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TheInflationist Weekend Summary: 31.10.2009

Post a Comment October 31, 2009 – 3:39 am |   | Permalink |  Print This Post |

The Dow closed -250 points on Friday, losing all of its gains from Thursday. October asserts its authority on the last trading day, ensuring that markets close the month down after a promising start. We updated our portfolio after Fridays blood bath. Our portfolio value went up to $105822 after Friday’s crash, reflective of our net short position. Our portfolio is up 165% since inception on 1.1.09. Cash is at $37241, Stocks valued at $57823 (expect this to take a hit Monday as the ASX futures closed down 141 points!), and unrealised trading profits of $10758. For new readers, we started the year with $40000 in our no holds barred trading challenge. Every single trade we have made since then have been recorded LIVE. Traders are permitted to trade in anything - as long as trades are recorded live and prospectively (ie NO DAY TRADES as these trades are impossible to verify and are of no use to other readers).

Reviewing our performance, we find that more often than not our trades first go against us initially. This potentially enables us to outperform ourselves by hiring someone to read the blog and to replicate our trades only when we are down. This removes the psychological battle in trading which we are still trying to master and will potentially outperform out current portfolio.

GAME PLAN FOR NEXT WEEK

So, our game plan of waiting for a higher entry point didnt eventuate. Markets opened down and went lower. We see markets going lower from here from a macro perspective. The trend followers will probably now short on rallies as oppose to buying on dips since March. The challenge here is when do we take profits? Our portfolio is looking quite FULL below (!), and we look to liquidate most of our stocks this week (hopefully) after a rally (exception of Cooper Energy). Our trading positions remain open but we intend to close out our short USD positions (NZD/USD and AUD/USD). We see a short term rally in the USD as markets head lower. We also have AUD/CAD on our watchlist. We have dipped a few shorts here and there in our personal portfolio, but intend to take a core short position early next week. Sure we are bullish on the Australian Dollar, but commodity rich Canada has quite a similar economy in our view. Only difference is the proximity to China, hence the perceived strength in the AUD. We think this will be a good trading position, and it will probably trade range bound.

Our Hang Seng Nikkei play remains in the red. We will let this one cook for now whilst we start taking some profits in other plays. Monday will be an interesting day in Australia - futures were down 141 points (!). The only other time we have seen such a huge drop was in March (from memory it was 180 points). This is a good long opportunity (make it VERY small and short term), especially if one had shorts from Friday which are still open. The Aussie futures took a bigger hit compared to the Dow (but the ASX have been outperforming everyone else since March so expect weakness in the ASX in the coming months).

Question is: is this the ultimate top? Hard to tell. There is the potential of another rally but we will take some profits and let the rest run with stops close to our entry. Dow of 9000 is our initial target, with a retest of March lows at some point in the next 12 months. We plan to hold some of our shorts to retest March lows!

More updates later.

Correction: We forgot to add a short Euro/GBP mini 0.937 to our portfolio below. We took this trade on 13 October 2009. Here is the link.

www.theinflationist.com

www.theinflationist.com

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TheInflationist Portfolio Updated 31.10.09

TheInflationist Portfolio Updated 31.10.09