Tuesday, 23 October 2012

S&P 500 breaks below last week's low, breaking down from trend channel

You've gotta keep an open mind in this game. Best to see the markets with fresh eyes each day. Easier said than done. Peter Brandt tweeted a link to a somewhat related article last night by MercenaryTrader.com titled How To Be Right A Lot. A good read.

Only last Wednesday I posted Three reasons why the ASX 200 is headed to 5000 and S&P 500 headed for test of all time high? Those scenarios may still unfold, but Friday's plunge in the US clearly introduced the possibility of further near term weakness. As I stated on Sunday, last week's S&P 500 low appeared important. That low has now been breached, accompanied by a bearish triple moving average cross.

Avid Investor model portfolio closing all positions (updated)

Following last night's cash S&P 500's poke below last week's low, which I had stated on the weekend I believed to be a key level, at 11am today I invoked rule 10 and the spirit of all rules to "play defense", closing all positions.

If you've been following me for a while you'll know that the value of the ASX 200 (at least in recent years) is a function of the values of the S&P 500 and Aussie dollar, and little else. With the S&P possibly breaking down, it was not time to be sitting tight on a Aussie stock portfolio that was only slightly ahead.

One thing I have learned during the brief existence of this model portfolio is that having such a thing out in public does not suit my psychology as a trader. Of course I had or have positions in all the stocks, although the simplistic money management for this portfolio was unique, for ease of administration. Was fun while it lasted. As I tweeted earlier, it was a fun experiment. Playing a lone hand as a trader suits me better. Happy to continue sharing charts.

For completeness, portfolio summary is shown below. Brokerage robbed the portfolio of 1/3 of its profits. Portfolio rules are here.

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