Sunday, July 22, 2012

Mosaic (MOS)

BUY signal Friday at $57.50. My initial stop is $47.08, so my risk (R)/share is $10.42. 

History (beginning in 2004):
Winning Trades: 3 | 75.0% | +$31.75/share avg.
Losing Trades: 1 | 25.0% | -$1.63/share avg.
Average Trade: +131.1% | +$23.40/share | Reward-to-Risk (R): +7.91

Wynn Resorts (WYNN)

BUY signal the week of 4.23.12 at $135.04. My first stop was $108.18, so my risk (R)/share was $26.86. Stopped out the week of 5.14.12 at $101.94. The percentage loss on this trade was -24.5% and the reward-to-risk ratio was -$33.10/$26.86 = -1.23.

The only thing that actually bothers me about this trade is the -1.23 reward-to-risk ratio. I should never take worse than a -1.0 R loss.  

History (beginning in 2003):
Winning Trades: 3 | 75.0% | +$38.71/share avg.
Losing Trades: 1 | 25.0% | -$33.10/share avg.
Average Trade: +63.8% | +$20.76/share | Reward-to-Risk (R): +1.31

VMWare (VMW)

BUY signal the week of 2.13.12 at $99.11. My first stop was $79.48, so my risk (R)/share was $19.63. Stopped out the week of 5.29.12 at $89.46. The percentage loss on this trade was -9.7%, and the reward-to-risk ratio was -$9.65/$19.63 = -0.49.

A $4.80/share expected value and 0.89 reward-to-risk ratio means I probably won't be trading VMW again anytime soon...

History (beginning in 2007):
Winning Trades: 1 | 33.3% | +$44.11/share avg.
Losing Trades: 2 | 66.7% | -$14.85/share avg.
Average Trade: +37.7% | +$4.80/share | Reward-to-Risk (R): +0.89

Starbucks (SBUX)

BUY signal the week of 4.6.09 at $11.75. My first stop was $7.82, so my risk (R)/share was $3.93. Stopped out the week of 5.14.12 at $51.53. The percentage gain on this trade was +338.6%, and the reward-to-risk ratio is +$39.78/$3.93 = +10.12.     

It's funny, but one really good trade (+338.6%) and three mediocre/bad trades (+11.2%, -14.2%, and -12.2%) actually looks pretty good when you add it all up.

History (beginning in 2003):
Winning Trades: 2 | 50.0% | +$21.41/share avg.
Losing Trades: 2 | 50.0% | -$4.31/share avg.
Average Trade: +80.9% | +$8.55/share | Reward-to-Risk (R): +2.38

Rackspace Hosting (RAX)

BUY signal the week of 12.5.11 at $44.02. My first stop was $32.97, so my risk (R)/share was $11.05. Stopped out the week of 6.11.12 at $42.86. The percentage loss on this trade was -2.6%, and the reward-to-risk ratio is -$1.16/$11.05 = -0.11.

Once again, we go from a +34.1% gain to a -2.6% loss...

History (beginning in 2008):
Winning Trades: 2 | 66.7% | +$10.07/share avg.
Losing Trades: 1 | 33.3% | -$1.16/share avg.
Average Trade: +51.7% | +$6.32/share | Reward-to-Risk (R): +1.51

Precision Castparts (PCP)

BUY signal the week of 9.13.10 at $126.68. My first stop was $103.19, so my risk (R)/share was $23.49. Closed Friday at $165.02 with a $155.77 stop. My new stop for this week is $155.20. The percentage gain on this trade is +30.3%, and the reward-to-risk ratio is +$38.34/$23.49 = +1.63.

History (beginning in 2003):
Winning Trades: 3 | 100.0% | +$57.13/share avg.
Losing Trades: 0 | 0.0% | -$0.00/share avg.
Average Trade: +206.1% | +$57.13/share | Reward-to-Risk (R): +13.20

Priceline (PCLN)

BUY signal the week of 2.13.12 at $582.52. My first stop was $483.98, so my risk (R)/share was $98.54. Stopped out the week of 5.29.12 at $610.50. The percentage gain on this trade was +4.8%, and the reward-to-risk ratio was +$27.98/$98.54 = +0.28.

Priceline traded as high as $762.13 the week of 4.23.12, so I ended up giving back basically all of my gains by the time I finally got stopped out. Honestly, I probably shouldn't be trading this stock in the first place. Volatility causes my stops to widen further, and it would be hard to find a stock with more volatility than Priceline.

