Monday

TheInflationist: Weekend Summary 220309

Post a Comment March 23, 2009 – 3:37 am |   | Permalink |  Print This Post |

Our portfolio remains relatively unchanged as some losses (AED) were offset by trading gains; up 32% in about 2 months despite the decline of the market. At the time of writing, the Dow Futures is up 1.35% at 7366 whilst Australia 200 is at 3524 (we are aware of our unclosed discrepancy trade and will do so when markets pull back). Based on our previous article “The Anatomy of a Rally”, there are 2 possible scenarios here. If 7580 was the peak, then a 51% pullback (ie least pullback since January 2008) would bring us to ~ 7050. If Thursday and Fridays pullback were within the primary wave up, then our max upside target of 8140 still holds. We believe that we are in a multi week rally similar to March 2008, so the principle would be to long on weakness. Our indicators triggered a Buy Signal last week (which does not reflect the day to day movement but rather on a general trend in the next few weeks). We never wholly trust a set of indicators - hence we prefer to take a trade when we have a 2% buffer in our favour (eg indicator is a BUY, and market is down 2% - so even if our indicators are wrong or market makers in full force to take out technical traders, our position is buffered by the 2%. On the other hand, if our indicators are right, the markets may reverse the -2% and close up 1%: that is a nice 3% move). We are weary of our silver and Australia positions: an easy way to minimize ones risk is to open a long Gold (951 at time of writing) or long FTSE (3848 at time of writing).

The Inflationist Weekly Portfolio Summary