Monday, November 26, 2012


The market started a correction today as expected but it's hard to tell what degree of a correction this is. I am going by the most simple assumption which is an ABC to the Fib retracement area of the Trend Average but I am also keeping an eye on a bearish W1-2 and hopefully we should be able to tell tomorrow.  Alternatively, if the market rallies to break the 1409 resistance then chances are there is one more leg up (perhaps to 1423?) but for now I'm assuming more downside.

I almost sold the VXX position I bought Friday as it just kept falling even when the market was down almost 1%. In the past, one could predict the direction of this ETF in conjunction with the overall market. But this correlation seems to have been lost recently and the only profitable trade in on the XIV apparently. Maybe this is indicative of an expectation of a "risk on" environment for next month?  whatever the case, I am stopping out if there is a rally tomorrow or at the end of the C wave. I rather stick to something that actually has a direct correlation with the market instead of playing market roulette. On the bright side, my longs on the HSI are about to make a high for the year and its daily MACD is doing a bullish cross so it's looking pretty good there. Also, Gold is looking like it's about to launch a big rally.

Main S&P 500 Trends 

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

Long Term Portfolio

  • 100% Long in Red Chips traded in HSI (Mainland China stocks traded in Hong Kong).

Short Term Trading Strategy 
  • Bought 500 VXX @30.77 on 11/23/2012
  • 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.

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