Maybe Google?

I don't trade Google anymore...

History (beginning in 2003):
Winning Trades: 5 | 71.4% | +$74.18/share avg.
Losing Trades: 2 | 28.6% | -$5.52/share avg.
Average Trade: +73.3% | +$51.41/share | Reward-to-Risk (R): +2.46

OpenTable (OPEN)

BUY signal the week of 1.30.12 at $52.00. My first stop was $35.77, so my risk (R)/share was $16.23. Stopped out the week of 4.30.12 at $36.50. The percentage loss on this trade was -29.8%, and the reward-to-risk ratio was -$15.50/$23.63 = -0.95.

So far it's one good trade (+155.3%) and one bad trade (-29.8%). I am kind of curious to see how the next trade turns out, but it looks like we'll have to wait a while. As it stands right now, with the stock trading at $37.89, my next buy signal is $48.12.

History (beginning in 2009):
Winning Trades: 1 | 50.0% | +$48.30/share avg.
Losing Trades: 1 | 50.0% | -$15.50/share avg.
Average Trade: +62.7% | +$16.40/share | Reward-to-Risk (R): +2.78

Mastercard (MA)

BUY signal the week of 10.18.10 at $242.64. My first stop was $202.75, so my risk (R)/share was $39.89. Closed Friday at $423.15 with a $387.44 stop. My new stop for this week is $386.07. The percentage gain on this trade is +74.4%, and the reward-to-risk ratio is +$180.51/$39.89 = +4.53.

History (beginning in 2006):
Winning Trades: 4 | 80.0% | +$80.57/share avg.
Losing Trades: 1 | 20.0% | -$35.79/share avg.
Average Trade: +45.7% | +$57.30/share | Reward-to-Risk (R): +2.29

Lululemon (LULU)

BUY signal the week of 3.30.09 at $5.10 (2:1 split adjusted). My first stop was $2.29, so my risk (R)/share was $2.81. Stopped out the week of 7.9.12 at $56.15. The percentage gain on this trade was +1,001.0%, and the reward-to-risk ratio was +$51.05/$2.81 = +18.14.

As always, I gave some money back at the end of the trend (LULU traded as high as $81.09 the week of 4.30.12), but still managed to keep a few dollars.

History (beginning in 2007):
Winning Trades: 1 | 100.0% | +$51.05/share avg.
Losing Trades: 0 | 0.0% | -$0.0/share avg.
Average Trade: +1,001.0% | +$51.05/share | Reward-to-Risk (R): +18.14

Intuitive Surgical (ISRG)

BUY signal the week of 1.18.11 at $326.58. My first stop was $259.28, so my risk (R)/share was $67.30. Closed Friday at $498.50 with a $498.33 stop. My new stop for the coming week is $485.02. The percentage gain on this trade is +52.6%, and the reward-to-risk ratio is +$171.92/$67.30 = +2.55.

I took a -$45.71/share haircut on ISRG Friday - it closed just $0.17 above my stop. Would it have been better to be stopped out? I guess we'll find out this week.

History (beginning in 2003):
Winning Trades: 4 | 80.0% | +$132.22/share avg.
Losing Trades: 1 | 20.0% | -$34.90/share avg.
Average Trade: +168.0% | +$98.80/share | Reward-to-Risk (R): +4.47

F5 Networks (FFIV)

BUY signal the week of 10.24.11 at $107.63. My first stop was $73.46, so my risk (R)/share was $34.17. Stopped out the week of 5.29.12 at $97.31. The percentage loss on this trade was -9.6%, and the reward-to-risk ratio was -$10.32/$34.17 = -0.30.

From +26.5% to -9.6% in just over month on this trade...   

History (beginning in 2003):
Winning Trades: 2 | 40.0% | +$45.01/share avg.
Losing Trades: 3 | 60.0% | -$5.49/share avg.
Average Trade: +60.2% | +$14.71/share | Reward-to-Risk (R): +1.98

Diamond Offshore (DO)

BUY signal the week of 2.21.12 at $67.19. My first stop was $56.84, so my risk (R)/share was $10.35. Stopped out the week of 5.14.12 at $59.15. The percentage loss on this trade was -12.0%, and the reward-to-risk ratio was -$8.04/$10.35 = -0.78.

