Executing My Plan Amidst Blood Bath In the Market

I’ve been on the wrong side of the market trading around the likes of QID and SDS since summer of 2010 and finally gave up in February.  It sounded bad, but not any where nearly as bad as my Belgium friend who basically rode QID and FAZ all the way down for the entire year until when he finally threw in the towel on Feb 1, losing money to the tune of $340K.   For me I came out flat, with losses offsetting all the gains.   Basically I missed the big bandwagon.  And that felt awful, especially when my colleague told me that he felt like he can retire again because his 401K had doubled from the 2009 low.

Even as I gave up on the dark side, I didn’t want to chase the long side either.  So my plan was to trickle in on major support levels, and if the market never look back, then I’ll just have to live with however number of shares I accumulate.  This is based on the bullish premise that:

  1. The primary trend is still up
  2. QE2 is being carried out
  3. This is the 3rd year of the presidential cycle
  4. The SI indicator is trending up

The market was overbought for a long time.  The oil panic due the the Middle East provided some setbacks.  The market struggled but held up quite well nevertheless.  Now came the real black swan event:  the Japanese earthquake, tsunami, and the nuclear meltdown!

After a big sell off yesterday, the stock market was at it again, dropping as much as 2.6% after the EC energy commissioner stated that the Japanese underestimated the nuclear catastrophe.   The Dow was down 300 point at one point.  The losses were pared back down to about 2%, but the market continued lower after market closed.

It’s hard to buy when it’s blood bath everywhere in the market, but I’m now 50% in.  I must make sure I don’t hasten to put more in too fast.  I must ensure that I have enough powders left at the next major support level.

I traded mainly IBM today as it approached the gap support.  A red day as IBM was downgraded in the morning to start, and then the nuclear catastrophe announcement.

My wife wasn’t too happy when she changed her limit order after I told her that the 155.14 support was being back-tested successfully intraday and was being tested for the third time.  The the nuclear announcement came at that very moment and brought the market into the panic selling.  IBM went all the way to the gap fill before paring some losses.  I don’t blame her given the very timing, which made me look really bad.

Today the SPY lost the 125.75 2010 year end close during the day, but closed above it.  Let’s see with the market’s YTD gain of 0% can hold the drop.  My portfolio reached the low end of the spectrum today 😦

Portfolio Value: $135,500.

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