Deals of the Week: January 8 – January 12, 2024

This week we’re short WGMI and long QS, TEAM, AMD, DYN and TANK. They essentially used up all of my non-margin purchasing power. As I mentioned in my discussion of position sizes for the Canadian version of SwingTradeBot, I don’t want to have an all-nighter.. But after starting a few more trades earlier in the week, I soon found myself out. I need to lighten up — Late Tuesday my broker pinged me. I exceeded my purchasing power overnight. Regulation T violation). So I had to choose which stocks to sell. Otherwise, the brokerage company would have done it for you.

At that point my account was up 9.6% YTD, most of which was unrealized gains. So I was happy to take some profit from the table and decided to sell half of some of my positions.

AMD & Team We finished well from last week. Somehow both are trading at the same stage. Both have very similar setups (a dip below the 20 DMA and then reclaim the MA) and both have risen back to the highs prior to the drop. Here is the AMD chart:

One nice thing about these two settings is that They put really tight stops on overpriced stocks.. Given my position sizing methodology (risk rate model): It gives me the opportunity to put a lot of money to work while only risking 1% of my assets. The stricter the stop, the more stocks I can buy. For AMD, it opened at $138.34 above the January 4 candle (and 20 DMA) and made a stop just below that candle at $133.75. So the initial risk (1R) was $4.59 (AMD’s average true range is 4.90; ~1 ATR stop is the most stringent I’ve used). I sold half my shares for $149.21. In other words, this is a change of 7.85% ($10.87) for AMD, and you get a profit equivalent to 2.36 times your initial risk (2.36R). It has slowed down a bit since the sale and is currently enjoying a 5.94% gain on the remaining half of its shares.

TEAM is very similar and currently holds a 5.22% gain on the remaining shares.

WGMI There was another carryover from last week. Most Disappointing Deals of the Week! As I mentioned last week, I was using WGMI as a way to play on the unwinding of the parabolic movement Bitcoin miners were having. I was short at MARA the last week of December and got lucky so I figured I’d go back to the well on what I thought was a dead cat bounce. WGMI is down 17% this week, but unfortunately it’s been a tough road to get there and it shocked me. I got tired of the 10-day chop and closed the trade with a loss of 0.22R. Fortunately, I did so because there was little news of Bitcoin ETF approval the next morning. That gap would have stopped me with a loss of about 1.3R. But the disappointing part is that the miners finally went bankrupt after widening the gap. This is a classic news selling response.

I saw a gap when the market opened, but I had to leave to go see a doctor. So I didn’t see the action until the big slide had already happened. Looking back, I should have placed a short sell order below the candle the day before because I thought a “gap & crap” could occur. Oh well! I hate when this happens. I have the right idea, but the price action is not cooperating. But I take comfort in the fact that I was in the right place and on the right (short) side.

I made a few different trades during the week, with mixed results overall.

It ended up being a “meh” week. It had a quick 5% gain for the week through Tuesday, but after a downturn, especially after Thursday’s intraday plunge, it ended the week up just 1.2% YTD and 5.39% up.

PS: There may be no more posts on this post until the first week of February as I am going on holiday to Australia. I’ve already received some orders for Tuesday, but I’m not sure if I’ll be doing many transactions.