July 26, 2019 

Portfolio Allocation

Current Position Performance

Highlights from the Week

* Cleaning House & Cutting Positions: Exit Strategies *

As Get Irked approaches its one-year anniversary (can you believe it’s nearly already been a full year since I started the site?), I wanted to let everyone know that I’m planning to cut some positions from the Trades in Play portfolio in order to focus on size and quality over the crazy large number of positions I’m holding.

It will likely take some time to remove the following positions from the portfolio, but here’s who’s not making it, why, and how I plan to get out of each position:

Aurora Cannabis (ACB)

Canopy Growth (CGC) and Cronos Group (CRON) are the sector leaders in cannabis, so keeping ACB around is just too many in one sector. Although I have no problem with my speculative portfolio not being diversified, it’s ridiculous to have nearly a third of any portfolio in the same sector (New Age Beverages (NBEV) also classifies as cannabis).

ACB dropped as low as I was willing to handle this week (see details below) so I closed the position, keeping my profit as “free” shares. However, this will be the last week I’ll cover it in Trades in Play.

Gossamer Bio (GOSS)

Despite being a (relatively) good performer for the portfolio, I’m cutting Gossamer Bio (GOSS). I’ve never been a fan of the biotech space due to its volatility and lack of any real fundamentals.

While I use technical analysis (TA) as an element of developing plans for both my trades and my investments, I like to combine TA with fundamental analysis. With GOSS’s only six drugs in different stages of the development pipeline and no products in the market, the stock moves entirely based on no news at all. 

I added to my position on Monday, but as you’ll read in the trade description in “This Week’s Trades,” the stock whipsawed so badly that I was slapped down -7.5% on the shares I bought Monday in the middle of the week only to be up +12% by Friday! 

That’s not just volatile – that’s a rollercoaster of nausea-inducing insanity! 

While this kind of volatility makes for a good gambling vehicle, this isn’t trading – much less investing (although Trades in Play is about the former not the latter).

If any of GOSS’s drugs fail trials or receive other bad news, this stock could easily get cut in half or worse. I go into more detail about my plan to get out of the position without losing my lunch (or my profits) in the “This Week’s Trades” section below.

Groupon (GRPN)

Groupon (GRPN) hasn’t done anything wrong outside of being painfully boring. That being said, I really don’t have enough faith in the company’s long-term prospects, and with its lack of significant volatility, it doesn’t even make for a good trading vehicle.

Time to get out.

Given GRPN’s current uptrend toward a line of resistance, I have a sell order at $3.64 to remove my capital and will let my profits run.

If GRPN doesn’t make it to $3.64 before losing its current uptrend, I’ll use a stop limit sell to take out my capital at a slightly lower level, keeping the profit as shares to see if it ever tries to break out past $4.00 a share again.

The last time GRPN will be in the weekly report will be when I pull out my capital, and then it won’t make an appearance unless something magical happens and it levitates higher.

New Age Beverages (NBEV)

Although I still believe the CBD trend will result in many winners, NBEV has fallen under hard times and it seems they might not have enough capital to survive to the eventual legalization of cannabis in the U.S.

I’m using a stop limit sell order which I adjust each day as NBEV follows its current upward trend. Doing this will help to gradually reduce my losses while also protecting against further downside if NBEV loses the trend and heads downward.

A Trailing Stop order would be perfect for this situation, but Robinhood doesn’t offer them so I’m relying on daily technical analysis to place day orders each morning. 

Hopefully, NBEV will continues its bounce from its now-oversold levels to my per-share cost of $5.45 and perhaps higher, but I don’t hold out hope for that and won’t be adding to the position from this point on.

Nio (NIO)

Electric Vehicles (EV) are here to stay – no doubt – but with the major manufacturers getting into the space and China cutting its government subsidies to new EV buyers, Nio’s going to have a tough time competing and may not survive.

Exactly like NBEV above, I’m using a stop limit sell order to take a loss if Nio drops too low, raising it manually each day, although I’m not cutting my losses altogether right now as NIO is following an ongoing uptrend.

That’s All, Folks!

There you have it – the above five (5) positions are targeted for elimination from the portfolio. The rest of the positions will remain in play for the moment.

Without further adieu, let’s get on with the regularly scheduled Trades in Play!

Biggest Winner: Gossamer Bio (GOSS)

As I talked about above, Gossamer Bio (GOSS) isn’t just a volatile stock – it’s this portfolio’s most volatile stock. While GOSS closed the week with a +11.32% gain, it was actually down -10.39% for the week during Tuesday’s trading. That makes for a nearly 25% trading range in a single week!

Ironically, even with all that price action, GOSS was basically flat for the year going into the week right at its $19.00 IPO price. While there’s a lot of money to be made trading in and out of this stock, it is not a moderate- to long-term holding in any way. This is a stock to flit in and out of, not one to stick around for longer than is absolutely necessary.

Biggest Loser: New Age Beverages (NBEV)

New Age Beverages (NBEV), the potential CBD drink play, just can’t catch a break, dropping an additional -8.15% this week.

This company’s inability to get its act together combined with bad news and the very real possibility that it might not have enough to capital to survive until the U.S. eventually legalizes CBD for consumption means it’s time to go.