History (beginning in 2003):
Winning Trades: 3 | 60.0% | +$23.77/share avg.
Losing Trades: 2 | 40.0% | -$8.19/share avg.
Average Trade: +50.5% | +$10.99/share | Reward-to-Risk (R): +3.04

Citrix Systems (CTXS)

BUY signal the week of 10.24.11 at $73.37. My first stop was $49.74, so my risk (R)/share was $23.63. Closed Friday at $80.75 with a $66.62 stop. My new stop for the coming week is $65.74. The percentage gain on this trade is +10.1%, and the reward-to-risk ratio is +$7.38/$23.63 = +0.31.

History (beginning in 2003):
Winning Trades: 5 | 100.0% | +$12.29/share avg.
Losing Trades: 0 | 0.0% | -$0.00/share avg.
Average Trade: +45.6% | +$12.29/share | Reward-to-Risk (R): +1.73

Cognizant Technology Solutions (CTSH)

BUY signal the week of 10.24.11 at $75.67. My first stop was $55.98, so my risk (R)/share was $19.69. Stopped out the week of 5.7.12 at $61.29. The percentage loss on this trade was -19.0%, and the reward-to-risk ratio was -$14.38/$19.69 = -0.73.

Something I had not noticed until recently, although in retrospect it should be obvious, is that the reward-to-risk ratio on a single trade matches the impact of that trade on the overall portfolio. In this case, a trade with -19.0% loss and a -0.73 reward-to-risk ratio results in a -0.73% loss to the overall portfolio. Pretty simple.

History (beginning in 2003):
Winning Trades: 3 | 75.0% | +$22.69/share avg.
Losing Trades: 1 | 25.0% | -$14.38/share avg.
Average Trade: +82.9% | +$13.42/share | Reward-to-Risk (R): +3.03

Crocs (CROX)

BUY signal the week of 3.26.12 at $20.92. My first stop was $15.04, so my risk (R)/share was $5.88. Stopped out the week of 5.14.12 at $15.49. The percentage loss on this trade was -26.0%, and the reward-to-risk ratio was -$5.43/$5.88 = -0.92. 

I still think CROX trades pretty well in this system.

History (beginning in 2006): 
Winning Trades: 2 | 66.7% | +$20.41/share avg. 
Losing Trades: 1 | 33.3% | -$5.43/share avg. 
Average Trade: +207.9% | +$11.79/share | Reward-to-Risk (R): +3.59

Salesforce.com (CRM)

BUY signal the week of 2.21.12 at $143.64. My first stop was $108.52, so my risk (R)/share was $35.12. Closed Friday at $135.16 with a $123.83 stop. My new stop for the coming week is $122.16. The percentage loss on this trade is -5.9%, and the reward-to-risk ratio is -$8.48/$35.12 = -0.24.

History (beginning in 2004):
Winning Trades: 3 | 60.0% | +$34.75/share avg.
Losing Trades: 2 | 40.0% | -$4.57/share avg.
Average Trade: +62.1% | +$19.02/share | Reward-to-Risk (R): +1.77

Cummins (CMI)

BUY signal the week of 1.17.12 at $104.78. My first stop was $82.00, so my risk (R)/share was $22.78. Stopped out the week of 5.14.12 at $97.20. The percentage loss on this trade was -7.2%, and the reward-to-risk ratio was -$7.58/$22.78 = -0.33.

By now you've already heard this story a couple of times: +21.7% at one point only to give it all back when the market moved down (faster than my stops could move up) in May.

History (beginning in 2003):
Winning Trades: 5 | 83.3% | +$17.46/share avg.
Losing Trades: 1 | 16.7% | -$7.58/share avg.
Average Trade: +62.4% | +$13.29/share | Reward-to-Risk (R): +2.53

CME Group (CME)

BUY signal the week of 2.6.12 at $291.59. My first stop was $234.34, so my risk (R)/share was $57.25. Stopped out Friday at $257.00, just $0.71 below my with a $257.71 stop. The percentage loss on this trade was -11.9%, and the reward-to-risk ratio was -$34.59/$57.25 = -0.60.

Once again I'm reminded of how important it is to use good risk management (I've actually been reminded of that more than a few times recently). In this case, using a 1% risk model limits the position/trading loss to just a -0.6% overall portfolio loss. 

History (beginning in 2003):
Winning Trades: 5 | 71.4% | +$82.42/share avg.
Losing Trades: 2 | 28.6% | -$50.54/share avg.
Average Trade: +36.8% | +$44.43/share | Reward-to-Risk (R): +1.92

CF Industries (CF)

BUY signal the week of 1.9.12 at $172.55. My first stop was $125.48, so my risk (R)/share was $47.07. Closed Friday at $202.77 with a $155.66 stop. My new stop for the coming week is $159.89. The percentage gain on this trade is +17.5%, and the reward-to-risk ratio is +$30.22/$47.07 = +0.64.

