Green Dot Portfolio: June 2019 Update

|
Includes: ABBV, AMGN, CMA, DGLD, ETG, INTC, KIO, KR, MMM, NIO, OSTK, SFM, SPXL, SPXS, SQQQ, TQQQ, X
by: Green Dot Investor
Summary

Total cash income on portfolio investment for June from dividends and swing trades was +1.50% and has totaled +10.22% for the past eight months, surpassing my 10% annual goal.

Dividend income for June was my highest, at $854 (monthly average is $723). Closed-end funds contributed 86% of dividends. Dividends contributed 35% of total portfolio income.

Swing trade income for June (ex dividends) was my highest to date, at $1,593. I closed seven swing trades for a net gain of +9.62%, including dividends (average 19 days).

In June, the SPY rebounded from the May pullback, closing once again at the fall 2018 high. Financials and small caps closed far short of retracing the 2018 bear market.

Welcome to my June update for my Green Dot Portfolio, a small self-directed retirement portfolio created in a Roth IRA trading account.

June was the eighth month of my second year for my portfolio, and it was my most profitable month since portfolio inception. This year my goal is to achieve 10%+ in total cash income, using high-yield dividend investments (closed-end funds, REITs, and dividend growth stocks), as well as swing and position-trading of stocks and ETFs.

1. Market Action and Pattern for June 2019

Readers of my previous updates know that I use the broad market index, the SPDR S&P 500 Trust ETF (SPY), to represent the overall price pattern and trend of the markets. At the end of April, the SPY had fully retraced the 20% three-month bear market selloff that occurred in fall of 2018. But in May the SPY gave back two and a half months of those gains. In June, the SPY regained the pre-bear market high, which has become a line of resistance.

A weekly chart of the SPY is presented below for this past year, including a Fibonacci retracement sequence for the fall 2018 bear market rebound. The chart shows that in the first week of June the SPY experienced the strongest weekly gain in a year, but on average volume. Although the SPY pulled back to the Fib. resistance line by the end of the month, the index closed in an uptrend, above all major moving averages.

(Source: Chart created by author from the TD Ameritrade 'thinkorswim' platform; download date 6/30/19.)

As I have noted previously, the Nasdaq indexes fully retraced the 2018 bear market. However, financials, as represented by the Financial Select Sector SPDR Fund (XLF), left below, and "small caps," as represented by the iShares Russell 2000 ETF (IWM), right below, have still not fully retraced the bear market. As these weekly charts show, the XLF closed at about the .786 retrace, and the IWM at about the .618 level. The XLF is also still below a major resistance line (in gold) that extends from the early 2018 high. The progress of these indexes is important because, as I have been taught, bull markets do not progress without the participation of these components. Based on information from Elliott Wave patterns (discussed below), I now expect that the XLF and IWM will play catch-up to the SPY and Nasdaq rather than these latter indexes breaking down as the dominant trend.

(Source: Chart created by author from the TD Ameritrade 'thinkorswim' platform.)

Elliott Wave Pattern

Since last year I have referred to the quantitative Elliott Wave pattern for the SPX by Tony Caldaro (Objective Elliot Wave). Since the passing of Caldaro in February, the "OEW Group" has providing analysis of the market pattern. The most recent update indicates that the 2018 bear market was a Major 2 wave (down) within a larger Primary III bull market and that the Major 3 wave (up) is underway. So far, Minor wave 1 from the late December low has completed at SPX 2954. A zig-zag (down-up-down) for Minor 2 also completed in early June at SPX 2729. A sub-dividing Minor 3 is nearing completion, with a target of about SPX 3002, which will complete Intermediate i of Major 3. An intermediate level pullback for Intermediate ii should then be in play. At this time the Group mentions a target of about SPX 3300 for the completion of Major 3. My expectation is that this could take many months as the other 3 Intermediate waves would need to complete. The OEW Group hourly chart for the SPX is presented below.

(Source: StockCharts.com)

If this OEW count is correct, there should be some significant upside in the coming year, but there will also be 2 Intermediate level pullbacks. For buy and hold investors, the eventual outcome will be positive until the Major 4 pullback. For traders, including me, this pattern should mean that there will be good opportunities to swing trade the larger waves within this overall uptrend.

2. Portfolio Strategy and Asset Allocation for June

With the rebound in June, I focused mostly on swing trades as higher prices kept me from initiating or adding to fixed income positions. But I made some small changes nevertheless.

