In our last post Germany Dax Update on 6 September we were liquidating our short Dax as it approached 5000 and turned long from 5000:
So where to from here? Our targets remain at the 5000 mark. If history is any guide to our untimely trades, we will be early again. So pepper it light at 5000, and hope to build up aggressively towards 4800.
We are still holding our longs that we anchored from 5200 to 4970 – we had a total of $40/point in total unhedged longs averaging about 5050. We have released some longs in the last week to lighten up from 5400-5700 to derisk in our personal portfolio. Looking at our chart above, this rally is not over yet. We know many are sceptical and are already short at S&P 1133. Beware. Things always take longer to unfold. Many technical blogs are calling for a sharp decline – timing wise we believe markets will need one more push up. The RSI has only touched the trendline down (Refer above chart updated today 9 October 2011). We will be longing on pullbacks with a target of 6000 at least. It may overshoot to 6200-6250 before the ultimate decline, but are happy to be completely out by 6000. News wise, Greek default will most likely be the trigger for the next decline (Note we have ALOT of Amazon shorts so we are long-biased in the indices as a hedge)
Trade Plan for the next 2 months:
- Long on pull back – if Dax pulls back to 5480-5500 we look to re-establish some long positions
- Take profits as Dax approaches 6000 – be all out by 6000
- Do nothing from 6000 to 6190
- Short from 6210 to 6300
- Ride it down and take profits from 5000 to 4600.
- Long From 4550-4480. (we think it will break the 4500 mark)