Alphahorn's Market Musings

If you didn’t receive it, then shoot me an email

You’ll need the new password for tonight’s post

Another great year for the Alphahorn Portfolio finishing the year up 40% bringing the Portfolio value to approximately $1.23 million. The slate was wiped clean at midnight eastern on 12/31. We enter 2021 with only the Bitcoin holding. Over the past several months, we have seen nice moves for Bitcoin over the weekend and this weekend is no exception. BTC is up over 10% since the midnight 12/31 close. Also regarding the Alphahorn Swing System, every index enters the year on a long/buy Signal. Two sectors, biotech and Energy however are on sell/short Alerts and need closes below BIB 85.86 and XLE 37.01 to confirm those Signals. I’m in a wait and see mood with the potential volatility coming out of Washington. As always I’ll post should any trades be made.

The wave count is looking for the completion of a diagonal. For the red count it would be a leading diagonal for minor wave 1 of intermediate wave (5) of primary wave [1]. For the purple count, it would represent an ending diagonal for intermediate wave (5) and thus primary wave [1].

In addition to the red and purple counts shown above, there is also a bullish blue count scenario. The blue count lags the other counts as it is only in minor wave 3 of intermediate wave (3) of primary wave [1]. I won’t spend too much time on this until the diagonal is invalidated or 3833 as labeled in purple above.

Below is the key chart for the next couple of weeks. We’ve been watching the NASI chart below as a leading indicator for a Nasdaq top. The negative divergence between the indicators and price (shaded area) have historically predicted tops. We are finally beginning to see signs of that divergence, which of course requires higher highs for the Nasdaq as the indicators roll over. But, at last the top seems to be in sight.

2020 has been a volatile year of trading. But the Portfolio has had another nice year currently up 41% going into the last trading day of the year. With the exception of Bitcoin, the few remaining positions will be exited just before the close tomorrow. For Bitcoin this years returns, and the benchmark for next year’s returns will be the price of BTC at midnight eastern standard time as the east coast welcomes the new year. The Portfolio in its 10 years of existence has grown from $100,000 in value 1/1/2011 to its current value of over $1.132 million. And, it has outperformed the vast majority of money managers and hedge funds by achieving an ~11 fold increase in value, or a CAGR of ~27.5% over a 10 year period. I wish all of you a Happy New Year and a prosperous and hopefully more sane 2021.

The indicators on the 30 min chart are beginning to turn down from over bought levels. If the diagonal count is correct, then we are seeing either a leading diagonal for minor wave 1 of intermediate wave (5) of primary wave [1] or and ending diagonal that completes intermediate wave (5) of primary wave [1]. Should we see a pullback as the new year opens for trading as this chart seems to suggest, then the depth of the pullback will be the differentiating factor between the two wave count scenarios. The red count must find support above the intermediate wave (4) low. The purple wave count calls for a much deeper pullback in primary wave [2] that should take out the intermediate wave (4) low.

Below is the NASI chart that I’ve been showing off and on with the Nasdaq in the background (shaded area). As I’ve noted, this chart is a great leading indicator to a top and does a great job of building negative divergence between the indicators and the Nasdaq price. This negative divergence has not materialized. Thus, I would expect higher highs for the Nasdaq, perhaps after a small pullback to build the negative divergence needed.