The Mad Hedge Fund Trader “Winding Down” With John Thomas from San Francisco, CA, December 7, 2016 www.madhedgefundtrader.com *

Pearl Harbor Day

In the Store Now for $49 Sectors and Stocks that Will Lead the Market for the Next 20 Years https://members.madhedgefundtrader.com/roaring-twenties-book/

2017 Mad Hedge Anzac Tour March 27-April 4, 2017 Attend my lectures, join me for lunch, or come party with me! *Sydney *Brisbane *Melbourne *Perth *Auckland, *New Zealand Dates will be published when we get closer to the event

Trade Alert Performance Best 4 Weeks of the Past 12 months-New All Time High!! *January +1.23% Final *July +0.67% Final *February +4.50% Final *August +7.52% Final *March -2.42% Final *September +0.27% Final *April -2.10% Final *October +8.13% Final *May +4.38% Final *November 4.37% Final *June -0.56% Final *December -.85% MTD *2016 Year to Date +26.89% compared to 10.43% for the Dow Average *Trailing 1 year return +XX%, +218.52% since inception, *Average annualized return of 36.43%

Current Capital at Risk Portfolio Review Small Unhedged Portfolio on top of big market moves Current Capital at Risk Risk On World is Getting Better (TLT) 1/$125-$128 put spread 10.00% (TLT) 12/$127-$130 put spread Risk Off World is Getting Worse Total Net Position 20.00% Expiration P&L 25.85%

Paid Subscriber Trailing 12 Month Audited Return 22 Paid Subscriber Trailing 12 Month Audited Return 22.78%-Best 6 Month Run Since Inception

72 Months Since Inception Daily Audited Performance Averaged Annualized Return +36.43%

The Method to My Madness *Running a small hedged book with performance at all time highs on top of monster market moves *All markets are stagnating on top of gigantic one way moves *Looking to get into New World Order stocks on any pullback *Trading December is always tricky, with multiple yearend effects *Yearend profit taking and book squaring will become an increasing factor *Swinging for singles, not home runs

Short Term Strategy Outlook *Rising interest rates now driving all investment decisions *Standing aside from volatility going into the holidays *Sell all bonds on any rally *Sell all currencies on any rallies *Institutions to a man were caught with the wrong positions, will take months to years to rebalance *A December rate rise is now guaranteed, and many more afterwards

Mad Options Trader *3 Huge consecutive trading months in the weekly options *Demand for the new $2,000 a year service has been overwhelming *Email Nancy in Customer Support at support@madhedgefundtrader.com and put “MOT Upgrade” in the subject line to add the service *Nancy will calculate a pro rata credit for the balance of your remaining subscription, and then bill you for your new subscription + MOT

Average Annualized Return of 100 Average Annualized Return of 100.12% Daily Audited 2 ½ year performance

The Next Black Swan-Clinton Wins the Electoral College The Next Black Swan-Clinton Wins the Electoral College! It’s a lot closer than you think *Recounts underway in Wisconsin and Michigan totaling 26 electoral votes *Up to ten Republican electors have said they might defect, as Trump is not a Republican *If Clinton wins these two states, and 12 electors defect, Clinton wins the Electoral College by 271-269 *The record number of “faithless” electors is 23 *Clinton win of popular vote by 2.3 million creates additional sympathy vote *Unlikely, but not impossible *If it happens, all market moves since November 8 get unwound very quickly

The Global Economy-Reaccelerating *US economy was clearly accelerating going into the election *November Consumer Confidence rockets to 107.1 versus 101.1 expected, Q3 revised up to 3.2%, powered by consumer spending at +2.8%, November ISM Service Sector jumped 54.8 to 57.2 *All economic data is now useless, as it predates the election, real data won’t start to show until late January *German inflation at an extremely low 0.8% YOY, industrial orders up biggest in a year *Collapsing currencies will be a positive for Japan and Europe, economies will accelerate *The causes of the next US recession are now in view: high inflation and an interest rate spike triggered by massive new government deficit spending

Weekly Jobless Claims –The Most Important Statistic -19,000 to 235,000-Lowest since 1973! The Downtrend Lives!-Show Me the Recession!

Bonds-From Deflation to Inflation *$1 trillion in US bond market losses since the presidential election, with $9 trillion to go if Trump gets everything he wants *Bonds are only 4 weeks into a bear market that will last for 10-20 years, it’s not too late to sell *Municipal bonds are especially hard hit as tax exempt status loses value in a falling tax rate world *Flight to junk taking place as bond investors hide out in the stock market *Emerging debt still punished as risk of trade war looms *Prospect of huge deficit financing crushes all yield plays

Ten Year Treasury Yield ($TNX) 2.35% Upside Breakout

Ten Year Treasury Yield ($TNX) 2.37% Upside Breakout

Ten Year Treasury ETF (TLT) 2 Ten Year Treasury ETF (TLT) 2.38% long 1/$125-$128 vertical bear put spread long 12/$127-$130 vertical bear put spread

Junk Bonds (HYG) 5.46% Yield A Great Risk Coincident Indicator-”RISK ON” means new highs, buy all dips

2X Short Treasuries (TBT)-At Last!

Emerging Market Debt (ELD) 4.65% Yield-

Municipal Bonds (MUB)-1 Municipal Bonds (MUB)-1.25% yield-New High Mix of AAA, AA, and A rated bonds

Stocks-Stalling at the Highs *The world is overweight technology growth and underweight domestic value *Trump rally has been confined largely to two sectors, banks and energy, everything else is now flat or down *No new money will enter the market until next year, so we are seeing frantic rotation only until then, short covering now driving markets *All selling has been postponed until 2017 to take advantage of new lower capital gains taxes *Technology growth could be in 6 month penalty box with a 30% draw down in some stocks *Into value banks, energy, pharmaceuticals, defense, materials, construction

S&P 500-New All Time High A Sideways Move Going into the November Election followed by an upside breakout took profits on long 11/$220-$223 put spread

iShares MSCI Mexico ETF (EWW)=Crushed

Dow Average-Break Out

Russell 2000 (IWM)-All Time High took profits on long 11/$125-$128 vertical bear put spread

NASDAQ (QQQ)- Last Year’s Leader

(VIX)-6 week lows-Holiday Drag

iPath S&P 500 VIX Short Term Futures ETN (VXX) took profits on long 9/$30-$33 vertical bull call spread took profits on long 10/$27-$30 call spread stopped out of long 12/$24-$27 vertical bull call spread

Velocity Shares Daily Inverse VIX Short Term ETN (XIV) took profits on long shares at $32.91 one of the most instantly profitable trades of 2016

Apple (AAPL) –Buy the Rumor, Sell the News the wrong stock in the wrong sector at the wrong time

Microsoft (MSFT) In the Wrong Boat

Facebook (FB)- took profits on long 11/$114-$117 vertical bull call spread

Alphabet (GOOG)-

Amazon (AMZN)-

Industrials Sector SPDR (XLI)-Breakout (GE), (MMM), (UNP), (UTX), (BA), (HON)

Transports Sector SPDR (XTN)- Breakout-Buffet’s New Favorite (ALGT), (ALK), (JBLU), (LUV), (CHRW), (DAL)

Health Care Sector SPDR (XLV), (RXL) (JNJ), (PFE), (MRK), (GILD), (ACT), (AMGN) November 8th Bottom!!

Financial Select SPDR (XLF)-The New Nirvana (BLK/B), (WFC), (JPM), (BAC), (C), (GS)

KRE Regional Bank ETF (KRE)-

Palo Alto Networks (PANW)- Slaughtered with the rest of technology

Consumer Discretionary SPDR (XLY) (DIS), (AMZN), (HD), (CMCSA), (MCD), (SBUX)

Europe Hedged Equity (HEDJ)-Cheap Euro Boost

Japan (DXJ)-Cheap Yen Breakout

China ($SSEC)- No Trade War?

