Over, Over, Over-bought

Despite being over-bought for the last two weeks, this week the market also went over-bought on a monthly basis. Unfortunately, in so doing, we were stopped out @ 1498. At the risk of ignoring the market action, we still see a sharp set-back at any time and so are placing a sell order for 5 contracts at 1500 on the market open, we will then sell a further 3 if the market hits 1509. We will set a very tight stop @ 1512.5 for all the 8 contracts and run the position until 1450, where we will take profits.

Weight of Money

This week did indeed see volume pick-up as money flowed into the market, threatening a sharp break-out. We still view this event as unlikely at this particular time. The market is currently on trend for an approx 30%+ appreciation for the full calender year, even with the vast money printing, we find it hard to believe the market could break into a steeper rate of growth. However, we cannot ignore the market action that relentlessly presses up every day. Our position now amounts to 13 contracts on the short side. If the market does indeed rally above 1488 we will reduce by 5 contracts and then place a final stop at 1498. We are also   altering our target price to any price below 1440, where we will take full profits.

Earnings in Earnest

Despite the market's overbought situation, it managed a small gain that does nothing to change our view point from last week. Indeed, it allowed us to fill our advised sell order from last week. This upcoming week the earnings season comes into full effect, we expect a lacklustre picture with guarded guidance going forward. With the last two weeks gains we see profit-taking as a slow growth picture emerges. We are maintaining our down position, and will add a further 3 'sell' contracts if the market hits 1483. We will also adjust the stop-loss to 1487, but maintain our profit-taking level @ 1422-30.

Mind the Gap

Fiscal Cliff averted !! We think not. If the US were a family household they would have an income of $22,000, they would be spending annually $38,000 and have a credit card balance of $143,000. The measures put in place in this latest deal will pay off $100 of the debt ! Hardly averted !! The market rallied strongly on reports of a wall of money moving from the bond market into the stock market, a tad fanciful, as volume for this last week was the fifth lowest for the past year ! By rallying so strongly the market has left a 'gap' down to 1431 and also moved sharply into overbought territory. We will therefore put an order in to sell 7 contracts at the open @ 1463. Should the market rally above 1475, we will sell a further 3 contracts and then place a stop for all contracts @ 1485. The target price where we will take profits on all contracts is @1422-1430. 

Aloha

Even El Presidente returning early from his Christmas break did nothing to convince the market a deal can be struck in the final hours before the 'Cliff' comes into effect 31 Dec. We duly took profits as this realisation dawned on the market, comfortably sitting in a 'cash' position as the deadline passes. We will know much better next week, after the month, quarter and year end, how things will shape in the New Year. In our first year we have quadrupled monies that we started with, with all trades being shown in our sister blog Portfolio We shall do a full review and projection on the 'Performance' tab once the year has fully completed. Meanwhile, we would like to wish all our followers healthy, wealthy and intuitive New Year !!   

The Cliff

Despite no agreement on the fiscal cliff talks, the market seems totally unperturbed, apart from a brief wobble in the early hours of Friday morning. With this total lack of progress we fail to see how a 'grand bargain' can be struck, in all likelihood the best outcome will be another fudge and the worst a total collapse. Either way we see profit-taking into the year end and will hold our small short position. We will  short another 2 contracts on a rally above 1450, and set the stop for all 5 contracts at 1463. We will also take profits on any fall below 1410.

Fed Impotence

As we predicted the Fed printed another bucket load of dollars, the market rallied, but ultimately ended down on the week. Cruelly, our stop was breached during this move, crystallising a loss for the portfolio. With the end of the year approaching, there is unlikely to be another opportunity. We will short the market with a small position of 3 contracts on any rally above 1335, with a tight stop at 1351.