Sold 250 HOD.TO @ $10.04, Loss -0.88%

I just got psyched out by the Euro rise and oil strength. So I closed my oil short. My purchase price was $10.34 two days ago on Tuesday. Final result in this trade is ($10.04 – $10.34) – $4.95 x 2 commission = -$75 – $9.90 = $84.90 = 0.88% of RRSP trading account.

Normally I would wait for a retracement to exit, but the high volume of U.S. DB Oil Fund (DBO) at the close yesterday plus the lack of weakness at the open today (Figure 1) makes me uneasy.

Note that even though EUR/USD is making new highs today, the U.S. equity market isn’t following suit. In particular, S&P500 is still below previous resistance level around 1115. This may be a bear trap. Or, it could be a short term term. I couldn’t tell.

So I’m staying on the sideline for now and will just be watching the market play itself out.

As you can see from my trading log, my last three trades were not profitable (2 losses and 1 breakeven). As such, I am putting myself on a cautionary mode until I can grow my account back to my previous high point.

U.S. DB Oil Fund (DBO) intraday

Sold 3 ABX 10OCT Puts 46.00 @ $4.15, Mark $43.97, Breakeven exit

My Barrick Gold short isn’t working as I hoped. My puts premium is moving closer to breakeven to my purchase price of $4.00. Furthermore, the market is cracking above resistance levels today. In particular, ABX.TO is marking a bullish engulfing candlestick pattern after a test of its 50-day moving average support (Figure 1).

Yes I know, there’s a massive resistance at $44.00 for ABX.TO. But…

As much as I’d like to believe in the bears, this short position is not safe anymore. I can’t let a positive trade turn negative. It’s better to miss an opportunity than lose money. So I’m ditching this now to reduce my risks at above breakeven seeing that I have another smaller short position in play. Which is underwater at the close, by the way.

My return on this trade is ($4.15 – $4.00) * 100 * 3 contracts = $45 – $12.95 x 2 commissions = $19.10

I’m just lightly short now and mostly in cash.

Barrick Gold (ABX.TO)

ABX.TO intraday

Sold 250 HOD.TO @ $10.59, -0.95% Loss

Oil broke above $75 resistance overnight. So my Horizons BetaPro Crude Oil Bear Plus ETF (HOD.TO) gapped down below my 10.60 mental stop at the open. I watched the U.S. DB Oil Fund (DBO) price actions this morning to time my exit as shown on Figure 1.

While the price gapped beyond my stop, the volume was weak this morning (Figure 1). HOD.TO traded below $10.40 on the gap momentum but I held on because of the low volume.

U.S. DB Oil Fund (DBO)

I waited and waited until DBO traded near 24.50. This is a short term support level as shown in Figure 1. This was also the equivalent of my previous stop loss for HOD.TO at $10.60. Even though I believe this is a stop hunt for the oil shorts because of the lackluster volume, I am not one to argue with my plan.

I pegged my mental stop at 10.60 at the time of entry. HOD.TO broke below my stop price. I had three options:

1. Ditch it at whatever price I can get.
2. Exit on retracement to my original stop price.
3. Exit on break-even.

For the reasons as discussed above, I picked option #2.

Here’s a calculation of my loss for this trade. ($10.59 – $10.92) * 250 shares = -$82.5 – $9.90 commission = -$92.40 = -0.95% loss of account total.

In any case, it looks as though my initial low-ball bid at 10.50 was a good entry point. I shouldn’t have gotten impatient and entered at a short-term resistance price level.

Sold 6 CM 10OCT Put 74.00 @ 6.60 Mark $70.70, +8.0%

The market seem ready to crack but it is not. So I am taking profit on my CIBC short here on a weaker volumn retest of the $70.50 support (Figure 1). I bought 3 puts contracts four weeks ago at $5.00 when CM was trading at $74.02. Then I added 3 more contracts with the same strike price and expiry for $5.65 when CM was trading at $72.30. The average cost was $5.35. Thus, profit is $750 – ($12.95 + $3.00) x 2 = $718.10 = 8.0% of total account.

CIBC (CM.TO) intraday

This is the last of my positions. I have no more outstanding position in any market.

CM.TO looks to be on the brink of a collapse. I may be making a mistake here by offloading my shorts before the fireworks. However, as I was saying, the market is still hanging on. Furthermore, there’s a positive divergence for CM.TO as shown on Figure 2 according to the oscillator at the top of the chart.

So I am taking profit now to reduce my risk as this position is relatively big for my small RRSP trading account.

CIBC (CM.TO) daily chart

Sold 250 HOD.TO @ $11.94, +2.2%

I closed my crude oil short with Horizons BetaPro Bear Plus (HOD.TO) at $11.94. Purchase price was $11.11 from yesterday. I don’t think this is the end of the oil bear run yet. However, I couldn’t give up a 10% gain (totalling 2.2% in account) in one day. Besides, it is Friday so I would rather take some profits off the table before the weekend.

Profit is $207.50 – $4.95 x 2 = $197.60. The maximum potential risk was $152.50 based on my stop calculation. Thus, the realized reward/risk ratio is 197.60/152.50 = 1.30. It’s alright but not that good as I usually aim for 1.50 at least.

Here are the main reasons for my exit.

Figure 1 shows the chart of crude oil. Note that it is end-of-day data only so today’s massive drop is not shown. I marked my exit price of $71.00 (crude oil) 0n the chart. See that this price is a support level in the long term.

Light Crude

Figure 2 shows the intraday chart of U.S. DB Oil Fund (DBO). Notice the weak volume on the second test of 23.70 support level. This figure was captured at the time of my exit. DBO traded below 23.70 and HOD.TO traded above 12.00 as I am writing this. Let’s see if they can stay that way.

U.S. DB Oil Fund