Monday, March 4, 2013

Possible Break Out Tomorrow





















The very bullish Monday scenario did not materialize, however the market did manage to stage a rally from the higher low put in the morning and closing strongly towards the end of the day. And if I am not mistaken, this is the first positive Monday this entire year. So the bottom line is the same, traders are buying dips and this wave from Dec 31st is basically a "chasers" wave where traders dive in afraid they will be left behind.  The only significant top we've had was 1530 couple of weeks ago and that looks like it will be taken out as soon as manana por la manana (tomorrow early morning). We have the Inverse Head and Shoulders and a steep Ascending Triangle targeting 1565 so keep this in mind if you are shorting. I am lucky I was able to sell the triple short hedge at the last dip last week and I will reconsider it when we get to 1576. Also, I forgot to mention that transports have made an all time high, so DOW theory supports an all time high. Right now it will take a bearish miracle to reverse what's coming..

I ended buying 5% more of China related shares so I am now 95% long and looking to add more in the next few days. China sold off on liquidity concerns and I think it's interesting they have the only economy in the world today where the problem is too much growth yet the market trades relatively near the bottom. Once investors in China see their real estate investments stall, they will jump to the stock market and we will see another bubble there. One thing many fail to realize is that people in the second largest economy in the world are stuck with their money in China as they can't invest abroad for diversification. This is the main reason their government has failed to stop real estate speculation, there is too much money circulating and the only asset people feel secure with is real estate. The Shanghai market has now finally corrected to its Fib retracement area so I am expecting another strong bullish leg soon. Also, I am keeping my eyes on Apple, it closed at $420 but the ideal level to buy (for me) is $350. Not sure if it will get there but I think a bottom is getting closer.. so much for the Tom Demark "$480 low" or the "1492 top" on the SP500. I can't believe he gets away with charging $500 a month.. I give somewhat decent forecasts for ad clicks for a cup of coffee!

Main S&P 500 Trends

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

Long Term Portfolio
  • 95% Long in Red Chips traded in HSI (Mainland China stocks traded in Hong Kong) initiated September 2012. Only position trading 30-40% of portfolio for cost improvement. - Sold 10% on 12/27/12, Sold 10% 01/22/2013 - Bought back 5% 02/27/13 - bought 5% 03/01/13 - bought 5% 03/04/13

Short Term Margin Trading Strategy 
  • Bought 1500 SPXU@ 30.98 on 02/27/13 - Sold 1500 SPXU @ 31.05 on 03/01/13 +0.07
  • Bought 2000 VXX @22.38 on 02/12/13 - Stopped out @22.38 on 02/14. Bought back @22.05 on 02/15/13 - Sold all 2800 VXX on 02/25/13 @ 24.30 = +2.05
  • 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 $15-20

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