Taking some risk off the table

Here are some of the major charts I’m looking at…

5-14-2020

It seems like we’re at an inflection point.  The S&P 500 pulled below the 20-day moving average, the IWM pulled well below and re-tested it’s 50-day, successfully so far.  Gold miners are consolidating near 35, and they look ready to break higher soon.  Silver finally broke it’s previous consolidation and broke past it’s mid-April high.  News is all over the place – we’re opening up, but we’re extending the shutdown kind of and all that.  The federal reserve is screaming about market support, clearly nervous about where the market goes from here and ready to jump in if it drops a bit.  Whatever is happening, I have a gut feeling we’re likely to see a significant head-fake before the next trend asserts itself.  That being said, I’ve been reducing risk a bit.

Back on April 28, I listed this for my portfolio:

  • Cash: 44%
  • Long plays, total: 37%
    • Gold miners, 2022 calls: 22%
    • Silver (SLV), 2022 calls: 14%
    • Other, 2022 calls: 1%
  • Short plays, total: 20%
    • Shorts, Various, 2020 expiry: 2%
    • Shorts, Russell 2000, 2021 expiry: 10%
    • Shorts, Russell 2000, 2022 expiry: 8%

Currently, here’s where I’m at:

  • Cash: 54%
  • Long plays, total: 35%
    • Gold miners, 2022 calls: 15%
    • Silver (SLV), 2022 calls: 6%
    • Other, 2022 calls: 1%
    • High Dividend stocks: 13%
  • Short plays, total: 12%
    • Almost completely Jan 2021 short Russell 2000

I actually had a great couple of weeks, going up about 6.3% overall.  The long puts were sold to capture profits and reduce risk, many of the short puts were sold at minor losses, and I took significant profits from my gold and silver exposure.  For the high dividend stocks, I sold covered calls immediately after buying in, mainly trying to capture some dividend payments on money I was planning on keeping aside.

I have some thinking to do and decisions to make on what strategy to take going forward … I just want to make sure that I’m on the right side of whatever trend asserts itself next.

 

About johnonstocks

I've been trading stocks since 2003, active on Motley Fool's discussion boards and using first Hidden Gems, then Global Gains. I no longer have the newsletters, but I keep up on the WSJ and read David Rosenberg everyday at gluskinsheff.com. Education: CFA level 2 candidate MBA-focus in Finance, Marshall, University of Southern California - expected Dec 2010. BS Mechanical Engineering, UC San Diego, June 2002
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