Brook Reef

Covering XLF short via $38, 2/11 puts for $0.84 Realized gain of $0.22 (35.48%) I threw on a stop loss order this mornings for the position and it got hit on this mid-day rally. I planned to close the position ahead of the weekend anyhow given the time premium that burns off over 2 non-trading days. This was a fairly small position (0.31% of capital) though had huge leverage given the strike price. 35.48% x 0.31% = 11bps of gain for the portfolio. Not bad!

Selling NFLX @ $385.33 Realized gain of $14.12 (3.80%) Remember that discussion about catching a falling knife and trying not to get hurt? I'll jump out of this falling knife catch unscathed. Carl Icahn has rented an auditorium to present his short case against Netflix tomorrow (1/28/22). If his presentation is compelling, the stock could be weak. If he's not, it could go up. I don't need to be involved with an icon like Icahn throwing rocks. Plus, the broad market keeps showing weakness and Netflix isn't a high conviction idea. I'm trying to position myself to have (mostly) holdings that I believe in and am excited to own, not trade. But sometimes, trading is fun! I'm hunting for more ideas like T, GTY, EIX, NNN, etc...

Buying T @ $23.72 2% position AT&T has long been a high yielding dog of a stock. On one hand, it's a dividend aristocrat - growing the dividend for 50+ consecutive years. On the other hand, they've loaded up on debt and disappointed shareholders for a long time. They've probably destroyed a lot of value with the various transactions. But that's yesterday's news. AT&T is spinning their TimeWarner business with Discovery. T shareholders will receive shares of the new company and own 71% of it. T will also receive some $45 billion of cash. Post-spin, T will reduce the dividend from current levels. They're using the spin as justification - less cash flow means less dividends. But we can see past that - it's a true cut. But that's not a bad thing, per se. The dividend is expected to be somewhere in the $1.10-1.15 range. At this purchase price, that means a yield of 4.6-4.8%. While that's a pretty attractive yield, it ignores the value of the SpinC

Shorting XLF via buying puts  $0.62 with a $38 strike expiring on 2/11 20% position, if exercised - 0.31% position @ purchase price There isn't a perfect short out there - I should have stayed short TSLA - but this one will have to do. Financials get hurt if/as interest rates decline.  Not sure how long I'll hold these puts - this is another of those "dirty day trade" ideas. Sorry, but I can't resist.  If you're not a frequent trader, stick with the long-term ideas I have like T, NWE, NNN, CAG, etc.

Selling 15% of 25% SPY @ $442.59 Realized gain of $13.83 (3.23%) Taking the Powell rally as a chance to lock in some gains on this risky trade. I went pretty big and will right-size the trade now. Stop on remaining 10% remains @ $420.67, though we'll see how sloppy today gets and adjust accordingly. Selling the Powell rally in stocks and buying the crash in rates is what I'm doing.

Buying NFLX @ $371.21 2% position They say not to catch a falling knife, but gosh is it tempting. I'll let myself buy a small slice of the cratering Netflix stock - down from somewhere near $525 before earnings to today's level - just about 30% down. Is Netflix a screaming buy? No! It made about $11/share of earnings - which means it trades well north of 30x P/E. Not cheap. Growth is slowing and perhaps over. But this isn't Uber or some other wild, unprofitable company. Netflix could stop spending so much on content and forget growth to just milk those of us who watch it every day. Sure, raising prices could lose users. But to what extent? If Netflix gets down to a market multiple, I'll buy aggressively. For now, this is a falling knife that I hope doesn't cut me.

Buying SPY @ $428.76 25% position I'm not trying to make this a day-trading guide by any means. But the signals are noisy and confusing - and volatility reigns supreme right now. The intra-day reversal off of the lows and subsequent move to highs of the day is a decent buy signal, for a trade. Plus, the markets have been down for 7 consecutive days and could have an up day. The trading service I subscribe to said to buy again (for the 3rd time) after getting stopped out on the first 2 signals. Buy SPY @ $428.76 STOP @ $420.67 (-1.89%) Target: $464.00 (+8.22%) While you might scoff at the buy signals getting stopped out, the total loss on the 3 trades (if this gets stopped too) is 2.56%, 1.18%, and 1.89% = 5.62%. On just 25% of my capital. So really a loss of 1.4%. How much are you down in this selloff?

