Monday 31 October 2011

Running with the bulls of the Dow?

I am writing today's post early because tonight is busy. I have made another big move. I have taken profits on those positions that I opened just over a week ago. When the market turns it is viscous and I am glad I started to take profits on Friday. I did not ditch UK shares until it was obvious that the market was not going to turn around. The US shares I dumped on the open. Hong Kong shares overnight were still generating profits so I held on - may regret it tomorrow.

I switched from US gold (and silver) positions, which are based on futures, to UK physical metal ETFs. The drama that revealed itself when I first looked at the markets this morning was not in equities but precious metals. They had fallen precipitously for no apparent reason. Equities had had a strong run and needed to consolidate but that was not true of gold and silver. A look at the dollar explained what had happened. The dollar rose sharply after its pull back and precious metals bore the brunt.

So there I was this morning grabbing my profits as quickly as I could before they melted away. And despite a hefty chunk being torn out of them I have still recouped over half of my losses for the year.

So what happens next? Today's chart shows the strong run up that has just ended. The broken resistance levels are now potential support levels. As I write the Dow is sitting on the first one at 12090. (Notice how the pull back started after the price hit resistance at 12290). Then we have the 200 day moving average. Then 11880 where the market paused for three days. Then 11715 which has already acted as support on the way up. And finally the top of our old channel at 11530. This is the important one. If it is broken we are back in bear territory but a determined bounce off that or off one of the others suggests we may be running with the bulls.

For now I am mostly back in cash. precious metals 13% commodity 5% equity 12% cash 69%.

My weekend was a great one. My daughter and son-in-law came with their two children - four and six. I had treated my daughter to a session at the new Bath Spa. And the children were left in our care. They behaved impeccably watching the television some of the time and playing happily together the rest.

I prepared a dish which was fashionable a while ago but is seen less often these days. It was moussaka. I made it as follows:

2 large onions coarsely chopped
1 kg of lamb mince
half a bulb of garlic crushed
tsp of ground cinnamon
3 bay leaves
fresh thyme
1/2 pt white wine
1 tin chopped tomatoes
1 tin cherry tomatoes
chicken stock
pepper

3 aubergines sliced and fried in olive oil

I fried the onions and garlic gently and then added the lamb and turned up the heat and stirred till the lamb was almost cooked through. Then I added all the other ingredients (except aubergines) and simmered for a good half hour.

The aubergine slices I used to line a big casserole dish.

While the lamb was simmering I made a Béchamel  sauce by heating 3oz of butter with 3oz of flour and then slowly adding and gently whipping in a pint and a half of whole milk. The trick is to turn the heat right down after melting the flour into the butter and only raising it again once the mixture has become mostly liquid. Once I had a smooth sauce I added a 50-50 mixture of grated parmazan and Gruyère. I put in about half a pound but you could try less. I then added three beaten eggs and a tablespoon full of Dijon mustard.

It just remained to pour the lamb onto the aubergines in their casserole dish and pour the Béchamel  sauce over the lamb. I could then get back to playing with the children. I then put the whole lot in the oven at 190 deg. about half an hour before we were ready to eat. Everyone seemed to enjoy the resulting concoction.

No comments: