Real Life Trading Winter Portfolio 2018: First Edition

Jan 08, 2018


Real Life Trading Winter Portfolio 2018: First Edition

Hey Real Life Traders from all over the world. How are you? Welcome to 2018! I shared an interesting statistic not too long ago. It went something like this. “Does the 1st trading day of the year matter?” Sounds random, but ...

For the past 20 years, on the 1st day of a new year the S&P 500 has been higher 10 times and lower 10 times.

Full year return if up the first day? +14.2%.

Full year return if down the first day? -0.6%”

So far, it’s looking pretty solid for the bulls! Which would be delicious for most investors and traders. At some point, it would make logistical sense for 2018 to have a 3-5% pull back potentially, but I feel like that would be a very reasonable and easy dip to buy.

I implemented a special and new scan for this portfolio. Therefore, I will be bringing you 4 completely new stocks, charts and companies to look at in addition to our our staple. Let’s dive in and make stock angles, shall we?

  1. Knoll, Inc. - Ticker: KNL Analysis on January 8th, 2018

Knoll, Inc is in the consumer goods sector, focusing on business equipment. They have almost 3,500 full time employees. They design, manufacture, market and sell commercial and residential furniture, accessories, textiles, fine leathers, and felt for the workplace and home in the United States, Canada, and Europe. It operates in three segments: Office, Studio, and Coverings. The company offers systems furniture consisting of integrated panels or table desks, work surfaces and storage units, power and data systems, and lighting products; office seating products comprising various work chairs; and files and storage products, such as lateral files, mobile pedestals and other storage units, bookcases, and overhead storage cabinets. It also provides a range of adjustable tables, as well as meeting, conference, training, dining, and stand-alone desks and table desks; technology support accessories, desktop organizational tools, lighting, and storage; various lounge seating; side, café, and dining chairs; barstools; and training, conference, dining, and occasional tables. In addition, the company offers fabrics, upholstery, leather, handcrafted rugs, and related architectural products. It serves companies, governmental agencies, and other medium to large sized organizations in various industries, including financial, legal, accounting, education, healthcare, and hospitality primarily through its direct sales force and showrooms, distribution partners, independent dealers, and independent retailers, as well as through online. The company was founded in 1938 and is headquartered in East Greenville, Pennsylvania.”

Meaning, it seems KNL is a more quiet performer. They rarely make headlines but have been paying dividends pretty solidly and consistent for a while now while the stock just slowly creeps sideways to bullish over the years, finally squeaking out new all time highs last year. In fact, below is the weekly chart.

They have posted some pretty decent earnings recently and their PE is quite stout. Technically, I have been digging this recent gap on the daily chart, back on 12/26/17.

That appears to me at least, to be a bullish gap and go, mixed with some kind of double bottom. In addition, this isn’t a super expensive stock, which could allow many traders and investors who read these articles to partake in the price action.

My preferred order and set up would look just like this. With that type of rotation, it would be a pretty retest of that double bottom neck line and a good pull back into the daily ema’s.

But of course, she could keep chugging along. Therefore, if KNL keeps trading sideways for another week, allowing the 10/20 ema to press the stock higher and then buy the dip from there. A play like this.

Either way, I think the direction is easy to dictate on this one. Bullish to neutral. One could also highly consider a $20 put sale expiring in February. That pays exactly .20, which is 1% of the stock price, precisely the premium I look for and the time frame works out too. It is over earnings, but KNL hasn’t had that large of a gap down on earnings in a very long time! Plus it would be a buy low, sell high, snagging this one at more than a 10% discount. Just one to consider.

2. MKS Instruments, Inc. - Ticker: MKSI Analysis on January 8th, 2018

What does MKS do? Well, they are much bigger than KNL with over 4,500 full time employees. They are also based out of the North West, with their home office being in Andover, MA.

“MKS Instruments, Inc. provides instruments, subsystems, and process control solutions that measure, control, power, deliver, monitor, and analyze critical parameters of manufacturing processes worldwide. The company operates through two segments, Vacuum & Analysis and Light & Motion. The Vacuum & Analysis segment provides analytical and control solutions products, including gas analyzers, automation control products, IO modules, automation software, data analytics software, and precision machined components and electromechanical assemblies; and materials delivery solutions products comprising flow and valve technologies, as well as integrated pressure measurement and control subsystems to provide customers with precise control capabilities that are optimized for a given application. It also offers power delivery, plasma, and reactive gas generation products used in semiconductor and other thin film applications, and in medical imaging equipment applications; and direct and indirect pressure measurement and integrated process solutions.

The Light & Motion segment offers lasers and laser-based systems, including lasers and amplifiers, fiber lasers, diode-pumped solid-state lasers, high-energy pulsed lasers, and tunable lasers, as well as accessories; optics products, such as precision optics and lens assemblies, thin-film filters and coatings, replicated mirrors, and ruled and holographic diffraction gratings, as well as subsystems and subassemblies; photonics products comprising photonics instruments and systems, and vibration and motion control products, as well as three-dimensional non-contact measurement sensors and equipment. It markets and sells its products and services through global direct sales organization, independent distributors and sales representatives, Websites, and product catalogs. The company was founded in 1961.”

Whoa! That’s some high level stuff right there. I had to pull out my dictionary to make sure I knew what we were investing in. What is really fun about this stock is its pretty recent breakout of it’s tech bubble highs back in 2000.

With the normal and healthy retest that occurred last year, it would seem to me that this stock has legs to run.

