.
The price difference multiplied against a suggested number of shares for the idea.
The suggested number of shares, the trade size, is estimated by dividing $500 by / (“risk per share”).
The “risk per share” is estimated by using weekly “ATRs”. You can use any measure for your own system/setup - it’s an oversimplified way to equalize the risk for all ideas.
This explanation is probably unnecessary but maybe it will encourage some to consider focusing more on this aspect of speculation and risk-taking.)
What are the Top 20 LONG ideas as of this week?
A selection of 10 charts from the Top 20 LONGs as of this week via Koyfin charts.
Now the above shared charts have been produced without any “indicators” - no bells or whistles. Some of you would be shaking your heads - you’ve been consuming the notion that there is particular brand of magical thinking about price (a/k/a “the holy grail”). I have my own flavor on this and I will now post the same ideas differently. These charts will have just a few SMAs and some indicators to show trading ranges.
It just looks so simple, doesn’t it? Well, yes it is. BUT it is NOT easy. You just don’t know which of these lovely trends is “the one”. Hello, “risk management” and filters.
Let’s move to the Top 20 SELLS to remind ourselves that someone’s favorite idea could be in decline. Maybe they’re great for “shorting” but that’s it.
Let’s consider a few of the charts from this Top 20 SELL update. We’ll do just a few, since most folks are “long only” as investors and long time frame traders.
Most of these SELL ideas were recently added to the Rooster360 master ideas universe but as we see from these slow-motion weekly price charts that the message was “lower”. The simple act of following price can be enough to inform our trading. And now we can use this to consider 2 more updated lists, the “Worst 20 LONGS” - so far, it’s “so so” for the following members of this week’s Worst 20 longs.
And let’s not forget the “Worst 20 SELLs” - these are sell ideas which may in fact be bottoming or slowing in their descent. BE careful - I recall an anecdote out of Livermore about waiting for prices to move to a certain price before acting. When it comes to hunting for “bargains”, again there is no rush. Most of the time, for most investors and smaller traders, very little turns on a dime that is worth chasing.
Let’s close out with just charts from the rest of the trend trading universe to review.
Let’s do a quick and dirty “macro” view of how Mr. Market is doing - very rough view.
I didn’t forget about UBER and all the rest. It has been in the back of my mind.
I wrote about what has been unfolding four years ago in a market “satire” - imagining a rush of an entire cohort of businesses, born in the shadow of QE, to file to go public after a new presidential administration and era began. It is now happening.
I will move forward to cover thoughts on Uber and the big picture on “The Big Stack”.
Traders can focus on trade ideas here.