Friday, December 7, 2012

Year End Rally

The market made it to 1420 today and every small retrace has been putting in higher lows, so the market looks like it wants to rally. However, the Fiscal Cliff issue remains an obstacle and I hope they will agree on some sort of deal by the end of next week or the week before Christmas at the latest. Fundamentally speaking, people in higher income brackets should pay the same rate as everyone else and they shouldn't be targeted just because they make more money. If anything, people in higher income brackets who own businesses should have a regressive tax so they have incentives to expand their businesses to make more money so they'll fall in a lower tax bracket. That way you get more capital deployment, more employment and more tax revenue. A progressive tax just penalizes people who want to expand their business or simply become more successful and that is not what we need. But since most people don't like (or understand) the concept, there will always be a progressive tax system in place and I hope Republicans will accept that and move on.

Anyhow, I ended up selling the XIV position for coffee money for next month (literally). And this was a tricky trade as I sold it close to the day's high at 18.93 set early morning but then it rallied to 19.25 in the last hour which would have made the trade much more profitable. But it's ok as long as I made some money and I am out of the market for the weekend. Also, China and HSI and looking strong but I am still debating when to start taking profit as I am thinking HSI is probably on a W4 with more room to go. Maybe I'll get lucky and that index will hit 22750 by Christmas.

Have a Great Weekend!

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) since September 2012. Only position trading 30-40% of portfolio for cost improvement.

Short Term Margin Trading Strategy 
  • 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 = $2,395*
* Margin position is usually $15-20k
* Margin position in gold is $4k

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