Despite very conservative trading over the past several weeks through that very choppy wave 4, the Alphahorn Swing System Portfolio has generated a 16.28% return year-to-date. The hardest lesson that I’ve learned in trading is that it is better to miss a rally than to be on the wrong side of a big move. So, while the markets have made another push up after the choppy wave 4, and the Portfolio only played the SPX, Energy and Gold during that move, it was the right tactic when it comes to preserving capital. In the end, the returns speak for themself, up 16.28% after 3 and 1/2 months is better than most of the most successful hedge funds in the world. And, the Portfolio continues the torrid pace that it has been on since mid summer of 2012.
The markets continue to push upward and the Swing System has been riding this tremendous wave for many indexes going back to Nov or Dec 2012. It has been a tremendous rally and very profitable rally, but it has many signs of ending. Real Estate is way over-bought according to my System and it penetrated the upper red barrier yesterday. A trade below yesterday’s low will confirm a short for Real Estate and an entry into SRS will be made.
The 30 min chart shows the count that now shows intermediate wave (3) is about to end and the largest pullback of the year is about to begin. The daily chart shows the alternative more bullish alternative that only minute wave [i] is ending, but both call for a correction to ensue. If this is the end of intermediate wave (3) then the pullback will of course be more substantial, likely even breaching 1500, but if it’s only minute wave [i], then 1576 is the likely target. To that end, I’ll be exiting most if not all the longs in my personal portfolio throughout the day, as I anticipate a red week ahead. The negative divergence that I pointed out midday yesterday is continuing to mount and my NYMO chart already has 1 of my 3 barriers breached. I’m looking for a top around 1611 at R1, which means the market could open lower then rally, perhaps into the close.