Portfolio Allocation

My overall portfolio increased slightly from 42 holdings in May to 44 by the end of June. The pie chart below shows the percentage of the portfolio investment allocated to these assets at the close of June. For comparison, in May REITs comprised 5.34%, CEFs comprised 59.14%, Income/Dividend Growth Stocks comprised 9.08%, and Swing Trades comprised 26.44% of portfolio investment. The holdings are listed by these categories in Section 8 below.

(Source: Chart created by author from portfolio data as of June 28.)

3. Portfolio Adjustments in June

With the markets generally uptrending in June, I made only two purchases of fixed income positions. On 6/3, I added to two existing CEFs:

  • I added 100 shares of KKR Income Opportunities Fund (KIO) at $15.242/share. This fund pays an income-only distribution of $0.125/share/month (9.54%) and is currently trading at a -4.49% discount to NAV. This purchase brings my total position to 558 shares and reduces my average unit cost to $15.4414/share. KIO has paid the same monthly distribution since January 2014.
  • I added 100 shares of EV (Eaton Vance) Tax Advantaged Global Dividend Income Fund (ETG) at $14.84/share. This fund pays and income-only distribution of $0.1025/share/month (7.66%) and is currently trading at a -7.55% discount to NAV. This purchase brings my total position to 500 shares with an average unit cost of $15.1486/share. ETG has paid the same monthly distribution for a decade.

In addition to the CEF additions, I added 15 shares of Comerica Inc. (CMA) on 6/12 at $69.69/share. I've written before about this bank stock including when I took a swing trade this year (+10.38% for 16 days in April), noting that I consider this a dividend growth stock. As I present in the chart below, CMA has grown its dividend by 235% over the past five years, which should act to pull up its price (only increased 44.4%).

Chart

(Source: Chart created by author using YCharts).

4. Dividend Income

In June, I collected $854 in dividends, including $43 from swing trades closed in June. My eight-month average for this second year is $723 (ex swings). Dividends in June comprised 34.9% of total income compared to the eight-month average of 40.3%, because I banked more swing trade profits.

Dividends from CEFs were $735, a new high, and comprised 86% of dividends this month. The eight-month average for CEF income is $614, and CEFs have comprised an average 84.2% of non-swing trade income. I've tended to hold CEFs more than REITs because the CEFs generally pay monthly and have higher yields. I also took profits on many of my earlier REITs when prices made new highs.

Total monthly income from dividends including dividends from swing trades for this second year is presented in the chart below. The blue line on the chart is the average monthly dividend income. Total dividend income so far this year is $5,825. Dividends on closed swing trades has totaled $261.

(Source: Chart created by author from portfolio data as of June 28.)

5. Swing Trades

For those new to my monthly updates, I provide some detailed information, charts, and my trade logs for swing trades in my weekly blogs for followers. I also have been posting what are, in effect, trade alerts as "updates" for readers of my weekly blogs. I post to the most current weekly blog any trades shortly after I place them. Readers are reminded to do their own due diligence when placing any trades.

Closed Swing Trades

In June, I closed seven swing trades for a total profit of $1,593. The average investment for these trades was $2,430, and the average net gain was +$234. The total return on the swings averaged +9.62% for an average of 19 days in the trade.

The table below presents the dates, symbols, names, number of shares, sell prices, percentage gains, and number of days in the trade for the 6 trades closed in May.

Date Sold Symb. Security Name Qty. Sell Price % Gain # Days
6/10 TQQQ ProShares UltraPro QQQ 60 58.50 17.04 6
6/10 INTC Intel Corp. 45 46.90 4.24 19
6/10 SPXL Direxion Daily S&P500 Bull 3X Shares 50 49.50 16.97 6
6/18 AMGN Amgen Inc. 10 182.50 9.09 25
6/18 X United States Steel Corp. 200 14.70 4.19 25
6/20 MMM 3M Co. 20 173.90 2.51 27
6/21 OSTK Overstock.com Inc. 200 11.50 16.52 24

Two of these trades, TQQQ and SPXL, were opened and closed in June. Details about the purchase of these is included in the table below for New Swing Trades.

I provide details for most of my swing trades in my weekly blogs. Given that these are mostly intended as shorter-term trades, I typically use technical chart levels such as gap fills or potential resistance at Fibonacci retracement levels and moving averages as the basis for my decision to sell any particular stock. Many of the stocks that I sell continue to advance in time, but my objective is to realize frequent, consistent profits, which I deploy to new trades.

