Quill,
Permit me, if you would, to comment of some of the stocks in your list, specifically the bricks and mortar retailers.
âSwing tradingâ can be defined a lot of ways, none of which require that stocks be traded from both sides of the market. But, obviously, do permit doing that. And just as obviously, shorting stocks is a hassle due to the need to borrow the stock and to pay often abusive borrow fees, not that there arenât options-based workarounds. But letâs keep things simple for now.
The current charts for HD and COST donât invite buying. But hereâs an ETF that would permit shorting the retail sector, namely, EMPY, and there are other bear funds that target online retailers. As you can see there was a BUY signal for EMTY a few days ago and SELL signal today. Actually, a good enough SELL signal came yeterday. Note the Doji.
So the trade would have gone like this. A âHeads Upâ on the 18th. A confirming BUY signal on the 19th. A matket-at-open entry on the 20th. The capture of a nice gap up yesterday, and out at the opening today for modest, $0.34 cent per share gain for a two-day holding period, which works out to about a gazillion percent annualized, or more realistically a very respectable l gain of nearly 98 beeps per market day where 6 beeps per day would offer a very decent gain of 15%/year.
Aside: Yeah, there are 52 weeks per year. Hence, 260 weekdays per year. But markets close for holidays an average of 10 of them. The long-term historical average gain from owing stocks is around 10%. In recnt years, due the Fed abetting markets with its ZIRP policy, stock gains have averaged closer to 20% per year. But we all know that party is winding down, and Buffetâs guess of 8% going forward is more likely. So letâs compromise and set our target at 15% per year. That means we would negy means the gains from coupeed to average just 6 bps/market day across our portfolio.
None but the bold (or foolish) are ever fully invested to the last penny. Backup money has to be kept aside. But if a position gains 6x that, then that money could be âfurloughedâ for a week. Hence, market exposures could be reduced. Such a strategy means the gains from compounding are lessened. But the upside is less worry.
Charlie