Selling SHY @ $85.17 Realized gain of $0.10 (0.12%) The reason you go big in short-term treasuries is because they don't move much. Taking the W here ahead of any Fed wonkiness. 

Selling SPY @ $439.99 Realized loss of $5.24 (1.18%) Stop loss got hit. Market is showing extreme weakness. I'm just glad, like the QQQ trade, that I used a stop loss and am mostly in cash. Losing 1% in a day hurts - but 1.18% of 25% is only 30bps of my capital. With the broad indices down nearly 2% today, that's some pretty epic outperformance! The good news is that some of the companies I follow are looking pretty attractive! Could be time to start bargain hunting! Buckle up.

Buying SPY @ $445.23 25% position Just like that QQQ trade I made earlier this week, the same trading newsletter says to buy SPY here with a tight stop just below today's low.  My stop is: $439.99 Target is: $480.00 This is a low-ish risk and high reward trade.  I'm jumping on board because another investing service pointed to the fact that SPY's volatility curves are in backwardation - meaning that near-term volatility is higher than expected volatility in the coming weeks/months. So this volatility spike is non-trending (so far).  When 2 investor guides/services agree coming at it from very different angles, it's hard to argue.  Let's see if this one wins back that QQQ loss!

Selling QQQ @ $361.91 Realized loss of $9.50 (-2.56%) Per my purchase note - I had a stop loss set here just below $362 on QQQ. This was a big trade where I took the advice of a newsletter. They're usually pretty good, but don't get every trade correct. Luckily, the loss is limited. Losing 2.56% on 25% of capital isn't nothing - it's 64bps - but how much is the average investor down owning tech stocks at 100%? We'll see where this dust settles. The bond market isn't showing major signs of stress with spread blowing out. There are definitely signs of "bad" - fundamentals aside - but the panic crash might not be here yet.  In any event, I'll keep plugging away at buying staples, utilities, & REITs and stay on the lookout for great short ideas to balance the opportunities that are arising in my core universe.

Buying GTY @ $29.86     2% position Getty Realty owns real estate related to cars - quick-service oil change properties, convenience stores, car washes, and auto parts stores. Like NNN, they operate as a "triple net lease" owner - wherein the tenant pay all expenses.  They own over 1,000 properties in 36 states. 99.5% occupancy - 72% on corner locations - 9.0 years average lease. GTY yields over 5.5% today. Buy the dip in GTY.

Buying QQQ @  $371.41 25% position I subscribe to 2 trading newsletters/research services. They are in disagreement about which way the stock market goes from here. The last time they disagreed, I followed the advice of the wrong one.  So I'll join the previous winner's side and buy QQQ for a TRADE here. Stop is at $361.00 - so risking 30bps of total capital with a target of $419 - or a 12% gain.  *The trading service said to go huge on this trade - they're doing a 40% position!

Covering TSLA @ $1,029.22 Realized gain of $6.29 (0.61%) Tesla hasn't fallen with the broader QQQ and is down today while QQQ is up. Something doesn't "feel" right with this trade, so I'll get out with a small profit and see if there's a better short idea on my screen.

Buying SHY @ $85.07 10% position SHY is a perfect ticker - it's a short-term Treasuries ETF. An investment for "shy" people. The short-term Treasuries seem to be pricing in 4+ rate hikes this year (2-year yield is over 1.0%). I don't see that happening...and if it does, the stock market and economy will get crushed.  So I'll take the under on rate hikes in a low-risk way. Equity markets are down because investors know that rate hikes will slow the economy. Does PE Powell have the clout to take that pain? I don't think so. He's a dove and a pumper. Rates are going down from here.

Shorting TSLA @ $1,035.51 5% position I thought today would be a good one to wind down gross exposure, but you play the hand you've been dealt and this is where we find ourselves today. By the way, I did predict a green close in an earlier trade - and the QQQ is in the green at this moment. I'll short TSLA again here a bit lower than last time around - but still obscenely over-valued. If you have a better short idea, I'm all ears - but I need something to offset the EIX and NNN buys in the "story stock" space. TSLA fits the bill for now.

