2018 Tax Loss Selling – Update (Dec 8/18)

Lots of selling in all stocks so far this month … as I have done in previous years, I monitor a list of about 45-50 stocks for possible candidates to trade into early January.  Typically this would mean buying call options and/or stock in the last two weeks of the year from a list of candidates that are possibly in the midst of selling by investors who are liquidating their big 2018 losers for tax-purposes.

As mentioned in previous blog posts on this topic, I screen for stocks at the end of November each year (or the first Friday of December if that means Dec 1-4th) that have a large 2018 price range (minimum of 25%) of the stock’s closing price and the closing price for my analysis is in the bottom 10% of that YTD price range.  This year I decided to use the S&P 500 as my scanning universe.

I monitor these tax loss candidates on a variety of ways, but the end goal is to try and find stocks that are clear “victims” of unrelenting tax-loss selling and therefore are likely candidates to pop once the 2018 selling is complete – that can mean a pop on the last few days of the month and typically the first couple of weeks in January.  My preference is to use January monthly call options so I know my exact risk for each trade.

Anyways, I will try to keep traders abreast of what I am seeing and planning to trade again this year.  Below are a list of PDFs taken of my tax-loss watch list sorted a variety of ways – I will update them every weekend until the end of January 2019.

Here is a summary of what sectors are dominating my 2018 tax loss list …

You can see that this year, the sector most found in my list is the energy sector.  I like when a sector is well represented as that could mean that all stocks in that sector are getting liquidated and that the reasons behind the weakness are less related to company-specific issues.

Here is my watch list sorted by the last week’s stock performance …

Anyways I’ll put my PDFs as at December 7, 2018 here for any interested traders (you will need to zoom in on the sheet to see all of the detail).  All I need to do now is to constantly reviewing the daily charts for these stocks to see when and if any good trade candidates appear over the next couple of weeks.

Cheers … Leaf_West

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