Thursday, January 17, 2013

Almost at the top?

Yesterday I mentioned than it was make or break time and the market finally broke out of its consolidation pattern and finally broke the 1474 level and now we see it trading in the 1480-1490 range I had been expecting for weeks. At the micro count level, I see 3 waves completed so there should be another wave that will put the market in the 1490's range and perhaps then we'll start seeing a decent correction. This will have to be confirmed by the break of the Trend Average, which has kept many readers of this blog on the right side of the trade during the past 2-3 weeks. If the TA holds, it just means that 5 wave micro count is just W1 so 1500+ would be a given. But I'd prefer a top around this level to give the market a break and shake out all the weak hands. You guys know I don't follow longer term counts as much but if I were to speculate, I would say the market is following the Long Term Count I always post. So this wave that is about to finish would be considered W1 of a W3, and that would imply a challenge to the all time high at 1575. I have seen a long term bearish rising wedge in the works but just like the one I showed yesterday, this pattern can fail and as long as the trends are bullish all these bearish predictions will fail and once 1575 breaks, many doomsters will be pulling their hair out. And as I have been saying, as long as there is no recession, the markets will continue to go up. The markets look for earnings growth and price accordingly and as long as we are in a profit friendly environment, enjoy the bull ride. The one issue on the horizon is the debt ceiling debate, which the market has already taken into account imo. However, should there be a negative surprise then it could drag the economy and the markets along with it. If it happens, it would be similar to the Fiscal Cliff in that we would only see the markets get nervous at the last minute.

China and the HSI are rallying tonight and I am about to lock in profits on 30% of the longs but I'm debating to do it today or early next week. HSI reached 23,600 so just 200 points short of the 23,800 level I had been looking. And if we get that 5th leg tomorrow, I will be loading up on VXX to hedge which ironically closed higher today.

Main S&P 500 Trends

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

Long Term Portfolio
  • 90% 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. - Sold 10% on 12/27/12

Short Term Margin Trading Strategy 
  • Bought 1000 VXX @ $25.78 as of 01/16/2013
  • Bought 1000 VXX @ $25.92 as of 01/15/2013 - Closed @25.96 on 01/15/2013 . = +0.04
  • 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

Retirement Goal 
As of 01/02/2013 - 13.5%*
* Percentage gain for total liquid portfolio that started in September 2012, Goal is to double portfolio for retirement by September 2015, with 100% being the ideal retirement level.

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