Recap for Week Ending 8/3

Net Asset Value: -8.12%
Change in Contributed Capital: 0
Cash Reserve (USD): 68%

This week was roller coaster for the equity markets. Of course, Wall Street mood swings spilled over to the cash markets. I decided very early on that these market conditions were not my game. I'm more of an align-the-odds-in-your-favor kind of guy. I don't trade when the market is indecisive, and I try not to make too many interest-negative trades in the medium to long term. The bulls and the bears can fight for control of the market, but with patience and a little capital, birds like me will benefit without losing our shirts.

The daily chart of the DJIA doesn't look too hot. Daily RSI is 38.95, with wider range and larger volume on down days. Trouble in the sub-prime mortgage market is causing broad re-evaluation of assets in the derivative market. We should be looking at a 78.6% Fibonacci retracement of the move from 11,939.61 to 14021.95. That is, a low of 12,385.25 for the Dow is likely. If that support is broken, I will consider entering the market.

	27-Jul	4-Aug	change	real return
CHF	1.2079	1.1903	-1.46%
CNY	7.558	7.5600	0.03%
EUR	0.7337	0.7263	-1.00%
GBP	0.4941	0.4901	-0.81%
JPY	118.56	118.01	-0.46%
XAU	0.00152	0.00149	-1.76%
ORORCL	classified	classified	-8.12%	-9.88%
DJIA	13,265.47	13,181.91	0.63%
Nasdaq	2,562.24	2,511.25	1.99%
S&P 500	1,458.95	1,433.06	1.77%

In terms of purchasing power, the dollar lost most of its value against gold: 1.76% nominal. But because both the Nasdaq and the S&P 500 went South for the week, U.S. cash became more valuable as an asset. Someone who buys the indexes at the close this week can actually acquire 1.99% more of the Nasdaq and 1.77% more of the S&P 500.

I incurred the -9.88% loss in purchasing power, in part due to gold appreciation and in part due to the automatic execution of stop losses at the beginning of the week. Most of these stop losses were hit at the top of valley or at the bottom of a trough. I can either blame luck for it or hold myself accountable. The second option seems more attractive. Perhaps my stop losses should have been wider. And perhaps I should not have been so penny-wise, pound-foolish when I placed my USD/CHF short order a few PIP's from the top, before 1.46% dip.

Oh, well. You live and learn. You don't make the same mistake twice. That's all that matters.