Thursday, January 31, 2013

January 5.2% return on S&P500





































So the market closed the month up 5.2%, the best performance since 1997. And if you want to see what happened the rest of 1997, look at the second chart.. it went up 25% more. Obviously, it would be a fallacy.. a gambler's fallacy to be exact, to assume that past results affects future performance. But sometimes these past performances are worth a look as one can see how the market deals with momentum. Right now the market has a strong momentum and despite many opinions (mine included) that a top is close, the fact is the market has not traded or even really tested the Trend Average for a month. And until the market turns the TA bearish, there is top yet. February is usually a weaker month and realistically the market can't go up 5% every month. In fact, the best year the S&P500 has had in recent times is 1997 and that was a rise of 2.5% per month on average. So I won't be all that surprised when a correction does occur but for now the market has not breached key support, so we could be witnessing another sideways move before a bullish run. Perhaps the DOW needs to make an all time high to change all those Elliott Wave doomster counts before turning south?

For entertainment purposes, here are couple of links of people who like to anticipate tops and are currently very bearish..

Prechter in 1996 calling for a 50% decline on the SP500 to 300.. he seemed so sure plus he had lots of fancy "in house" oscillators and expert tools.. and we see what happened in 1997.

http://www.businessweek.com/1996/47/b350224.htm

Doug Kass in 2012, who makes great calls from time to time (specially bottoms) but not so much at tops.. he started shorting late summer and the market went against him for months.

http://www.businessinsider.com/doug-kass-vix-low-stocks-collapse-2012-8

So bottom line is, it's better and safer to stick to the facts.. in other words the trends.


Main S&P 500 Trends


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

Long Term Portfolio
  • 80% 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, Sold 10% 01/22/2013

Short Term Margin Trading Strategy 
  • Bought 1000 VXX @ $25.78 as of 01/16/2013, Bought 1000 VXX @23.68 on 01/22/2013 - Sold @22.68 to position trade on 01/25/2013
  • 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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