Rising Wedge | Ending Diagonal

The slow bullish grind continues but now it looks like it is finally getting close to completion (really). There is an Ending Diagonal (Rising Wedge) pattern in place which are usually found at rally tops so perhaps there will be no more sideways corrections after the trendlines are broken. It is now 6 weeks since the market started its current rally so perhaps the 7th week will do the trick. So far there was been only 1 close under the Trend Average during this entire period and there hasn't been a proper Fib retracement for this wave. So the coming correction is going to be a Wave 4 like correction or a Wave that will bring the market down to the 50 Day Moving Average. I favor a deeper retracement but a Wave 4 like correction has similar odds. There is also the more orthodox Elliott Wave camp that calls for an end of the entire rally from 666 and they might well be right but the current long term trends and environment don't support that case in my opinion. I just read Warren Buffet was buying Heinz and if he is buying at this time, it is usually a good sign for the overall market. Buffet is the second (or is it third?) richest man in the world because of he has been able to pick the right companies at the right time. So anything he does, I pay attention to.. as a matter of fact, had I paid more attention to what Warren was doing in 2009 instead of the loony Elliott Wave Intl camp. I would be much closer to my retirement goal than I am today as I ended up paying a hefty price during the 2009-2010 period shorting the trend. The fact that one was selling $59 newsletters and the other was one of the richest men in the world through investing should have been clear. But I guess one has to live and learn..

I ended up being stopped out at break even on the 2/3 VXX position I had bought couple of days ago and by the end of the days was about to go in the $21 territory, so maybe by the end of the wave it will be at $20-21. Then I'll go back to fully hedged again and hope it goes up $10!

Main S&P 500 Trends

Short Term Trend = Bullish

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
• 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