Trading Update: 10 January 2015

True Profits Earned in 2015 to date: -US$3,759.08
All-time maximum profit earned: US$135,976.98 (amended on 17 January 2015 - the previous number provided was erroneous)
Current drawdown from all-time maximum true profit earned: US$7035.18
Change from last update: -US$3,759.08
Directional stance: Portfolio is 62.21% bullish.

Yeesh the numbers are not looking good this week. That's some fierce red numbers staring out at me, and the maximum drawdown I hit intra-week actually exceeded US$14k. I did mention in the previous update that: 

In the more immediate timeframe the markets seem to be taking a breather and we can expect the S&P 500 to resume the rally from hereon, or more probably after more of a pullback has taken place (somewhere in the low 2000s). So we can expect some more short term pain for the portfolio before we get back into business.

So that's exactly the story of the past week, just that the S&P 500 did slightly more than what I expected and decided to take a frolic and detour into the 1990s. 

Although the S&P 500 has since recovered to 2044, the manner of its climb up back to 2044 indicates a worrying possibility that the S&P 500 has, for the intermediate term, topped at 2094, and a downtrend that could head to under 1800 has begun. This has to be monitored carefully seeing that my portfolio is still very bullishly geared. A heavy fall in the markets (which confirms that an intermediate downtrend is in place) and a bullishly tilted portfolio would not make the best of friends. The short term pain I spoke about previously could turn out to be something more and set back profit gains for some time. Caution is called for! Hopefully the market's movements on Monday can reveal more. I am ready to exit and rejig the stance of the portfolio if the market gives signs that call for it.

Speaking of trading exits, there is a scene in the (wonderful) movie Lust, Caution (starring Tony Leung (Chiu Wai, not the other one) and the lovely Tang Wei) where, if my hazy memory permits, Tang Wei lures Tony Leung into a bar that is embedded with assassins tasked to kill him. Tony Leung has some fun with Tang Wei in the bar initially, but when he smells that something is not quite right he drops everything and bolts out of the bar faster than you can say "Tang Wei rocks!"

Look at the man go. Nobody can stop him from getting out. That's how you should exit your trades when you are sure that your prognosis is no longer right. Anyway Tony Leung survived, of course.

Off-topic: I have been down with a flu since the start of 2015. Mrs RetailTrader is not doing so fine herself. Maybe our health is correlated to the markets? ;) A reminder that health is wealth!