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
Cheers … Leaf_West