Monday, January 4, 2016

Booking some Happy New Year profits!

Back on 4th November, I posted about this particular chart pattern that I saw, along with some reasoning behind my trade. I would argue that since then, things are actually looking worse for the long term picture!

I actually have been building up a short position since mid October on the US indices, but since then they have steadily rose until my post on 4th Nov. Cutely enough, that was the day that I decided to double down on my position and I pretty much maxed out the available margin in my CFD account.

Anyone that has played with CFDs will know what a precarious position that is.

Fortunately, the market almost immediately turned since 4th November and the S&P headed straight for the 2000 mark, which it firmly bounced off on 16th Nov. Not being wise enough and a bit too greedy, I let my profits disappear into losses and I again increased my positions on 19th and 23rd Nov.

The market dithered around and on 17th Dec I added even more short positions again. In fact, while I was overseas I got numerous calls from my CFD broker telling me that I'm in a negative position and a margin call might happen if the market continues going higher. It did rise to 2080 and that is rather scary, but it has since then puked all over the place.

We are now once again at the 2000 mark and my position is almost 4 times as much as when I started in mid October. Although if the 2000 mark breaks, we could very well see a huge waterfall decline in the indices, I've decided not to tempt fate any longer and have booked some profits at the infamous 2000 Maginot line.

Psychologically, it's nice to close some of my positions so that my exposure isn't so high. It is also nice to "drag up" my average cost by closing my most marginal winning positions.

I still have positions betting on the US indices going down and my average price on the S&P is a pretty healthy 2076. That means as long as I close out my open positions before 2076, I'll be break even. Right now I'm sitting in nice unrealized profits.

The trader in me suspects a dead cat bounce soon, which I will build up positions once more for the clean break of the 2000 level and the gateway to much more weakness in the future. I am more than willing to bet on the decline of the US markets. But for EM markets like Singapore and so, I am not so inclined. The tremendous difference in valuation is one of the key factors. The US is stupidly expensive. Singapore is actually cheap.

I still think the US markets are beyond ridiculous, with many meh companies trading at hugely rich valuations in the millions, if not billions. Amazon. Twitter. Netflix. Yelp. Camera on a stick. It seems like logic is no longer required when buying a company.

Oh well, whatever. The market goes up and down every single day. Call it technical analysis, fundamental analysis, voodoo or just plain dumb luck. Only the guys that can eventually walk away from the table are the real winners. No one cares how much you were "up". All that matters is what you walk out with.

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