The Mad Hedge Fund Trader “Smelling the Roses ” With John Thomas San Francisco January 8,

Trade Alert Performance 2013 Final *2013 Final %, compared to 26% for the Dow, beating it by 41.45% *December Final % *January MTD +3.00% *First 160 weeks of Trading % *Versus +47% for the Dow Average A 78% outperformance of the index 75 out of 90 closed trades profitable in % Success Rate in 2013

Portfolio Review- Running Into Expiration watch out for over trading and over confidence! Expiration P&L +8.51% YTD Risk On (AAPL) 1/$490-$520 call spread10.00% (SFTBY) shares long20.00% (XLF) 1/$19-$21 call spread10.00% (XLE) 1/$83-$86 call spread10.00% (GILD) 1/$67.50-$70 call spread10.00% (FXY) 1/$98-$95 put spread10.00% (SPY) 1/$173-$176 call spread10.00% (TLT) 1/$104-$107 put spread10.00% (XLK) 1/$33-$35 call spread10.00% Risk Off none total net position100.00%

2013 Final Performance %!!

37 Months Since Inception %, Averaged annualized +40.7%

Strategy Outlook-Buy the Dips, Risk On Lives *Bull market in risk assets continues well into 2014, but are now vastly over extended, take short term profits *Run entire trading book into January 17 expiration, then reassess *Bonds attempting to break down to knew lows, highs in yields *Yen oversold, needs to consolidate a big move down *Don’t catch the falling knife in gold, the world wants paper assets, bottom isn’t in yet *Emerging markets still unloved, but may bottom soon, will be a rotation play *Commodities looking very cheap, must do well this year

The Jim Parker View The Mad Day Trader-On sale for a $1,000 upgrade The Quarterly calls are out Technical Set Up of the week *Buy buy (GOOG), Priceline (PCLM), and momentum names on dip (AAPL) moving stop down to $518 *Sell Short (TLT) sell again on rally after Friday (FXY) $94.50

The Global Economy-Ramping Up *Global synchronized recovery still the play for 2014, the US, Europe, China, and Japan all grow together for the first time since 2007 *This US could hit 3%-4%, far above consensus expectations *China still stagnating, how much of the 7.5% is real? *Biggest growth surprise could be in Europe, from 0% to 2% *Chinese December services PMI falls from 52.5 to 50.9, 2 ½ year low, sets off Asian growth scare

Weekly Jobless Claims -2,000 drop to 339,000

December Nonfarm Payroll out Friday, expected in line

Bonds-Another Poor Year Ahead *Bear Market continues *Most analysts targeting 3.5% yield on ten year Treasury for 2014, up from 2.95%, could spike to 4% *The “1%” will support this market, slow the descent *No Fed move on interest rates for a year *Another taper will come in the first half, but is already priced in *Sell every rally

Ten Year Treasuries (TLT) long the 1/$104-$107 Don’t chase from here, don’t sell into a pit

10 Year Treasury Yield ($TNX)-Yield 2.98%

Junk Bonds (HYG) 6.17% Yield

2X Short Treasuries (TBT) - The next leg up has started

Investment Grade Corporate Bonds (LQD) 3.84% Yield

Emerging Market Debt (ELD) 4.18% Yield

Municipal Bonds (MUB)-2.93% yield, Mix of AAA, AA, and A rated bonds

MLP’s (LINE) 10.2% Yield

Stocks – Beating the Tax Man *Tax selling has been the big factor so far this year by shareholder looking to defer taxes due until April, 2015 *Biggest falls have been by market leaders, like (XLE) and (AAPL) *Is a temporary move, bull market resumes when year end effects end *Traditional New Year rally was pulled forward by December hyper bullishness *Money moving from crap to quality

S&P 500 (SPX)- Begging for a Correction long the 1/$173-$176 call spread, run into expiration

S&P 500 (SPX)- The One Year View

Dow Average-Down on the Year

NASDAQ (QQQ)

(VIX)-

Russell 2000 (IWM)

Apple (AAPL)- Takes a Hit on tax selling after 48% gain in 6 months long the 1/$490-$520 call spread

Technology Sector SPDR (XLK), (ROM) long the 1/$33-$35 call spread

Cyclicals Sector SPDR (XLY), (UCC)

Industrials Sector SPDR (XLI)

Health Care Sector SPDR (XLV), (RXL)

Financial Select SPDR (XLF) long the 1/$19-$21 call spread

Financial Select SPDR (XLE) long the 1/$83-$86 call spread

Softbank (SFTBY) – losing momentum

Gilead Sciences (GILD) long 1/$67.50-$70 call spread

Shanghai-

(DXJ)- Upside breakout on more aggressive monetary easing, assets up from $300 million to $12 billion in 14 months

Emerging Markets (EEM) Trapped by the commodity complex, and rising rates

Dollar-Yen is the Big Story *Successful breakdown targets ¥125 in the cash, $75 in the (FXY), will be the big foreign currency trade of 2014, again. BOJ says room for more QE *But needs to consolidate first *Ausie Central Bank Governor still talking it down. *Euro overvalued again at $1.38 *Buy the Yuan (CYB) for a long term play

Long Dollar Basket (UUP)-Ready for Takeoff?

Japanese Yen (FXY) - Consolidation of Major breakdown Next long the 1/$95-$98 put spread

Short Japanese Yen ETF (YCS) -

Euro (FXE) -

Australian Dollar (FXA) - Talking down the Aussie again

Emerging Market Currencies (CEW)

Crude-In balance, no trade *Harsh east coast winter is supporting oil and natural gas *So is a global economic recovery *Prospect of Libya returning to the export market caused recent dip *Geneva Iran negations overhanging the market, but is a multi year affair *Ever present new supplies of natural gas

United States Oil Fund (USO)

Natural Gas (UNG)-Cold weather spike

Copper- Dragged up by Improving Global Recovery

Freeport McMoRan (FCX) Losers punished one last time

Precious Metals-In the Trash *Hedge fund redemptions crushed gold right into year end *Physical buyers still there *Emerging market central banks buying every dip *Don’t catch a falling knife

Gold-(GLD) Breaking to new lows

Barrack Gold (ABX)-

Market Vectors Gold Miners ETF- (GDX)

Silver (SLV)-

Agriculture-No Trade Until 2014 *Distress selling by farmers to meet cash flow setting new lows *They had been withholding supplies until now awaiting better prices *Big buys from Egypt and China helping to put in bottom *So is the extreme cold in the Midwest

(CORN)-

DB Commodities Index ETF (DBC)- buying for a later play

Real Estate-Slowing Down *November construction spending rose 1% to $934 billion, a four year high *Rising rates could trigger an initial stampede to buy homes *Homebuilders prefer profitability over market share, creating shortgages *Nothing to do here

September S&P/Case–Shiller Home Price Index

(ITB)- US Home Construction Dow Sub index Not the Sector to Own in Rising Interest Rates

(DHI) DR Horton

Trade Sheet-No Change “RISK ON” Good Through Q *Stocks- buy the dips, but cut back size, running to a new highs *Bonds- sell rallies, trade the 2.80%-3.5% range *Commodities-start scaling in on dips *Currencies- sell yen on any rallies, buy (CYB) *Precious Metals –wait for the final flush *Volatility-stand aside, will bounce along bottom *The Ags –stay away, no trade *Real estate- no trade

To buy strategy luncheon tickets Please Go to Next Strategy Webinar 12:00 EST Wednesday, January 22, 2014 Live from San Francisco Good Luck and Good Trading!