Trading Diary: Tough trading, stocks gyrate on Trump news

It’s stock market yo-yo time again, as headline traders batter stocks down, ending at least for now the great Trump-Santa Claus Rally.

Yo-yo collection.
Yo-yo market or Zombie Apocalypse? Take your pick. (PR image, Zombie yo-yo)

WASHINGTON, January 31, 2016 – If you’ve read our companion column today, you’ll already note that stock averages this week are back in the thrall of headline trading high-frequency traders (HFTs), whose selling and shorting programs are firing off with increasing force, jeopardizing the nifty profits savvy investors were able to realize during the recent rally, which may or may not be over.

Read also: Did Trump travel ban kill Wall Street’s Trump Rally?

What’s for sure is we’re now experiencing either a temporary pullback or a full-blown correction on what had become rather mindless optimism. Donald Trump would like to get his job creating actions going ASAP. But he now lives in Washington, D.C., a city that knows, even better than his native New York City, how to hamstring or delay a project until all the right political and family palms are greased, either with cash money or with changes to the law that benefit the usual elites.

At any rate, the mass hysteria drummed up by the media and the usual anti-democratic organizations that always torment Republican presidents like a flying squadron of harpies, seems to be taking its toll on market action, leading savvy investors to take something off the table right now and book some of those precious rally profits. Which is what we’ve been doing, too.

Trading Diary

Over the past few trading days, we’ve harvested profits in Bank of America (symbol: BAC), French energy giant Total (TOT), Hill-Rom Holdings (HRC), Blackstone (BX) and KKR (KKR).

But, given the battering some first-rate companies are currently getting, we’ve also redeployed at least some of that cash into—surprise—building a new position in BX, starting another new position into one of Blackstone’s competitors, Washington-based Carlyle Group (CG), and beginning yet another new financial position in monster-bank JP Morgan Chase (JPM), which should ultimately benefit from some of Trump’s current moves, not to mention allegedly rising interest rates.

We’re holding on to a position in pharma giant Merck (MRK), ignoring, for now, the new president’s attack on this sector. We’re also holding a modest position in veterinary pharma company Zoetis (ZTS), which was spun off some time back from Pfizer (PFE), which we’d also like to get back into at some point—as in the soonest possible time after President Trump stops badmouthing the pharmaceuticals, which—given that he’s meeting with these guys today—could be as early as this afternoon or tomorrow.

We’ve started adding in small positions in Swiss gold and silver ETFs (SGOL and SIVR respectively), given their recent strength, which is based on their historical role as a store of value in turbulent times. We regard these growing positions, however, as trades, not investments.

Finally, we continue to add—on down days—to our growing positions in a pair of variable rate bond ETFs, namely Powershares’ Variable Interest Rate Preferred Stock ETF (VRP) and Schwab’s TIPS ETF (SCHP). We’ve been growing positions in this pair for months, since we can add them commission free to our portfolio, but they’ve been down until recently. Now, apparently convinced the Fed is really going to keep raising interest rates, both positions have broken into the green, so we’ll probably slow our buying for now.

But, aside from tinkering around the edges, that’s about it. If the market looks like it really wants to correct, we’ll likely put on a big hedge with our favorite bearish ETF, SDS. Barring that, slow and steady will likely win this race.

Stay alert, and be careful.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17