New Swing Trades

In June I opened nine new swing trades (two of which I also sold in June) and I added to three existing positions, for a total investment of $26,672. Some details about these trades were provided in my weekly blogs, and I present a summary table below showing the date, ticker symbol, security name, quantity, and share price for each of these nine trades.

Dates Symb. Security Name Qty. Avg. Price
6/3 SPXL Direxion Daily S&P500 Bull 3X Shares 50 $ 42.150
6/3, 6/5 TQQQ ProShares UltraPro QQQ 40 $ 49.917
6/10 SPXS Direxion Daily S&P 500 Bear 3X Shares 100 $ 19.300
6/10 SQQQ ProShares UltraPro Short QQQ 54 $ 36.850
Add 6/12 NIO Nio Inc 350 $ 2.520
Add 6/12 CMA Comerica Inc 15 $ 69.690
6/24 KR Kroger Co 90 $ 22.150
6/25 TQQQ ProShares UltraPro QQQ 32 $ 61.500
6/25 SPXL Direxion Daily S&P500 Bull 3X Shares 40 $ 50.900
Add 6/25 ABBV AbbVie Inc 40 $ 69.350
6/25 SFM Sprouts Farmers Market Inc 100 $ 18.550
6/25 DGLD VelocityShares 3x Inverse Gold ETN 60 $ 33.895

For readers who know my trading style, most of these stocks were generally very over-sold when purchased. I am looking for bounces in the 5-10% range, typically within about 30 or so trading days. However, I am content to wait longer if needed, and I can collect dividends on many of these stocks.

I am also especially planning to continue focusing on the major index ETFs for swing trades. I like to use the highly leveraged ones as the profits are greater if I match the price trend correctly. So far I have closed nine of 11 winning trades on just the SPXL/SPXS and TQQQ/SQQQ, for a net profit of $2,186. Readers should be aware that these 3x leveraged ETFs/ETNs (as well as DGLD) carry higher risk.

6. Cumulative Swing Trade Results

Non-Option Swing Trades

I use swing trading to add profits and grow my portfolio balance more quickly than through collecting dividends alone.

For the eight months of my second year, I have been fortunate to close 61 profitable non-option swing trades out of a total of 63 trades, for a net gain of $8,359 including $287 in dividends on those trades. This represents an average weighted gain of +6.83% for an average of 33 trading days (+52% annualized). The chart below shows the percentage gains for these non-option swing trades for the second year of my portfolio. Trades closed in June are in blue.

(Source: Chart created by author from portfolio data as of June 28.)

As I stated previously, a goal for this second year of my portfolio is to increase the investment cost of my swing trades. The average investment cost was $1,842 for all 61 profitable closed trades compared to $2,430 for the seven trades closed in June, and the average net gain for those 61 trades was $145 compared to $234 for those closed in June.

Option Premium Swing Trades

I closed one option premium swing trade in June. On 6/3 I sold to close my six contracts of Microsoft (MSFT) Jun 21 2019 100.0 Puts at $0.09/contract, for a net loss of -90.1%. I had opened this trade on 3/15 at $0.77/contract. MSFT started to pull back in late March, but then motored higher until another large pullback on the date I closed. But by this time the trade was well beyond any possible profit, so I closed rather than let this go to expiration.

I find that I have to spend more time watching the option trades and I recently do not have the time to do that. I have for now stopped looking for option trades. I have one more option trade, a put for Xerox (XRX) that will expire worthless in July. Overall, these small trades have not materially affected the performance of my portfolio.

7. Realized Total Return

My Green Dot portfolio generates cash income each month through dividends and profits from swing trades. These are realized gains or cash that is available for additional investment. In October, I raised my portfolio goal for this second year to a 10%+ annualized gain (average of 0.83%/month).

Total cash return for the past 20 months is now +22.98% with a monthly average of +1.15%. The monthly average cash earned for my first year was $1,063 and for this second year is $1,867. Total cash return for June was +1.50%.

The total gain for this past eight months is now +10.22%, and the monthly average is +1.28%. So, for now, I am comfortably ahead of my target for my new 10% goal. This provides a buffer in the event that I do not maintain high levels of swing trading.

I presented a chart for the past few months showing the overall progress of my portfolio since inception. The chart below depicts the monthly cash income and the proportion from dividends and from swing trades. The growth in total cash income is clear, even though I added some funds since the first year. The first year is colored green and the current year is colored blue.

(Source: Chart created by author from portfolio data as of June 28.)

Unrealized Gains/Losses

The total current value of all the positions in my portfolio at the end of June was -5.18%, much improved over recent months due to the market uptrend. I still have some longer-standing losing positions such as General Electric (GE), Kraft Heinz (KHC), Macquarie Infrastructure (MIC), and Colony Capital (CLNY) that I will continue to hold for now.