Buying EIX @ $63.58 2% position I sold my EIX at $67+ last time around. Today, I'm buying it back 6% lower! Not bad.  EIX trades at a steep discount to the under-valued utilities group. It pays a big dividend. Is a major beneficiary of electrification. And has a top-notch management team helping them navigate all of it. California regulation is a bit tougher than it was as recently as a few years ago, but still reasonable.  So I'll add back one of the cheapest utility names out there.

Buying NNN @ $46.83 2% position NNN is a "triple net" lease REIT. Hence the "NNN" ticker - net, net, net. Their leases are: net of taxes, net of maintenance, and net of expenses. Basically, they get paid a set rent/lease with certain escalators - and the tenant is responsible for all costs. At the end of the lease, the tenant is supposed to turn the property over to NNN in the same condition it was leased. NNN has a 40+ year history of dividend growth. The current yield is ~4.5%.  This is a way to play lower rates and/or benefit from the return of retail. But without the risk of consumer spending - that's on the tenant!

Selling GLD @ $170.33 Realized gain of $3.24 (1.94%) Gold has done pretty well (for a currency) since I bought it. It looks like it's either going to pop higher from here or pull back. With the market rallying a bit intra-day, that means gold could/should turn lower.  I will buy it again lower, or when the set-up is more skewed in my favor. Taking gains isn't a bad thing! Feeling good about reducing my gross exposure today.

Selling EDV @ $135.49 Realized gain of $1.95 (1.46%) In the hoopla and business yesterday, forgot to send this trade. Deciding to reduce my gross exposure a bit. I'm debating selling GLD too - but didn't/haven't hit the button yet.

Closing XLU vs. XLF pair trade pre-market  Sell XLU @ $69.72 - Realized gain of $0.54 (0.78%) Cover XLF @ $40.66 - Realized gain of $0.44 (1.07%) Total Realized Gain of 1.86% JPMorgan reported pretty good results today and shares are down pre-market. That's obviously pushing down XLF, the financials sector ETF. XLU has held up remarkably in this sell-off.  As much as I've been pushing the idea of a major sell-off coming, I don't think this is THE BIG ONE. It very well could be...but my signals aren't showing it just yet. We'll get a relief rally soon - perhaps even today at the open - and then see where the dust settles. I might YOLO some calls at the open outside of  this blog's reach. To each their own. Tread lightly, but I'm not ready to short in big size yet.

Buying BGS @ $33.26 2% position Like ConAgra, B&G Foods makes packaged foods. Frozen foods. Brands you know and love - Green Giant, Tone's, Snackwell, SkinnyGirl, Ortega, and many more. Packaged foods is a tough business, but B&G has managed to pay a dividend since 2004 and grow it pretty dramatically. It's been flat in recent years. Stock yields over 5% today! The stock looks primes for a breakout after a year hanging out at this level - breakout could happen and push the stock to yield closer to 3% - that would be a 40% gain!

Pair Trade: Long XLU @ $69.18 Short XLF @ $41.10 5% each side This is a continuation of my thesis that rates are heading LOWER. Banks benefit from higher rates - which usually means bigger interest rate spreads and earnings. Utilities act much like fixed income, perhaps TIPS, and are worth more as rates decline. Thus, this pair trade is an interest rates call - in addition to an equity markets might move lower from here call.

Selling 1/2 of DOCU @ $141.96 Realized gain of $11.89 (9.14%) Selling the 1% adder I threw onto my DOCU position yesterday. Making 9% in a day is pretty darn good - and PE Powell is having to spook the market just a bit today in his confirmation hearing - a decent place to remove some winners and get ready to buy the next dip.

Selling GDX @ $30.60 Realized gain of $0.73 (2.44%) If PE Powell makes a "mistake", equity markets will falter - even if gold might do well. But because gold miners is an equity exposure, it will move down with other equities in that scenario. If Powell doesn't make a "mistake" and equities rally, GDX will do well - along with other equities. I've got enough other equity exposure that I don't need this one right now . Taking a decent 4-day gain - in the face of a broad market sell-off, mind you! - and moving on with my life.

