The Dog Days Of August Weren’t So Much
August is an often loathed month. If not for the heat associated with it, for those of us in the northern hemisphere that is, then for the anticipated lull in trading. The summer months and in particular August are well known months of low volume, sketchy trading and false signals. On top of that the Russian Incursion into the Ukraine was reaching a head adding the geopolitics driven flight to safety into the mix. One thing that I can say about August is that the S&P 500 at least produced a textbook correction to trend with subsequent trend following bounce. The set up was perfect, Putin inspired fear gave the market excuse to correct. The correction was orderly and evenly paced, hit the long term trend line and made a near perfect bounce back up to the all time highs reached in July. Some indices, the Dow Jones for one, made a virtual straight-line recovery from the August lows. Now the indices are sitting poised to make another run higher but that is fodder for September tips and recap. Getting back to August it was a pretty decent month for me.
On a closed trades basis I was a little better than 65% correct this month. I don’t have the exact details at this time because CT 2.0 is in mid launch but I’ll get to that in the forums. As for trades initiated in August I was 75% correct, that is, I profited on ¾ of my trades, well above break even and my own lon term average of 61%. Factors that will affect these numbers on a closed-trades basis include the 5 open trades at the end of the previous month (July) and the 5 open trades at the end of last month (August). I was only 20% right in the first case compared to 80% in the second. So, tips and trades in August totaled 20, 4 Monday’s times 5 tips. At $200 per trade the total cost of trading is $4,000. I return an average of 85% per trade, and won 15 trades, for a net return of $5,550 ($370 X 15). This makes my total return on investment 38.75% or $1550, another great month if I do say so myself.
Total Cost Of Trading 20 Trades X $200 = -$4,000
Total Return $370 X 15 = +$5,550
Net Return On Investment = +$1,550 or 38.75% ROI
Recap Of August Trading – August was a tough month due to the geopolitics of Russia, Ukraine, ISIS, Israel and the West Bank. The thing is, the market was a little tired of the back and forth caused by all this turmoil and went on vacation. August vacations are not new and were not unexpected but definitely led to very low volumes. It also led to lest knee jerky reactions to market news which allowed the major indices to correct, consolidate and bounce back to new highs.
Week One August 5,2014
This week the market was still in decline following the escalation of tension between Russia and the Ukraine. This was my weakest week of trading as I entered trend following trades just a hair to early. However, I stuck to my guns and had some good weeks later on. Trades on the SPX and Apple paid off. The SPX just barely as I caught it near, but not quite at, the bottom. Apple was moving higher on post split euphoria and iPhone 6 hopes. Gold, Oil and the Yen all bucked my analysis for the week.
Week Two August 12, 2014
This is the week that the fundamentals really took over. They did not drive the market to make a significant break out but they did produce a nice bounce from the long term trends. Every single trade I made this week profited. The SPX trend following call, the drop in gold from the exit from safety trade, the drop in oil on rising supply, the yen on BOJ/FOMC expectations and Apple on the technical run up following the stock split. Some weeks are just better than others.
Week Three August 19, 2014
This week wasn’t too bad, only one trade failed to produce a win. My trade on oil, the USO, was the single loser. I played a put, oil was on support and failed to break through, until the following week when I made up for this loss at least. Other trades on the SPX, Gold, DAX and the euro were all still moving from the previous weeks signals and produced profitable trades.
Week Four August 26, 2014
This was another week of profits for the Geek Account. Four out five trades closed in the money, only the SPX failed to produce. The trend following bounce in the major indices had run its course, on a near term basis, and produced a series of spinning tops that produced two weeks of flat trading. Gold fell and fell hard, as expected based on the fundamentals. The yen and the euro both lost a lot of ground to the dollar based on moves by the ECB, and lack of moves by the BOJ. And I was able to capture a profit in oil to counter my loss last week.