Didn't we do well

Last Friday's call on the market was beautifully timed. I am not one for patting myself on the back, I could so easily have got it wrong but not on Friday. The fireworks I had been looking for shot up into the sky. Dreadful metaphore because what happened was that the markets broke their support levels made a dive. I had shorts in place and bought more as the markets in London and New York opened, even though a large part of the move had already taken place overnight. I made half my profit for the year so far on Friday so those predictive volume spikes are doing their stuff for me.

My portfolio is now 64% short ETFs 10% gold and 26% cash. My profit for the year so far (from April) is 6% while the market has fallen by 8.1% (my benchmark is the FTSE and I measure in £s). A modestly good start to the year and just what I need after my disasterous performance last year. I am going to have my work cut out if I am going make up for last year's catastrophe and earn my salary for this year. The main thing is that I did not lose my courage and was ready to move on.

Friday's performance was not just shorts, it was also that gold I bought a few weeks ago. That shot up on Friday too. To my mind this is a worrying sign, for gold normally weakens when the $ strengthens which it did on Friday (at least it did when you factor out the effect of terrible jobless numbers in the US that were published before the US markets opened). And it shot up as markets tumbled, a return to the old relationship which has been absent since last Autumn. To me this suggests that fear has really returned to the market. We must see how this develops over the next few weeks.

FTSE closed for a couple of days now to celebrate the Queen's Jubilee. Could cause a problem if I need to sell UK holdings.

Big day today?

Those new support lines (I should say old support lines because they go back to February and April last year) have been working their socks off to hold the DOW up for 9 days now.  Then yesterday there was a spike in volume and an interesting candlestick shape. (I'm not too hot on candlestick shape analysis but it looked interesting with its long wicks and short body.) Main thing is that it was associated with a modest volume spike.

Result is I'm looking for fireworks today, could be up, could be down. I'm guessing down. At the moment the futures markets are showing a fall for the DOW but rises for the FTSE and the DAX. Only time will tell if I'm right. Luckily I'm not a nail biter.

In the mean time my gold is going well but mainly because of the rise in the value of the dollar

Tortured on the rack

The news yesterday was full of it: GREEK CRISIS HITS STOCKS! But as you can see from the charts a fall was to be expected and, measured by recent market activity, it was not especially big. The lower support line almost held and we are left scratching our heads. Will it go lower or will it not? This morning's futures market says not:: a 40 point rise in the Dow, a FTSE that will open flat and a modest rise in the Dow.

The FTSE looks more like a down trend but even there you can see that yesterday's fall was not out of the ordinary. The fall in the DAX was even less dramatic.

Never trust what you hear on the news. Watch the charts and be afraid unless you get a clear signal. We have now been in limbo for six weeks. That's more than 10% of a year. It's the worst possible type of market for making money. It is impossible to be confident about short positions and holding stocks is mighty risky when there is the threat of a big decline. Woe, woe and thrice woe.

Cash up

Dow blue, FTSE brown, DAX green

Today is one of those big days. Not for the market but for me. Seeing the weakness of Tuesday's break out and looking as the long term chart of the Dow which I posted yesterday I lost heart and sold almost everything I had.

I've lived through these moments of truth several times during my trading life. Mostly, I am happy to say, just before a major market crash. I have no way of telling whether a crash is coming but it is possible. A great weight has been lifted from my shoulders. The market with its massive daily movements is so hard to read at present. The fact that gold moves in the same direction as stocks as I described on December 8th. removes gold's value as a safe haven. So what I have done is given myself a breathing space.

• I can explore alternative strategies that may be helpful in these hard times. 
• I am ready for a crash if one comes
• I can watch gold and silver perform their peculiar antics without worry
• I have cash ready to jump on board any train that I see leaving the station

I made a small overall loss on my purchases of Tuesday. I made money on the US stocks, but I was too slow selling the UK ones. I would have made a lot had I sold them on Wednesday but the gains were quickly reversed. The Hong Kong shares never really went anywhere.

So now I wait to see whether any winning strategies come to mind. Whether I was right to worry. And whether gold and silver will be worth buying again.

Today's chart simply shows the relative movements of the DOW, the FTSE and DAX over the past year. It is surprising that the DAX has been hardest hit given that the German economy is doing so well. I guess it must be that investors are wary of Euro denominated assets. The Dow strength is probably due to a preference for dollar assets.