Buying DOCU @ $130.07 Adding 1% 2% position DocuSign is down with the market today on interest rate fears. But if you think that's going to slow down digital signing of documents, you're mistaken. Since reporting earnings, DOCU is down and hasn't recovered much. I'll use today's weakness to add back the 2nd half of this position that I sold about 20% higher.

Buying NWE @ $57.32 2% position Last time I traded NorthWestern Energy, I bought just below $59 and sold at $70 - for a nice 19% gain. With the stock below where I purchased last time, I figure I'll give it another shot to pay me. NorthWestern has more risk than it did then - but time has also passed. They're having a CEO transition this spring and that's a time when the company could get bought and/or refresh their business plans. I thought the outgoing CEO was great, but the new guy is excellent. He'll have some tough regulatory issues to navigate, but he's ready to bring his company into the energy transition. More to come on this one. Lots of moving parts, risks, and opportunities.

Covering DUK @ $102.67 Realized gain of $0.49 (0.47%) Going to take this morning selloff as a chance to cover this big short position. I'm bulled up on utilities in 2022, especially against the broad market - so will hunt for a non-utilities short position to reduce my equity exposure. Probably after the next rally.

Buying GDX @ $29.87 5% position After buying gold yesterday and the broad market selling off - I'll push my luck and buy the equities exposure of gold miners via GDX. For GDX to work, gold has to rise AND markets have to not sell off. I'm not convinced of the 2nd part of that equation, but will see if I can't make some quick money anyhow.

Buying EDV @ $133.54 5% position I was early on the long Treasuries idea when I bought a 10% position in TLT - but I think I've got the call right. So I'll push my luck and buy some long duration Treasuries via EDV.  Rates are going lower, not higher.

Buying GLD @ $167.09 5% position Gold hasn't performed very well despite the "inflationary" backdrop. Maybe inflation is transitory? Or maybe gold isn't a good inflation hedge? With risks seemingly heightened, perhaps gold is a flight to safety trade? In any event, I'm starting my gold position with a pre-market purchase. Going to trade this one by my set of rules - 5% trade sizes with a 15% max position size for ETFs.

Closing out IYT vs. QQQ pair trade Sell IYT @ $279.94 - Realized gain of $0.01 (0.00%) Cover QQQ @ $391.08 - Realized gain of $4.63 (1.17%) Total trade gain of 1.17% The bigger the trade, the quicker the hook. And making 1%+ in a day is good enough for me - especially when it was 20% of my gross capital. I'm trying not to get sucked into day-trading, but volatile markets with unbalanced downside vs. upside risk need to be treated with caution. 

Buying CCI @ $190.92 2% position Crown Castle is a cell tower owner. With the news that AT&T and Verizon will delay their 5G rollout due to concerns about radiation or whatever the anti-vax conspiracy theorists are peddling, the stock is down. CCI makes the bulk of their earnings from these access fees and adding more equipment to their towers. With the share price down over 5% today and a full 10% from the peak, I'll start a position here and be ready for more.

PAIR TRADE: Long IYT @ $279.93 Short QQQ @ $395.71 10% positions each  The QQQ - tech-heavy NASDAQ - has performed extremely well in the last year or so. The Dow Transports haven't done nearly as well. I think it's time for that to reverse - so will put on a pair trade to see if I'm correct. Keeping my market exposure down - and/or getting short is my plan during this 2022 start of year rally.

Selling KRBN @ $53.10 Realized gain of $6.06 (12.88%) Taking off the last 1% of this position. Making 12+% in a few weeks is good enough for me. I don't need to hold when things go vertical. I'll be back again (in size) below $50.

Selling EIX @ $67.78 Realized gain of $9.70 (16.70%) EIX has performed quite well since I bought it. But the risks are now balanced against the reward - so I'll take my money off the table and hunt for the next great idea. EIX is still cheaper than the utility group and has a great future, but isn't a top idea. If I were running a fund, I'd reduce the position to a modest overweight from a huge overweight - but this strategy here is a Top Ideas portfolio.