Are we there yet?

We have now had two days of heavy falls. Judging by the futures market and by the performance of Asian markets overnight we are due for another nasty day today. So has the slide that I have been waiting for, preparing for at such a high cost finally arrived?

My short positions are slowly returning to profit. I still have to recover the losses from my early short foray that I closed in mid April. I opened more positions on Friday. So I am backing my judgement big time - 28% of my portfolio. Whether or not I am right still remains to be seen. I have found that taking short positions is a risky business. But then you can't expect to make money without taking risks. The money you make in this game is a reward for taking risks. So I hold on tight and stick with the white knuckle ride.

Fear factor

I am sitting on heavy losses from my shorts on the FTSE S&P and DOW. Yesterday I almost threw in the towel as the market powered through the previous highs on the Dow. But then it pulled back and closed below previous highs. The close was still a local record. The situation on the S&P was not so bad, we are still well below previous highs. The big disappointment was: no spike in volume. I am waiting for a crescendo in trading. This would show that those sitting on the sidelines have finally been suckered in, and the market his at last ready to fall.

But I am  pretty close to my stop loss so the next day or so will be the end of my patience.

I am not a great one for listening to news but an item caught my attention yesterday. Alan Greenspan made a statement. You remember him, he was the guy who single handedly landed us in the s**t.  In a Bloomberg interview he said that stocks are very cheap. His argument is superficially coherent since it is based on the low PE ratios of S&P companies. I continue to believe that we have is asset price inflation generated by the the printing of money, so I continue to fear a big bust. The day will come when it becomes obvious that central banks can no longer sustain the weight of their collective borrowing and the banking system will start to unravel again. I just hope that when it happens I will be in a relatively safe place. But there is no point in being right in the long term and losing money in the short term so I will have to pay attention to my stops and find something else to do unless omething happens soon.

Waiting

I have not been updating because there is so little to say. Here we are waiting, waiting, waiting. And it's a painful wait. It's so hard to get the timing right. When the market shoots off in an upward direction it takes massive courage to hold onto shorts which are losing money, particularly when my capital base is so small. Result is that I cut my losses and then I'm not there when the market moves off in the direction I expect. Fear of the bear trap is ever present. The best I can do is to control the money I put at risk so that if I do get it wrong my loss will be manageable. I then hold on tight and go with the ride as long as I can bear the pain. The notes on the chart show why I am holding on.

Those damned bulls

I am feeling the jaws of the bear traps gripping my ankles. Who'd have thought it: straight through the 13000 level and sticking there all day long. No volume spike but we are back to those days of huge daily price movements. I have yet to throw in the towel. If it goes on like this I am going to have to sit on the sidelines and watch developments that I lack the skill or resources to handle. I cannot afford another year like the last one.

Today is decision day and its going to be hard. But the first rule of investing is that you must, above all, protect your capital. If you fail to do that you have no chance of re-entering the game. Take your losses and wait for better times.

I did it

The market recovered on Thursday and then fell on Friday. I bought more shorts as I planned. Now I wait to see if the slide will continue or if I have been suckered into a bear trap. No real way to tell until it happens.

The market held above that support line of 12880 for most of the Friday and only slipped in the last 30 minutes of trading. Perhaps this is a good sign for my position. Only time will tell. That waiting game again.

Climbing back on the horse

It is hard when you have lost a lot of money to get back into the market, but you need to grit your teeth anddo it.

I indicated in my last post that I am now bearish about the market so the only way to go is short. I bought short positions on the US and UK markets yesterday through SUK2 and DXD exchange traded funds. I turns out that I went in too early for the market continued its retracement today. I'm holding on and planning to buy more when the up-tick has come to an end. 13000 is the strongest resistance point and it also represents the half way point of the downward move.

Not much more to say. I wait to see if I am right.

Woe is me

Back after three week of absence and at the beginning of a new year for my portfolio. On the 5th April each year I cash up, review my performance for the previous year, revalue any holdings at their market price on the day, and start with a clean sheet.

 My performance last year was disastrous. Almost half my losses were chalked up during the last three weeks. I was too slow to cut my losses. I was holding a portfolio that was far too risky to be left without proper supervision and I lacked full access to data which would have warned me that a major shift was taking place in the market. Too late now to grieve, I just have to work hard to make up the losses.

A quick look at today's chart shows what has happened and also what I should have done if I'd had been able to see events unfolding more clearly:

• the support line, respected by the market since October was broken on the 6th March
• it looked like a false break down because the market recovered within a week
• support was broken again on the 20th
• this followed a sharp spike in volume on 16th, the day of a new high

Those last two events should have been my signal for retreat. I actually held my positions until the 29th March by which time my losses were dramatic. To add insult to injury one of my US holdings had it's listing suspended on 28th March. I have written off that holding and this accounts for about a third of the loss accumulated during the past three weeks.

So where are we now? Yesterday the Dow closed bellow the critical 13000 level and faces a couple of previous resistance levels which are now potential support levels. I do not hold out much hope for a happy outcome. Share prices have been riding high and we are approaching the summer which is rarely a good time for the market. I enter this period with almost 90% cash and so I am now protected from danger and will be well placed to take advantage of any rises. For me the best outcome would be a sharp market fall which would mean that bargains would reappear.

Precious metals and commodities have done no better than shares. I have no precious metals but still have my cattle holdings which are not doing well. My other holdings are tiny.