Monday, February 25, 2013

Going for the 50 Day Moving Average





















What a day! we saw almost a 50 point swing on the SP500 and while I had been expecting the market to turn south early this week, I did not expect the early morning action. The early gap up had all the signs of a bullish Wave 3 of a possible Wave 5 and I was ready to start covering my hedge but then the reversal was so abrupt and steep it was obvious something else was something else going on. The market losing its previous 1497 low confirms we are either on a C wave or a bearish Wave 3. The stronger the correction, the more likely this is an intermediate Wave 2 correction. For now I am looking to see how the 50 DMA will hold as the challenge seems highly likely at this point. That is where we will see just how many bulls are there in this market. We still have the sequestration issue to deal with but in the end that might turn out to be bullish since forced budget cuts would slow GDP and the Feds would have to keep liquidity flowing. What matters now is how a deadlocked government in Italy will affect the austerity measures put in place by Monti's government and in turn Europe. Berlusconi was running 2-3rd not that long ago and given the fact that he is on appeal on a tax fraud conviction and had been caught hiring underage prostitutes (makes US politicians look like angels), his comeback is nothing short of amazing. This guy has been around forever and it seems like he just won't away to the detriment of leftist Italians.. my ex is from there and she and all her friends love to hate this guy..lol. But today at least I am grateful for Berlusconi as I was able to come back to the positive side on my VXX position, which I ended up selling for a small profit. Had I held until after hours, I would have been up $5-6k. But since I was at one point $7k under, I am just happy to be out of this crazy ETF. I told myself couple of weeks ago I would stick to ETFs that actually track the SP500, so I will buy back SPXU on the bounce to short. Volatility is fun to trade, almost like gambling but it can make you lose sleep and quite possibly shorten your lifespan. So from now on I am trading that only intraday or in very small amounts. Aside from that, FXI is finally at its Fib retracement area at $38.04 so I will be jumping in soon on this one and will be 100% long again. Also, I might buy some AAPL or a triple long on margin.. couple of weeks ago people were overly optimistic and soon they will be overly pessimistic, works like clockwork,

Main S&P 500 Trends

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

Long Term Portfolio
  • 60% 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 2000 VXX @22.38 on 02/12/13 - Stopped out @22.38 on 02/14. Bought back @22.05 on 02/15/13
  • Bought 800 VXX @23.70 and 1700 SPXU@ 31.68
  • Bought 1000 VXX @ $25.78 as of 01/16/2013, Bought 1000 VXX @23.68 on 01/22/2013 - Sold @22.70 to position trade on 01/25/2013. Took loss $2.00
  • 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
* Position in gold is $4k

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