Intro and Catching up to today

The DJW5K is my enemy. I hate it. I will crush it.



Now that there is a damn mission statement! I've been a stock trader off and on for as many years as I've been able to fund a trading account. I have always done well against the market, but for one reason or another have also always managed to stop trading for long stretches of time. I can't say why. But this time will be different. For the first time I'll be chronicaling my experience, and I'll be doing it right here. With any luck, writing out what I'm thinking and doing will teach me a thing or two about my strategies and techniques. Also, if anybody who reads this would like to discuss the topic, I'm very happy to do so.

My strategy at the moment is to trade the immediate trend for as long as it lasts. Primarilly, I like to buy volume breaks from consolidation patterns, hope for an organized trend to develop, and move stops up below correction bottoms along the way. This is somewhat of a longer holding strategy than I've had in the past, but I'm hoping reduced commissions will offset losing a few would-be winners here and there. My old tried and true strategy was to buy and sell at a target price. It worked, but the commissions were huge, and I never held a running winner.

I started this strategy on June 1st. I'm playing the long side only right now as I'm trading in a retirement account. At some point I'll probably fund a margin account and play the short side when appropriate as well. My one and only goal is to beat the market. My indicator of choice is the Dow Jones Wilshier 5000 (DJW5K). I realize the S&P500 is the more usual benchmark, but if I had to throw all my money in one fund, it would be a fund that closely tracks the entire market. The DJW5K comes pretty darn close. If I can't beat it, I might as well join it. Of course, I want to beat the S&P500 as well, but I expect my results vs. that indicator to be relatively lumpy due to it's more limited exposure.

My blog plan is to update regularly on Tuesday and Thursday nights with my thoughts on all positions that have been open for about three weeks to a month and more. Younger positions will be reported on only if something really interesting happens. I'll also pop in on a daily basis if any activity happens in the portfolio. I'll report monthly and to date percentage results and a comparison with the enemy at the end of each month. I'd love to be able to paste charts in here somehow, but I haven't figured out how, or even if I'm allowed to do that yet.

I'm almost a pure technical trader, although if it is a close call between two companies, I'm taking a dividend and a good PE ratio over something that has neither. I'll hopefully be holding winners long enough that dividends matter.

By way of catching up, here's what's happened since June 1st: For the month of June, I gained 0.71%, the DJW5K gained 0.47%. For the month of July, thanks in large part to Middle East crap, I lost 0.52% and the DJW5K lost 0.46%. I got stopped out on a crap load of positions July 13 - 17 after war broke out over there. My two-month average was 0.09% and DJW5K's was 0.00.

Positions that have opened and closed:
DDS 6/1/06 - 7/14/06 +4.28%
VFC 6/1/06 - 7/14/06 +1.35%
SNWL 6/1/06 - 6/14/06 -6.95%
BLS 6/15/06 - 7/13/06 -4.40%
DGX 6/27/06 - 7/14/06 -3.18%
CELG 6/27/06 - 7/17/06 -4.70%
PCAR 7/3/06 - 7/14/06 -6.38%
R 7/3/06 - 7/14/06 -6.25%
AVA 7/6/06 - 8/2/06 -1.65%
LVS 7/7/06 - 7/14/06 -8.48%
ZEUS 7/10/06 - 7/17/06 -9.07%
FBR 7/12/06 - 7/13/06 -6.18%
STI 7/14/06 - 7/19/06 -2.35%
AHS 7/17/06 - 8/7/06 -6.89%
WFC 7/19/06 - 8/9/06 -1.97%
N 7/19/06 - 8/16/06 +10.7%
DLLR 7/25/06 - 8/8/06 -5.5%
SJR 7/26/06 - 8/14/06 -2.04%
ABK 7/26/06 - 8/1/06 -3.42%
CHL 7/27/06 - 8/21/06 +0.25%

Existing portfolio:
LH 6/8/06
ECL 6/27/06
OKE 7/10/06
RAI 7/12/06
CXW 7/19/06
TXU 7/19/06
FE 7/19/06
HCR 7/25/06
LNT 7/25/06
SBIB 7/26/06
XOM 7/26/06
CMCSA 7/27/06
ALJ 7/31/06
LTR 7/31/06
GIS 8/9/06
CNST 8/14/06
ORCL 8/14/06
DGX 8/15/06
SEIC 8/15/06
PLCM 8/16/06
BUD 8/16/06
PWEI 8/17/06
TRMB 8/21/06
EME 8/21/06
UDR 8/24/06


So, closed trades so far are pretty crappy, but that's to be expected. I fully expect losers to rot quite a bit faster than the winners ripen. Just the nature of the beast. So far, I have closed 4 winners and 16 losers. Losers average -4.96% and 11 days held. Winners average +4.14% and 26 days held. My unrealized portfolio is currently +3.1%. Overall, I'm slightly positive.

I'm fully invested, so until something gets sold, nothing new will be added. 20 - 25 positions usually means I'm fully invested, or very close to it. I'll probably increase the number of positions and invest a smaller percentage of my capital in each at some point.

One last miscellaneous thing: An interesting fact that is sometimes a limitation, but at other times a benefit is that I raise cash when I sell stocks. I am measuring the growth of my entire account, including the idle cash. If that cash sits there uninvested, it hurts, on average, when the market is hot, but helps when the market is cold. If I have a bunch of cash on hand and the market is really running, but I can't find anything to buy, I get left behind. On the other hand, if the market takes a long dump, I get stopped out and quit losing as the market slips steadily behind.

Okay, enough of this. On to the fun stuff! I did my Tuesday writeup a couple days ago. I did another today. I'll put those up in a separate post.

Happy Trading


Note - I'm a horrible speller and the spell check isn't working. No complaining!