The Magnificent 7 Positions In This Portfolio
Tim Knight | Oct 08, 2017 01:37AM ET
I trade a couple of different portfolios, and today I thought I’d talk about the smaller one, in which I trade principally options. To be clear, I am not at all a sophisticated options trader. I simply buy puts that tend to have three characteristics: (a) in-the-money (b) plenty of time until expiration – – three, four, or five months out (c) are against securities that look well-positioned to fall and have also illustrated their ability in the past to fall hard.
Here are the seven positions in this portfolio – – first up is SPDR S&P Oil & Gas Exploration & Production (NYSE:XOP), the S&P oil and gas producers, which as you can see from SlopeCharts has a history of forming tops and tumbling.
My favorite of all of these is the consumer staples ETF symbol Consumer Staples Select Sector SPDR (NYSE:XLP), which, if it can break that horizontal, is going to go into a free-fall.
The financials (Financial Select Sector SPDR (NYSE:XLF)) has a marvelous analog, as the red and green trendlines illustrate.
The mid-caps (SPDR S&P MidCap 400 (NYSE:MDY)) aren’t very heavily traded at all, but we’re at the extreme high of this year’s channel.
Also not heavily-traded, but apparently at the top of a fairly substantial broadening pattern, is the Dow Transports (IYT).
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The last of these options positions is the Dow Jones Industrial Average, DIA, which is the least inspired of my picks. This is just a “rent is too damn high” charts.
Of the seven positions, the above six represent put options, but I do have one long position, shown below, which is the gold miners. I’ve been impressed with their ability to hold their trendlines (VanEck Vectors Junior Gold Miners (NYSE:GDXJ), Direxion Daily Junior Gold Miners Bull 3X Shares (NYSE:JNUG), NUGT) and good old GDX (NYSE:GDX) had a bullish engulfing pattern on Friday.
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