May Tips Recap: Volatility – Profits Back In The House
Man o Man. It has been a rough couple of months for trading the longer term positions. Between weak earnings, tepid data, volatile oil and central bank activity volatility has been high and market movement erratic. Just when I think the trends are reestablishing another twist in the market or bit of unexpected news jumps up and my analysis falls apart again. The good news is that May trading was a little better than the previous two, I managed to return to profits, if barely, and I think we’re about to enter a period of stronger and more certain economic direction. That being said I still expect to see some volatility over the next month or two but the long term outlook is shaping up nicely.
Total Cost Of Trading = $15,500
Total Return = 17,575
Net Return On Investment = $2,075 or 13.3%
May had 5 Mondays which means I made 25 official weekly tips. I also made 6 bonus trades during the month,with 3 day expiry, as volatility and signals dictated for a total of 31 trades. Of those trades I won 19 giving me a win/loss ratio of 61%, more than enough for profits. Of the 25 weekly tips I won 14 for win/loss ratio of 56%, still enough to show profits. So, based on the total number of trades, 31, my total cost of trading was $15,500 and I returned $17,575 for a net gain of $2,075 of 13.3%. This may not sound like a lot but when you consider that the S&P 500 has returned less than 5% in 2015, and much less than that on a month to month basis, 13.3% is pretty dam good. Not to mention the fact that $2000 is enough to cover my monthly bills.
What Happened In May?
May, what happened in May you may ask? Quite a lot in fact starting with a raft of macro-economic data, earnings season, warnings from Japan and the BOJ, the Saudi’s replaced their oil minister Al-Naimi, too much Fed-Speak and another month of tepid data. All together making a very volatile month. The broad market made a mild correction and bounced, the dollar bounced from a long term low, oil prices drifted up to 8 month highs on shifting supply/demand outlook, gold hit a mult-year high and then corrected. Needless to say it took quick thinking and the ability to be flexibly and react quickly to changing conditions.
Week One May, 2nd 2016
This was the first week of the month. Macro data and earnings were the top priority for traders. The data was OK, not great and not bad, but nothing to get real exited about. The same was true for earnings. The season came and went, better than expected, but only better than the horrible -8% growth originally predicted. This week was one of my two worst weeks for the month, only 2 trades closed in the money, but I was able to make progress from here.
Week Two May, 9th 2016
This week was a little light on data, the second week of the month always is. There was a little bit of important earnings but not enough to sway the market one way or the other. The two major events this week, and events that affected my trading, were the removal of Al-Naimi from the Saudi Oil Minister position and a warning from the Japanese government that action to weaken the yen may be on tap. Regardless, I was able to win 3 of 5 trades, including the yen but not oil, bringing the month to date win rate up to 50%.
Week Three May 16th, 2016
This week was when I began to anticipate a broad market correction, one that was to come but not strongly. The near term technicals were weak, along with a weak outlook for future earnings, which was in large part why I chose to start trading bearish on the S&P 500. In the end, this was my best week of trading for the month. Not counting the previous week when I made many of my extra trades. I was able to profit on 4 of my 5 trades, only losing out on the EUR/USD, bringing the month to data win rate up to 67%.
Week Four May 23rd, 2016
This was another light week in terms of data and earnings but nonetheless important in that there was quite a bit of Fed-Speak. Fed-Speak is the random, often contradictory, comments and statements from FOMC and Federal Reserve officials that tend to make the market crazy and cause a lot of unnecessary volatility. What I call BS. I was able to stay largely ahead of it, I won my three trades on gold, the Euro and the Yen, but lost out on oil and the S&P 500.
Week Five May 30th, 2016
This was the final week of the month, the final day in fact, with all trades closing in June. This week was filled with another round of data, a very week and surprising NFP number, lots of FOMC speculation, the ECB meeting and short and sharp correction in the S&P 500. Sad to say I only won 2 trades, the S&P 500 and the EUR/USD, making it the second of two worst weeks this months, but not so bad I fouled up the whole month.
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