Monday, December 17, 2012

1438 to be challenged?




















First of all, thanks for taking a look at the gun control issue. Whether you agree or disagree, at least this has made people think about this problem we are having with mass shootings. Just over the weekend, about couple of miles from where I am writing this update, an idiot was spraying bullets at a busy shopping mall parking lot. Luckily, no one was injured but it goes to show how endemic this problem has become.

Anyhow, back to the market.. The index managed to bounce right back above the 50 DMA and the Trend Average, which is a bullish sign. Looking at the waves, I am labeling the waves a W1-2 because I see 5 waves in W1. It's still too early to tell but the market is well positioned to take on the 1438 level as soon as tomorrow. Another alternative would be a retrace back to the 50 DMA or the TA after a mild bullish opening and rally from there. I am aware there are bearish options out there but no point in talking about them until the Trend Average changes to the bearish side. Also, I just read the Obama administration has lowered their request for the revenue part of the Fiscal Cliff to $1.2 trillion (down from $1.6) and the Republicans raised theirs over the weekend to $1 trillion. Additionally, the gap on social spending is narrowing so it is looking like some sort of deal will be reached sooner rather than later and I can see 1475 being taken out if an agreement happens before Dec 31st.

I ended up selling my AAPL shares on the bounce after its previous low ($505) was breached, so I made few bucks there but would have made more if I would have waited. But I am extra careful with margin, so the less market exposure the better. On my China longs, I am still waiting for a good point to start hedging/locking in partial profit. But it just keeps going up.. hope FXI gets to $41 before the year end :-)


Main S&P 500 Trends

Short Term Trend = Bullish
Medium Term Trend = Neutral Leaning Bullish (change of trend imminent if market remains above the TA)
Long Term Trend = Bullish

Long Term Portfolio

  • 100% Long in Red Chips traded in HSI (Mainland China stocks traded in Hong Kong) since September 2012. Only position trading 30-40% of portfolio for cost improvement.

Short Term Margin Trading Strategy 
  • Bought 30 AAPL @ $509.50 as of 12/14/2012 on margin - Closed @514.50 on 12/17/2012. = +5.00
  • Bought 1000 XIV @18.62 as of 12/13/2012 on margin - Closed @18.70 on 12/14/2012. = +0.08
  • Bought 1000 XIV @18.80 as of 12/05/2012 on margin - Closed @18.88 on 12/07/2012. = +0.08
  • Bought 1000 XIV @18.41 as of 12/04/2012 on margin - Closed @18.63 on 12/05/2012. = +0.22
  • Bought 500 VXX @29.23 on 12/03/2012 - Closed @30.12 on 12/03/2012. = +0.89
  • 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.
Net Profit since 11/08/2012 on open and closed short term positions = $2,625*
* Margin position is usually $15-20k
* Margin position in gold is $4k

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