Close of Market May 27th, 2020

Well, here we are at the end of hump day without much to say. Our open trades in UGL and SSO continue in place. None of our pending trades triggered: those resistance levels proving to be formidable barriers.

I do have an idea. Before we stopped trading the original portfolio at the end of April, 2020 and decided to keep going with the book portfolio, we entered a trade in Apple.

Let’s call an audible and take a look at that chart.

Apple

If you track up the diagonal trend line you can see a lone candle having dropped below the 21 EMA (blue). The price then moves up and closes above the 21 EMA, the 8 EMA (red) and the 55 EMA (green). The blue has crossed above the green giving us an uptrend set up. The price rising above it all gives us the go ahead. We just have one little problem: resistance at around the $291. We put our stop-buy in at $292. We are triggered in. We put our trailing stop at $264 or $28 below the trade price.

We have a couple of issues coming up. First of all we are facing resistance at the $327 level. Also, we have divergence. The latest high in price is not matched by a high in the ROC in the pane below. The trend arrow on the ROC is sloping down as the price continues up.

Usually when we see this, we take action. I usually put a trend line on the price and if it is broken I close out the trade. Our trailing stop, like a faithful Sherpa, has been following the price up. If there is a quick decline our stop would get us out at $296.

The reason is that so far, Apple has made a high of $324. Our trailing stop was $28 behind, and therefore anchored at $296. So even in a fast decline we would still get out at a profit of $4 per share. ($324 – $28 = $296). We bought in at $292.

If there is an orderly breaking of the trendline we would more likely be out around $304, a little better result of $12 per share.

We followed our process and are out with a small profit – either way. This is what we are about. Probing for the big move, accepting the small gains and losses along the way, knowing that 5 big moves in a year will give us a fantastic return. The portfolio is up over 38% so far thanks to a single trade in oil.

Stay patient, my friends, the Big Moves will come. There is no need to bet the farm or take undue risk.

If you have any questions or comments, please drop me a line: charlesgoddard2020@gmail.com.

TTFN,

Charles

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