Wednesday, January 2, 2013

New Highs Coming

So politicians waited until the very last minute to come together on the Fiscal Cliff and we got a big rally as I had been anticipating for weeks. What Obama and Boehner couldn't negotiate in over a month, Joe Biden managed to do in less than 24 hours with the Republicans. So I'm glad Biden was brought in and it shows what a skilled politician he is. I wouldn't be surprised if Biden wins in 2016 as he's been scoring major political points. And now that the picture is clear, the market is now going to play catch up with the rest of the world, so I am expecting 1475 to be taken out fairly soon and perhaps see the all time high being challenged by May 2013. The Bullish Engulfing Pattern is confirmed and all the 3 trends I track have turned bullish with today's move, so as long as the trends stay there we should see a bullish January. The market is overbought short term so a pullback to the Trend Average is expected after 5 complete waves. And that will be a level to put back that 10% I took a few days ago and perhaps some margin as well. I am very glad I didn't sell anymore last week! HSI just exploded last night and it's well above the 22,750 target I had since September. I am now expecting the 5th wave on the HSI to match the 3rd wave, so 23,800 is the next target. As of now it is already at 23,400 so it is almost there.

Today I am posting the short term chart which shows the rally today and a long term chart that shows a possible path the market will take in the next few months. Like I said on my last update, the problems we had last year at this time are basically gone and we are approaching a healthy level in the world economy. If Europe manages to grow again at a modest place, then all world engines will be in synch and that will allow for this bull market to continue. Markets have a 20% correction usually every 3.5 years on average and the current bull market is currently just 11 months old so condition and timing favors the long term chart. And perhaps this year we will hear less from the likes of Marc Faber (who was "100%" certain of a worldwide recession), Roubini, Prechter and Jim Chanos.. major uber bears who are never positive about anything. Obviously, we will eventually get a 20% sell off/correction but 13 is looking like a lucky number so far.

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 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 dated September 2012, Goal is to double portfolio for retirement by September 2015, with 100% being the ideal retirement level.

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