While I wait, I'm receiving good returns from a large portion of the portfolio. At the end of June, 13 of my 15 CEFs (which account for 63% of portfolio investment) were profitable, with a net gain on share price of >$1,450 not including the distributions. These 15 CEFs currently average 8.1% in distributions.

8. Current Portfolio

At the close of June, my portfolio consisted of 44 holdings, including one option premium swing trade and two penny stocks. The table below lists these holdings, including the current number of shares, average unit cost, dividend/distribution yield, and the percentage that they comprise of the overall portfolio investment.

Symbol Qty $ Unit Cost Cls. 6/28 % Div. Yield % of Portfolio
REITs 4.5%
CLNY 345.00 11.785 5.00 8.76% 2.5%
SKT 125.00 26.052 16.21 8.86% 2.0%
CEFs 62.9%
AOD 204.23 8.220 8.34 8.35% 1.0%
AWF 1,162.29 11.873 11.78 6.72% 8.4%
BGX 509.79 15.036 15.69 9.33% 4.7%
BIT 405.60 16.560 17.45 8.08% 4.1%
CSQ 303.26 12.377 12.76 7.80% 2.3%
DSL 761.79 19.841 19.97 8.96% 9.3%
EMD 101.46 14.130 14.32 8.39% 0.9%
ETG 500.69 15.149 16.05 7.72% 4.6%
FAX 1,528.50 4.710 4.18 7.91% 4.4%
HYT 877.58 10.386 10.72 8.11% 5.6%
JPS 1,113.35 9.350 9.50 7.11% 6.4%
KIO 558.11 15.441 15.73 9.49% 5.3%
LDP 243.42 24.333 24.89 7.52% 3.6%
RNP 50.60 20.001 21.62 7.03% 0.6%
RVT 204.05 13.303 13.92 9.03% 1.7%
Income & Dividend Growth 9.4%
CMA 40 71.309 72.64 3.76% 1.7%
D 15 80.194 77.32 4.78% 0.7%
FDX 8 188.113 164.19 1.59% 0.9%
FRME 115 39.404 37.90 2.83% 2.8%
MIC 33 69.741 40.54 10.00% 1.4%
SNV 75 38.699 35.00 3.52% 1.8%
Swing Trades 23.2%
ABBV 60 72.327 72.72 6.11% 2.7%
ACLS 120 16.600 15.05 -- 1.2%
CI 10 163.350 157.55 0.03% 1.0%
CVS 55 58.123 54.49 3.65% 2.0%
DGLD 60 33.970 35.50 -- 1.2%
ERBB 1,670,000 0.000 0.00 -- 0.3%
FUTL 5,000,000 0.000 0.00 -- 0.3%
GE 103 23.922 10.50 0.38% 1.5%
KHC 50 43.238 31.04 5.20% 1.3%
KR 90 22.200 21.71 2.62% 1.2%
MC 60 33.250 34.95 5.79% 1.2%
NHTC 150 10.680 8.05 8.16% 1.0%
NIO 850 4.458 2.55 -- 2.3%
SFM 100 18.595 18.89 -- 1.1%
SPXL 40 51.013 51.35 1.26% 1.2%
TQQQ 32 61.641 61.77 0.10% 1.2%
WLK 50 69.775 69.46 1.45% 2.1%
XRX Jul 19 2019 26 Put 3 1.335 0.01 -- 0.2%

Final Thoughts

With a record month in June for dividends and swing trade profits, I have now surpassed my annual cash income goal in just eight months.

I am looking forward to continuing to collect dividends on my fixed income holdings while working to profit on shorter-term swing trades. The markets should continue to reach new highs, and if I can read the waves skillfully, I hope to realize gains as stocks go both up and down in the coming months.

I wish readers well with their own endeavors!

If you found this article of interest and want to receive my weekly blogs, please click the "Follow" button at the top of this page. And please share this with others who you think would be interested.

Best to your investing/trading!

Disclosure: I am/we are long ABBV, ACLS, AOD, AWF, BGX, BIT, CI, CLNY, CMA, CSQ, CVS, D, DGLD, DSL, EMD, ERBB, ETG, FAX, FDX, FRME, FUTL, GE, HYT, JPS, KHC, KIO, KR, LDP, MC, MIC, NHTC, NIO, RNP, RVT, SFM, SKT, SNV, SPXL, TQQQ, WLK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.