The market made another high today and the micro count posted seems to be delivering, so we could see 1490 (or even 1500) challenged early next week. But the top is not so much the issue at this point but what the bottom will be on the correction. A test of the 50 DMA would be great but that is at 1422 at the moment and with the idea of the debt ceiling being extended 3 months being floated by Republicans, I don't think the markets have much of an excuse to correct that much. So I'd be looking at gap support or around 1450 as the correction target. It's all speculation obviously but that seems like the most attractive target to me.
The VIX plummeted today because of the Republican debt ceiling idea and those VXX at bought at $25.78 are down 5%. The good news however is that my longs are at a high and the VXX portion is only 1/3 of my expected hedge, so I will be getting a bargain price on the 2/3 left perhaps even in the $23's. I am still debating whether or not I should actually sell any of my longs since I am going to hedge, as one thing I do not want to do is be net short in this market. I was going to post a long term chart showing the rising wedge the bearish crowd is counting on and draw a bullish 3 rising valleys pattern (you can click here to look at a very recent example) on it so you can see what the actual bullish potential is. But I'll have to find time to do that.. The bottom line is, per that particular pattern which in Wave terms would be a nested 1-2, a BUY was confirmed when 1474 was breached so the potential of a big rally is very possible at this point. Had the market not been able to overcome the 1474 resistance, one could have argued for a double top. But the path of least resistance is now up. There are no significant bearish events in sight, except for a black swan event so my prediction of markets possibly rallying until May 2013 (which would coincide with the 3 month debt ceiling extension) has a good chance.
Have a Great Weekend!
Main S&P 500 Trends
Short Term Trend = BullishMedium 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 GoalAs 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.