Just like the broader market, this trade has been a real rollercoaster ride. It traded up to $197.97 the week of 4.23.12, then all the way down to $157.01 less than a month later (close to my $152.66 stop at the time), and now it's back up and over $200.

History (beginning in 2005):
Winning Trades: 4 | 100.0% | +$38.60/share avg.
Losing Trades: 0 | 0.0% | -$0.00/share avg.
Average Trade: +121.9% | +$38.60/share | Reward-to-Risk (R): +6.96

Caterpillar (CAT)

BUY signal the week of 1.3.12 at $95.76. My first stop was $75.13, so my risk (R)/share was $20.63. Stopped out the week of 4.30.12 at $98.44. The percentage gain on this trade was +2.8%, and the reward-to-risk ratio was +$2.68/$20.63 = +0.13.

Similar to Akamai Technologies earlier, at one point this was a +21.1% gain before I gave most of it back. At least I managed to keep a few dollars this time.

History (beginning in 2003):
Winning Trades: 6 | 85.7% | +$15.56/share avg.
Losing Trades: 1 | 14.3% | -$6.62/share avg.
Average Trade: +36.1% | +$12.39/share | Reward-to-Risk (R): +1.41

Boeing (BA)

BUY signal the week of 12.19.11 at $73.97. My first stop was $59.80, so my risk (R)/share was $14.17. Stopped out the week of 5.29.12 at $67.24. The percentage loss on this trade was -9.1%, and the reward-to-risk ratio was -$6.73/$14.17 = -0.47.

History (beginning in 2003):
Winning Trades: 3 | 75.0% | +$19.47/share avg.
Losing Trades: 1 | 25.0% | -$6.73/share avg.
Average Trade: +40.0% | +$12.92/share | Reward-to-Risk (R): +1.89

Aruba Networks (ARUN)

BUY signal the week of 1.30.12 at $23.86. My first stop was $16.44, so my risk (R)/share was $7.42. Stopped out at $16.55 the week of 5.7.12. The percentage loss on this trade was -30.6%, and the reward-to-risk ratio was -$7.31/$7.42 = -0.99.

The good news here (and it's a real stretch to say there is any good news here), is that my 1% risk model restricts a terrible trade like this one to just a 1% overall portfolio loss.

History (beginning in 2007):
Winning Trades: 1 | 33.3% | +$19.68/share avg.
Losing Trades: 2 | 66.7% | -$4.77/share avg.
Average Trade: +137.1% | +$3.38/share | Reward-to-Risk (R): +3.02

Akamai Technologies (AKAM)

BUY signal the week of 10.31.11 at $29.82. My first stop was $19.72, so my risk (R)/share was $10.10. Stopped out the week of 5.14.12 at $28.45. The percentage loss on this trade was -4.6%, and the reward-to-risk ratio was -$1.37/$10.10 = -0.14. 

When Akamai closed the week of 2.6.12 at $38.43 I was looking at a +28.9% gain on this trade... obviously I should have taken some profits at that point. Too bad it wasn't so obvious back then.

History (beginning in 2003):
Winning Trades: 3 | 50.0% | +$19.62/share avg.
Losing Trades: 3 | 50.0% | -$6.39/share avg.
Average Trade: +115.1% | +$6.62/share | Reward-to-Risk (R): +3.46

Apple (AAPL)

Once again, I'm going to try and get this blog caught up on all of the trades that I was talking about back at the beginning of May. 

It's not that I want to talk about these trades. In fact, I'd much rather forget most of them. On top of that, a lot of the information is so far out of date it's just ridiculous. 

Still, I think it's important to recap the results and close things out before moving forward with any new posts.

As usual, we'll kick things off with Apple:
 
BUY signal the week of 3.30.09 at $115.99. My first stop was $84.39, so my risk (R)/share was $31.60. Closed Friday at $604.30 with a $546.03 stop. My new stop for the coming week is $553.33. The percentage gain on this trade is +421.0%, and the reward-to-risk ratio is +$488.31/$31.60 = +15.45.

History (beginning in 2003):
Winning Trades: 3 | 75.0% | +$201.35/share avg.
Losing Trades: 1 | 25.0% | -$12.10/share avg.
Average Trade: +273.6% | +$147.99/share | Reward-to-Risk (R): +11.09