Wild start to the New Year

It's an hour before market close, and it's been a wild Wednesday. The market peaked nearly 1.5-2% (depending on the index) half way through the day, and has plummeted down .5-1% (again, depending on the index). I've seen huge changes in my portfolio personally. The volatility can be nice, in that if you're active you can trade around it and turn a profit even if the market doesn't go much of anywhere. I've been caught more on the downside today, but I did do the prudent thing and trimmed 4-5 positions into this morning's strength and have added to 3-4 in the late afternoon weakness.

Let's see, I trimmed positions in ARG, DEO, JNJ, LOW, MA, and MRVL into the strength. I didn't close out any of the positions, but I had profits to protect and all of those were either getting somewhat close to my price targets or I felt the positions were too large now based on risk/reward. If they dip down lower I may look to add them back. As one user asked, this is the sort of action I consider 'trimming into strength'. When the market and/or individual stocks surge on no news or catalysts whatsoever, it's often prudent to trim and take some profits. Then, when the stocks pull back, you re-add your position if you care to and keep the profit. Worst case scenario the stock runs, you still have a position, but less of one. Best case scenario it pulls back, you get some profits from market overreaction, and you can buy it back if you choose.

Cramer says this a lot, and I really agree with it. It's arrogant to buy or sell all at once. No one can call exact tops or bottoms. If you think you're good enough to know the exact moment to buy or sell, more power to you. I don't. There are times opportunities present themselves where you must act quickly and decisively, but a vast majority of the time I choose to initiate a position, build it slowly over time with 3 or 4 separate buys, trade around it as it goes up and down adding and trimming to take advantage of volatility, then slowly selling off the position as it approaches my price target unless the thesis changes. I sell in the same 3-4 sells that I did buys, over time.

I also closed out some short term trades. I had a trade in WMT that spiked this morning so I closed it out for a nice quick 3.5% gain. I was also stopped out of 3 other trades, EGN where I protected a 2% gain, SNDK for roughly a 4% loss, and GG for break even.

I also put some money to work today adding to positions in both HAL and GW on this morning's energy downgrades. Energy has been hit really hard with the mild winter in the northeast. Both of these stocks I feel are severely undervalued and will gain long term, so I felt the weakness was a good spot to build my position a little more. First big snow storm in the NE will probably make these pop as well, at which point I might trim some into the strength. Later in the day on the massive decline I added to positions in HLF, PSPT, LWSN, NYX, and SHLD. In some of these cases, I was averaging down my cost basis (the stocks were cheaper than my average purchase price, so buying more brings my average cost down, which as long as I still believe in the stocks is a positive thing). In some of the others I felt they simply fell too much and will look to 'flip' them as they (hopefully) bounce. These are all investment positions, so flipping won't be selling off entirely, but simply trading around (unless I change my thesis on the stocks).

I also initiated trades in SNDK (which I later was stopped out of today for a loss) and PTIE. That's pretty much it. I may do some more today if I see opportunities. Overall it's looking like I'll post a loss today, but unless the indexes do something drastic in the last 40 minutes or so I will have lost significantly less than the indexes. I fell pretty good about my positions. I feel the spike today was out of line, but I feel the later selloff was a bit drastic and panicked. I'm still keeping a close eye on the action to start out the year.

-Rizen