Wednesday, November 28, 2012

200 DMA - Trend Average Test

Just when I had given up on the idea of seeing a test of the Trend Average and the 200 DMA, the market decided to break out of the rectangle pattern to test these levels, make a 38% retracement and then rally sharply towards resistance and slightly closing above it at the end of the day. And looking at the MACD cross on the chart, the market looks like it's headed to 1423 at this point. We could see some downside to retrace the bullish wave from today and in turn form an Inverted Head and Shoulder formation. The fact the market was able to reverse quickly after testing the 200 DMA shows there were buyers waiting for this test, like me actually, the difference is I was deep asleep when this happened and when I woke up the market was already higher than yesterday so I guess I'll just have to wait and set my alarm clock next time.

The overall picture continues to be bullish and a change of the intermediate trend to the bullish side gives a green light to go all long. This fiscal cliff issue will be resolved sooner rather than later and that should spark a huge rally, perhaps a Santa Rally?

Main S&P 500 Trends 

Short Term Trend = Bullish
Medium Term Trend = Bearish
Long Term Trend = Bullish

Long Term Portfolio

  • 100% Long in Red Chips traded in HSI (Mainland China stocks traded in Hong Kong).

Short Term Trading Strategy 
  • Bought 500 VXX @30.77 on 11/23/2012 - Closed @29..68 on 11/27/2012. = -1.09
  • Bought 500 VXX @31.54 on 11/20/2012 - Stopped out @31.11 on 11/21/2012. = -0.43
  • Closed position 500 @ 18.26 on 11/20/2012. Sold 500 @ 17.79, raised stop to break even on the other 500 as of 11/19/2012. Bought 1000 XIV @15.98 as of 11/15/2012 on margin - position trade cost improvement 4 cents, so net cost $15.94 as of 11/16/2012 - Profit = $2.05 
  • Bought 1000 XIV @16.88 as of 11/14/2012 on margin - Stopped out @ 16.66 on 11/14/2012. = -0.22
  • Bought 1000 XIV @15.67 as of 11/08/2012 on margin - sold 1000 XIV @ 16.25 on 11/12/2012 = +0.58
  • Margin positions in Gold initiated 11/06/2012.

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