Plus, if you dive into the daily chart, look at these beautiful bounces off of that 100 simple moving average.

This trend at the present moment in time looks pretty stable. Granted, I would have loved to bought in early December on that almost 20% pull back.

As of now, it appears MKSI is working on formulating a double bottom. I’ll be keeping an eye on the neck line retest for sure.

And, just in case this stock doesn't do exactly what we want, I'll keep an eye out for something more shallow. 

Seems we might have missed the real chunk of this move, but I will keep this one on our watchlist (obviously). Keeping my eyes out for some kind of pull back into this very nice trend, which should present a buying opportunity. Trend = bullish!

I feel like we will be nice and diversified in this portfolio. Coming in hot, we have...

3. National Grid plc - Ticker: NGG Analysis on January 8th, 2018

We have here stock about as solid as they come. 4.98% yield, EPS of 15.12 with a PE ratio of 3.9, yes please. In the not too distant past we included DUK, Duke Energy because it is always nice to have a utility in a portfolio or fund because of stability. Even though, some utilities have really been smacked around recently.

What’s good to note is XLU (the utility ETF) is trading right around the 100 SMA on a weekly chart, begging for a bounce.

That will team up well with the NGG chart, hopefully.

Below is NGG on a weekly chart. You can see this ‘stable company’ has dropped a sizable 30% since mid 2016. NGG is very far away from it’s 100 SMA on a weekly chart and I am keeping my eyes on a bounce down here.

I plan on approaching this one as a longer term buy low, sell high. Put sales pay a pretty wretched premium. If you plan on possibly owning this one longer that 5 months you could use protective puts as protection. Those could come in handy and help avoid a whipsaw as NGG is likely entering into some sort of accumulation phase.

Otherwise, as a more aggressive trade, I’ll be watching this set up.

4. SMART Global Holdings, Inc Ticker: SGH Analysis on January 8th, 2018

Alright, it’s time for one of our smaller companies. SGH only has 1,169 full time employees. “SMART Global Holdings, Inc. designs, manufactures, and supplies specialty memory solutions worldwide. The company offers dynamic random access memory (DRAM) components, which are used to manufacture modules and other products; DRAM modules for desktop, notebook, and server applications, as well as for use in smartphones; and specialty DRAM modules for industrial, communications, and networking applications, as well as develops specialized memory module designs based on original equipment manufacturer (OEM) requirements. It also provides flash memory, USB, and serial advanced technology attachment products primarily for use in communications equipment, printers, servers and storage products, switches, and routers; and aerospace, automotive, and defense industries, as well as industrial applications. In addition, the company offers supply chain services, including procurement, logistics, inventory management, temporary warehousing, programming, kitting, and packaging. SMART Global Holdings, Inc. sells its products to OEMs through direct sales force and independent sales representatives in North America, Latin America, Asia, and Europe. The company was formerly known as Saleen Holdings, Inc. and changed its name to SMART Global Holdings, Inc. in August 2014. SMART Global Holdings, Inc. was founded in 1988 and is headquartered in Newark, California.”

I am not personally floored by the overall longterm aspects, fundamentals or prospects of SGH. However, just from looking at the charts I could see how we can make some fun and quick short term gains on this one.

This one is pretty brand new to the markets, which is another reason I wanted to include it. Companies like this, if structured with incredible intellectual property or some specific proprietary information regarding this sector could be ripe for the buy out (at some point).

We don’t have a plethora of data on this stock. Going forward it would probably be wise to keep eyes on that hourly chart too.

That being said, here is the daily chart:

Yes, it would be a head and shoulders pattern, but SGH would have to close below $28.

I am kind of liking these pivot price levels at $28 and $37. From here, it should be pretty simple to play. These are the two wave rotations I will be keeping an eye on going forward from here.

5. Apple Inc, - Ticker: AAPLAnalysis on January 8th, 2018

Let’s just start with, it’s only a matter of time before AAPL hits $200. I know there was some pretty random and disconcerting news concerning old phones being intentionally made less efficient some people were ‘forced’ to buy an upgrade. Yeah, I said jokingly that more than likely exactly what they did. 2-3 days after the iPhone X comes out, my iPhone 7+ just started running like an elk through molasses with cinderblocks tied to it’s legs.

But, it will be just another rumor mill, news event that probably gets swept under the rug while AAPL surges higher on it’s multiple streams of income.

I’ve had numerous Real Life Traders sell some puts and get into some bull put spreads recently on AAPL. My good buddy Victor G has one expiring in two weeks. It had fantastic earnings back in November and since then has just slowly chugged sideways, bouncing off of the 50 ema on the daily chart two times.

From here, AAPL either slowly continues higher out of the purple pennant pattern you can see above OR, AAPL rolls over from this key resistance and trades back down into a support zone, that would look something like this.

I think the support around $165 would hold nicely as the 100 simple moving average is also right there. Therefore, here are my two thoughts and wave counts and structures to what I transpires on AAPL.

Either way, let’s continue being bullish on AAPL.

My friends, thank you SO MUCH for reading this entire article. I mean, it’s 100% free and hopefully makes us all some pocket change.

Keep in mind, Real Life Trading has it’s open house trading rooms which starts January 22nd and goes through the 26th.

You can click this link to register for the morning day trading room and you can click this link to join the afternoon swing trading room. It is going to be a tremendous experience and I am very confident we will have an absolute bast trading together.

It’s time to enrich lives folks! Let’s do this! You are amazing!

 ~ Jerremy Alexander Newsome 

CEO of Real Life Trader and owner of Bitcoin.