This Week’s Trades

Aurora Cannabis (ACB): Cost Basis Removed: 33%+ Profit

I closed out my Aurora Cannabis (ACB) position when it broke a support trend line at $6.47 per share on Thursday, locking in 33.47% in profits over my capital investment in the seven months since I started trading it.

I’ve chosen to keep the profits as shares to see if it eventually gets a buyout offer (which I will cover in that week’s Trades in Play), but I will no longer be covering the position in the weekly Trades in Play so I can refocus the portfolio on other positions and strategies.

ACB closed the week at $6.41, down -0.93% from where I sold on Thursday.

BiliBili (BILI): Position Reduction

BiliBili (BILI) had been trading in a tight range right above my per-share cost, so I used a stop limit sell order to reduce my allocation if it broke down, which it did on Thursday triggering my order at $15.70.

Doing this frees up some capital to reinvest in BILI if it tries to retest its recent $13.23 low. I’m eyeing a key trendline of support around $13.76 to add some shares back to the position if it tests the level next week.

BILI closed the week at $15.96, up +1.66% from where I sold on Thursday.

Gossamer Bio (GOSS): Added To Position

With no real products, revenues, or earnings to speak of, biotechnology companies in development stages like Gossamer Bio (GOSS) trade completely based on technical analysis, demonstrated on Monday when GOSS, which has been bouncing between $15 and $25 since its February IPO, dipped below $19.00, filling my buy order at $18.87 and rebounding from a key weekly trend-line of support drawn from its $15.59 all-time low.

Monday’s order replaces some shares I sold a little over a month ago at $22.00, a reduction in cost of -14.23%, making my current allocation per-share cost of $14.45 lower than GOSS’s all-time $15.59 low made in April by -7.31% and -26.58% less than my initial buy at $19.68 in February.

However, following a brief bounce off the weekly trend-line, the stock annihilated the support on no news to hit a weekly low of $17.06, a whopping -9.6% lower than where I bought. Then, it reversed course to bounce to close the week at $21.15 – up +23.97% off its weekly $17.06 low.

This kind of volatility on no news was the catalyst for me to decide not to stick around much longer in the position. I’m already trading Bitcoin – I don’t need to manage another position that moves this wildly. 

Plus, as I mentioned above, if the stock moves like this on no news, imagine what it will do if one of its drugs fails a trial or the company receives other bad news! We’re looking a stock that could easily get cut in half or more.

To protect profits, I’m using a stop-limit sell order to sell 1/3 of the position to lock in gains of 40% at $20.37 and two limit orders to sell the other 1/3 increments higher at $24.19 – a 67% gain slightly below a level of resistance just below GOSS’s all-time high and finally the last 1/3 will sell if the stock overshoots to $26.01, just below a key Fibonacci Retracement level with 80% gains on my that 1/3.

If the stock pulls back and only triggers my stop-limit without bouncing, I will use additional orders to protect the remainder of my profits.

If the stock heads higher without triggering my $20.37 stop-limit order but doesn’t hit my higher limit orders at $24.19 and $26.01, I’ll raise the stop-limit order accordingly to protect a higher percentage of profit as the stock continues higher.

In the event that all three orders execute (i.e. GOSS pulls back slightly before breaking through its all-time high before I can adjust my plan as the orders fill), I’ll pull in a total profit of 79.29% from the six months I’ve been in this position. 

GOSS closed the week at $21.15, up +12.08% from where I added on Monday.

Revolve Group (RVLV): Added To Position

After breaking through the $40 mark last week, Revolve Group (RVLV) pulled back substantially throughout this week, eventually breaking a point of key support and triggering a buy order on Friday at $33.22.

From here, I expect the sell-off to taper off, however, if it doesn’t, I have buy orders at lower levels: $29.76 and even $25.83, slightly above its opening price on IPO.

I believe Revolve will report good earnings on August 8, potentially challenging its all-time high of $48.36, so I have sell orders to start taking profits at $44.62 and $48.04.

RVLV closed the week at $34.29, up +3.22% from where I added on Friday.

Yeti (YETI): Profit-Taking

Yeti (YETI) popped on no news during Tuesday trading, so I took the opportunity to take some profits at $35.21, lowering my per-share cost down to $13.55. However, Yeti continued to skyrocket, making a new all-time high at $38.11; +8.24% higher from where I sold those shares on Tuesday.

Yeti doesn’t report earnings until next week, so I have no buy orders open until we hear what the company has to say. If it reports good earnings and shoots higher, I have a sell order at $40.64 which will sell enough shares to remove my entire capital investment.

Yeti’s long-term prospects are certainly excellent, but the last time it tested its highs in May, it pulled back more than -35% before coming back for another attack. My buy target would be the $23-25 range if a disappointing earnings report causes a pullback in the stock (depending on the news, of course, as a particularly sour outlook would make Yeti a no-buy until management proves itself).

YETI closed the week at $35.85, down -2.05% from where I sold on Tuesday.

Questions?

As always, If you have questions about how I’m playing different positions or anything at all, really, feel free to leave a comment below!