Market Update

I had a very busy day today so it is just now that I am getting some time to add today's update. I didn't even have a chance to drink coffee.. anyway, the market went up but not by all that much so there seems to be this wait and see mood. However, the pattern looks bullish as there seems to be a series of nested 1-2s and perhaps the jobs reports tomorrow will give the market enough fuel to rally towards 1423 again. It's still not clear to me if this wave will end up being corrective or impulsive but we should get an idea tomorrow or early next week. China and HSI continue to rally and depending on what happens here in the US, I might hold on for a bit longer. It is starting to look tempting to start locking in some profits but I'll be patient.

Also, today was one of those days where I am right on the market but wrong on the trade. The market went up but the XIV I bought fell 1%, so I am hoping a stronger rally will yield some profit so I can be out for the weekend.

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 1000 XIV @18.80 as of 12/05/2012 on margin - 
• 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.

SP500 working on a Flat?

It was a somewhat confusing day earlier today but at the end of the day, the result was about the same. The A wave just got extended (as in it wasn't finished yesterday ) and the market is not working on a B wave with the potential to form a "Flat" by topping around 1423. However, should this wave rally hard past 1423 then it will be a W3, the short term direction is up just not sure to what level just yet. I figured the HSI and China rallying 2-3% last night would help the US stage a decent rally but instead Apple shares sold off today and dragged the entire market. So I guess each market is doing its own thing at the moment. And for those who are following the HSI, the count I have is Bullish W3 of a W1 of W5, so there seems to be more upside to come and my target at this point is 22750 going by wave proportion. I am hoping to cash out of 30-40% of my shares in FXI around those levels or any signs of a top. I am hoping to see $40 by the end of the month on this run and that'll make it a very nice Christmas gift for me :)

I ended up selling XIV for a minor profit in the middle of my confusion but I bought back again once there was more clarity. So I'll log the first one as a final trade and the second one as a new one.

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 1000 XIV @18.80 as of 12/05/2012 on margin - 
• 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.

Trend Average Test

I mentioned yesterday the market was going to test the Trend Average and the market did it today and on the same wave too, so now we have to see how the market rebounds. I've been doing this Trend Average type of predictions for two years now and it pretty much works like clockwork, it always happens with the exception of strong intermediate waves. And perhaps the longer I continue to analyze the markets, the better I will get at identifying these intermediate waves so as to increase the percentage of winning trades. It is a fact at this point that minor waves always test the TA, so as a trader it's great knowing where the market is and the levels it must re-visit. And I know there isn't such thing as a "sure thing" in the stock market but this TA test has always happened in the last 2 years I've been tracking it. Unlike wave counts or oscillators, there is always a clear numerical target.

Anyway, today the markets seems to have found a short term bottom and depending on the counter rally, we should be able to project downside. However, should this bullish wave take out 1423 then we might see   a strong rally. I went long with XIV today per my mechanical signal, so hope that goes well. Right now China and HSI are rallying, so we'll see if that translates into anything in the US market tomorrow. And btw Gold seems to be headed for a test of the initial intermediate wave lows so I'm hoping that holds.

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 1000 XIV @18.41 as of 12/04/2012 on margin
• 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.

W2 Correction?

Last week I posted the market was going for 1423 when the 200 DMA and the TA was tested and the market fulfilled my prediction by gapping up and topping exactly at 1423 before starting its correction, which I think will now go for the TA or even the 200 DMA again given the Fiscal Cliff uncertainty. So far, I counted 5 complete waves intraday from the 1423 top to the 1408 bottom so we should see a bounce before another bearish wave to test the TA/200 DMA. And again, given the environment we could see a deeper retracement before a big rally so I'm hoping they (politicians) finish up negotiations before Dec 20th so we can have a nice Santa Rally.

I bought back the VXX position and took profit at the end of the day since I am expecting a bounce. Also, I want to avoid holding on to this ETF overnight in case something gets resolved and profits get wiped out. HSI btw made a new high for the year as I was expecting and started a W2 correction of W1 of W5.

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 @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.

Market Update

The market didn't do much today despite some of the not so good news coming from the Fiscal Cliff negotiations. But the market continued to consolidate in a W4, so my assumption is another bullish wave is coming to test the 50 DMA earlier next week. Also, I posted the long term count chart I've been tracking for a few months now. Again, I don't trade based on long term wave counts but it is good for "situational awareness" should the market breakout of the long term Broadening Formation. If the market can rally past the all time highs, chances are prices will take off. What catalysts could make this happen, is anyone's guess at this time. Lastly, I am posting the HSI chart as that is where I am 100% invested and where my trip to Easter Island depends :) I could have sold few weeks ago when the RSI was over 70 but seeing that it was a W3, I took my chances in not selling. And now prices are very close to a break out for a W5, so we'll see if this wave will top in the 22600+ area as projected should the W4 low hold. Money is flowing into HSI due to the rebound in China and the very high dividends being paid so it is a matter of time before mainlanders realize what they have in front of them. It makes no sense that condominiums in mainland China sell for $500,000 (which have tripled in the last few years) while collecting a 2-3% yield on rent, while "red chips" stocks are yielding 5-6%+ and are at a 15 year valuation low (10.9 PE). As it is HSI will continue to rally but if China starts to rally, then we'll see a long term bull market there.

Have a Great Weekend!

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 - 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.

Year End Rally Set Up?

The market kept rallying as I expected yesterday and came within a few points of the 50 DMA and the previous peak from earlier this year (1423). So ideally, the wave will complete the impulse by testing these levels and then go on to a Fib retrace. Looking at the news, I think the environment is perfect for this to happen as the market is essentially trading on the Fiscal Cliff news.The ongoing negotiations and posturing by both the dems and the reps, will be a good excuse for a pullback to the Trend Average perhaps even the 200 DMA again. But a resolution to the Fiscal Cliff before Christmas will sure add fuel to the market to stage a big rally. The key levels to watch will be the 1385 low, the TA and the 200 DMA. I will probably attempt a short or buy back VXX at the 50 DMA and buy at the TA or 200 DMA with the 1385 as my stop. And obviously I'll have to see how the market gets to these levels for a better forecast. Had I been awake yesterday, I would have been up 4-5% already today.. oh well. At least HSI is 0.5% within this year's high so I am good there.

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 - 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.

200 DMA - Trend Average Test

Just when I had given up on the idea of seeing a test of the Trend Average and the 200 DMA, the market decided to break out of the rectangle pattern to test these levels, make a 38% retracement and then rally sharply towards resistance and slightly closing above it at the end of the day. And looking at the MACD cross on the chart, the market looks like it's headed to 1423 at this point. We could see some downside to retrace the bullish wave from today and in turn form an Inverted Head and Shoulder formation. The fact the market was able to reverse quickly after testing the 200 DMA shows there were buyers waiting for this test, like me actually, the difference is I was deep asleep when this happened and when I woke up the market was already higher than yesterday so I guess I'll just have to wait and set my alarm clock next time.

The overall picture continues to be bullish and a change of the intermediate trend to the bullish side gives a green light to go all long. This fiscal cliff issue will be resolved sooner rather than later and that should spark a huge rally, perhaps a Santa 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 - 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.