Emerging Markets (EEM)-Trashed in New World Order

Foreign Currencies-Greenback Bulks Up *Rising US interest rates pouring money into US dollar at incredible rate *Straight line move down in Japanese yen remains unabated *Buy the dollar on any dips, could see a pause around the December 13 Fed meeting *Failed Italian reform vote demolished Euro, which is now threatening parity *Standing aside awaiting a better entry point, especially against the yen

(UUP) Dollar Hits 8 Month High

Japanese Yen (FXY)-Is This the Big One Japanese Yen (FXY)-Is This the Big One? took profits on long the 8/$97-100 put spread took profits on long the 9/$99-102 put spread

British Pound (FXB)-

Euro ($XEU), (FXE), (EUO)- Bombs Away took profits on long the 9/$112-$115 vertical bear put spread took profits on long $11/$110-$113 vertical bear put spread

Canadian Dollar (FXC)-

Emerging Market Currencies (CEW)

Chinese Yuan- (CYB)-Breakdown at Last

Energy-Short Squeeze! *OPEC November 30 agreement triggers massive short covering rally, but long term confidence is low *Kazakhstan to add 400,000 b/d by end 2017, also Libya, Iran, Iraq, and Syria *Russia increased production into OPEC meeting, likely won’t cut in sympathy *Iran will seek to undermine any agreement *Strong dollar has yet to hit oil prices, will do so shortly *Shale drillers ramping up production as costs fall dramatically *Oil still stuck in $40-$52 range, but we are now testing the upside *Only a new American war in the Middle East will break oil to the upside

Oil-Top of Range

United States Oil Fund (USO) took profits on long the (USO) 11/$12 United States Oil Fund (USO) took profits on long the (USO) 11/$12.50-$14.00 vertical bear put spread

Energy Select Sector SPDR (XLE) (XOM), (CVX), (SLB), (KMI), (EOG), (COP)

Alerian MLP ETF (AMLP)- Basket Approach is the Only Safe Play here

Exxon (XOM)-

Occidental Petroleum (OXY)-

Natural Gas (UNG)-Bumping Against 2016 Highs

Copper (COPX)-Upside Breakout Candidate

US Steel (X)-Upside Breakout!

UnPrecious Metals-Still a Disaster *Rising interest rate outlook could demolish gold for the foreseeable future *China places curbs on new gold imports to halt capital flight *Indian currency conversion still a drag as gold is sold to meet bills *The only good news is the gold longs in the futures market have already dramatically shrunk *Gold may have to revisit $1,050 before the carnage is over

Gold (GLD)-Searching for a Bottom took profits on long 11/$112-$115 vertical bull call spread

Market Vectors Gold Miners ETF- (GDX)

Silver (SLV)-

Silver Miners (SIL)-

Agriculture-No Respite *USDA Supply & Demand Report predicts large scale cuts in all crops in 2017 due to weak prices *Drought in US southeast also reducing supply, and a dry La Nina is coming *However, Ag prices remain weak *Other hard asset selloffs in oil and gold have also helped hold ag prices down *Only cotton has been strong thanks to Chinese buying *Stay away

Cotton (BAL)

(CORN) – Shall We Buy?

(WEAT)-New Lows on Strong Dollar

(SOYB)-Bouncing Along the Bottom

Real Estate-Pop, But Then What? *Nationwide housing prices hit a new high for the first time in 10 years *But in election aftermath, market has gone quiet with everyone waiting to see what happens next *The building boom will continue in the face of rapidly rising interest rates for years *Home mortgage rates rocket, up from 3.75% to 4.375% in 3 weeks *Home prices will accelerate first as buyers rush to beat rate rises, then eventually bring an end to this cycle *September Case Shiller -0.0% to 5.1% YOY, holding steady, post Trump data not out for two more months

April S&P 500/Case–Shiller Home Price Index +5 April S&P 500/Case–Shiller Home Price Index +5.0% YOY, Portland, Seattle, Denver leaders

General Growth Properties (GGP) Yield Play Profit Taking

US Home Construction Index (ITB) (DHI), (LEN), (PHM), (TOL), (NVR) Another Rising Rate Victim-But Becoming a favorite Sector to Buy

Trade Sheet So What Do We Do About All This? *Stocks- Buy dips in New World Order stocks *Bonds-sell rallies on government deficit risk *Commodities-buy dips *Currencies- sell rallies, especially yen *Precious Metals –stand aside *Volatility-buy the dip *The Ags –stand aside *Real estate-buy the dip

Good Luck and Good Trading! Annual All Asset Class Review Out Tuesday January 3 Next Strategy Webinar 12:00 EST Wednesday, January 4, 2017 San Francisco, CA Good Luck and Good Trading! *