If you call this day disappointing, I agree with you. S&P is up 1.7% and PennyStocks portfolio is up just 0.12%. In fact, its surprising we are up. SDS was hammered. In addition to that, one of our main holdings, FRP, was down 30%. We managed to stay green due to healthy diversification and our profit taking throughout the day. We liquidated several high risk "leftovers", with a good profit though. The smallest profit was taken is 8% from EMKR. We were slightly overweight by EMKR, so I sold 1/3 of it. Only one new position initiated - ICOG - and I have a dedicated post that explains rationale behind entering this trade.
Well, if this market continues its unstoppable march to new high, I think it would be a perfect situation for us to clean up the portfolio and get rid of most unnecessary stuff: 1)low trading volume, 2)reverse splited stock 3)high gains already and extremely overbought near term 4)too much weight in our portfolio.
But if I were a permabull I would be very concerned about today's anaemic volume action. SPY chart looks kind of weird and needs confirmation. Bulls are running out of energy to continue this move up. I don't want to predict here. Forecasting market is a silly and ungrateful job. But it looks more like end of the month/end of the quarter window dressing when big funds and managers want to show some nice looking pictures to their customers. Usually in days like today when S&P moves 1.7%, even with a big loser, we are at least on the same level as S&P. Today it didn't happen. Pennies were slow and quiet whole day, with few exceptions in my portfolio. It's one more proof of window dressing from big funds. Nobody adds penny stocks to show how great and reliable is a portfolio. Everybody wants things like AAPL, GE and CSCO.
During the next potential (but not very likely) continuation I would rebalance our own portfolio by selling whatever should be sold AND at the same time, would get some classical protection in addition to SDS we have. Out of money Put options for November is not a bad idea at this point. Our strategy does not cover option trading, but if you are interested, I can admit that for my broader portfolio I am going to get small SPY puts for November, (assuming continuation)
The second "option" we have is hard and painful reality check. In this case, SDS will be our big friend. Selective entries and exits will continue. We resume our business as usual :) and outperform S&P.
So, our tactics for this week is cautious portfolio rebalancing. Very selective entries and more active exits when possible, without damage to profitability.
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