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Saturday, March 27, 2010

Big Update

Hello Hello fellas...

It's been a long time since a proper update on the blog, but it has been very hard to keep up with everything going on. Today I will make a proper update starting from our little portfolio which we can say is in good health, to currencies, stock market, commodities and what can we expect from here on.

So let's start with our portfolio:

This one looks to be a very hard task, I have a few ideas on my mind and some of our current positions appear in the screener once again, so it will be more cumbersome to me, since I had to go through their graphs to see which ones could offer more potential. The fact that the market is deeply overbought makes the timing of our purchase to be very poor. I will present some facts further down the road, to see if we press the trigger on Monday or not.

Here is the current state of the portfolio:

Well the stocks that are up for a switch and their respective returns since we've bought them are the following:

- IPHS   +141%
- NOV   +19%
- DIVX  +45%
- COH   +134%
- MOS   +29%
- DELL   +45%

So, these stocks have served us well especially IPHS and COH, but it will be time to sell them now except for Coach (COH). This one I still like it.

The new contenders for the next year should be:

- COH (which we already have in the portfolio).

Now the thing is, the first group of stocks are to be sold at the opening of Monday. I will not buy the the new contenders right away and why is that?

Because the market is extremely overbought and in my opinion a correction is due next week at least, so I will be waiting a bit to see if the market drops. In terms of S&P the readings are in the extremes, and nothing goes up in a straight manner of course.

Here is a signal that has served well in the past months and is now triggering a potential top:

Every time the conditions on volatility crossed over its' MA it was a top before a mild or even a stronger correction.

Regarding the Dollar, everything is going acording to plan. The dollar has been rising relentlessly against pretty much every currency. The scenario I traced out almost a year ago has been such a very good road map for us:

Now, the thing is, I see this rally hitting a mid-term top. I can already count 5 waves up of the same degree so it may be time for a little bit of a rest on the Dollar. As you can see the EW structure since the bottom is textbook clear:

The same goes for Eurodollar, which pretty much is the Dollar Index chart but inverted:

The idea to remain is the trend is clearly down for Euro and other currencies against the dollar. The pundits that keep saying how the dollar is doomed i bet they are scratching their heads, and of course they are blaming this due to Greece problems. The fact is the one who makes the news is the market, not the other way around. I didn't even dream of bailouts, IMF's, PIGS and Greece almost a year ago, and yet the dollar is behaving pretty much the way i said it to be in terms of structure, price action, etc... of course they will keep putting the blame into Greece, etc. We of course know better :-)

This chart if I remember correctly was made in July 2009. The green up arrow is the red (1) wave from the updated dollar index chart. As for very long-term we still can't know for sure if this is a rally just to test the 100 area or if it is a new bull long term bull market. As time goes by, we should know that more along the way as we get closer to the inflection points:

This is all for now. Tomorrow will be sky diving day :-D

So if you hear nothing from me the next week or so, it's because my parachute didn't open.

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