The Mad Hedge Fund Trader “The Endless Summer” San Francisco, CA September 11,
MHFT Global Strategy Luncheons Buy tickets at San Francisco November 1
TradeMonster San Francisco Conference October San Francisco Marriot Marquis Hotel Go to and register by clicking the InvestMonster box on the rightwww.madhedgefundtrader.com
Trade Alert Performance Staying On Top *2013 YTD %, compared to 16% for the Dow, beating it by 26% *September +4.45% *First 126 weeks of Trading +97.1% *Versus +23% for the Dow Average A 74% outperformance of the index 138 out of 195 closed trades profitable 70.8% success rate on closed trades
Portfolio Review- Building a larger long “RISK ON” Returns Mad Hedge Fund Trader Trading Book Asset Class Breakdown Risk Adjusted Basis current capital at risk Risk On (FXY) 9/$103-$106 put Spread10.00% (FXY) 10/$103-$106 put Spread10.00% (FXY) 10/$102-$105 put Spread10.00% (FCX) 10/$28-$30 call spread10.00% Risk Off none total net position40.00% Expiration P&L +45.3% YTD
Performance Year to Date % Finally, a New All Time High!
Performance Since Inception +35.3% Average Annualized Return
Strategy Outlook *The money won’t wait *We never got the 12% correction, only 7.1% *Taper is priced in *So is Syria, the Bernanke replacement and the coming debt ceiling crisis *It’s off to the races once more with risk assets *Stocks could gain 10% by year end *Bottom fishing begins in commodities and emerging markets *another leg down in the yen is imminent
The Jim Parker View The Mad Day Trader-On sale for a $1,000 upgrade Summer market still prevails Technical Set Up of the week *Buy Europe good value (EWG), (EWP) Emerging Markets moving (GXG) Short play over in emerging currencies (SPY) trying to break out (IWM) Small caps *Sell Short Yen big time, risk is limited
The Economy-Picking Up *August nonfarm payroll 169,000, unemployment rate drops to 7.3%, new recovery low, labor participation rate at 35 year low *August HSBC Services PMI 51.3 to 52.8 *August Eurozone PMI 50.5 to 51.5, two year high, Q2 GDP 0.3% *UK August Business Activities Index 60.2 to 60.5, 6.5 year high *GM August sales +14.7%, industry +16 million units 2013 *August ISM manufacturing index 55.4 to 55.7, 26 month high *Japan Q2 GDP revised up from 2.7% to 3.8%
Weekly Jobless Claims -9,000 jump to 323,000 New 5 Year Low
10 Years of Nonfarm Payrolls
Bonds-Bonds rally…or They Rally *Taper is priced in. If you don’t get it bonds rally *If we do get taper it will be “taper light”, $5-$10 billion a month cutback, $75-80 billion a month in Fed bond buying continues. Bonds rally *Real taper killed off by Syria and the August nonfarm payroll *Bonds are only 13 months into a 20 year bear market, so rallies will be brief *Only fixed income value is in MLP’s, where the cash flow is huge
Ten Year Treasuries (TLT Yields)
2X Short Treasuries (TBT)
Municipal Bonds (MUB)-3% yield, Mix of AAA, AA, and A rated bonds
(JNK)-
MLP’s (LINE)
Stocks *Traders are adding risk, moving from low beta to high beta stocks *Expecting a big post Syria, post taper rally *(SPX) could add a full earnings multiple point by year end, from 15X to 16X, or from 1,630 to 1,780 *Bottom fishing starting in emerging markets and commodities *Major institutions and individuals are still generationally underweight equities *are we only half way through an 8 year bull market?
(SPX)-The 30,000 view
S&P 500 (SPX)- 5 Week Downtrend Reversal?
NASDAQ (QQQ)
NASDAQ 100 Advance-Decline Ratio
(VIX)-Back to the Graveyard The spike for the year is in
Russell 2000 (IWM)- Leads the Upturn
Cycles- Traders Adding Beta
Auto Industry
Ford Motors (F)
Apple (AAPL)- Buy the Rumor, Sell the News
Shanghai- Double Bottom in place
Shanghai- long term
(DXJ)- the only way to play Japan -Nikkei with hedged yen – Olympic Pop
Japan Nikkei Index
Emerging Markets- Bottom fishing
Dollar- The Fall Rally has begun *BOJ unanimously votes to maintain ultra easy monetary policy, maintaining targets of doubling money supply and 2% inflation in two years *Yen losing flight to safety bid as Syria war dissipates, breaking down on all crosses, US $ is next *Conclusion: Yen down *2020 Olympic win crushes the yen *Euro rallies again *Ausie rallies on conservative election win and improving China data
Long Dollar Basket (UUP)-up on weak yen, down on strong euro and ausie
Euro (FXE) -No Trade
Australian Dollar (FXA) - China Bounce plus Conservative election win
Japanese Yen (FXY) -Cash market smashes through ¥100 major breakdown is imminent
Japanese yen positions Running a triple position-strong conviction *Long the 9/$ bear put spread *Long the 10/$103-$106 bear put spread *Long the 10/$102-$105 bear put spread
(YCS)-For Non Options Players 200% Short Yen ETF-head and shoulders top risk
Energy- Waiting for the Missiles *Oil has been over $100/barrel since July 4 *Wall Street is long 1.9 million contracts in wake of Egypt and Syria Crisis, about a 4 month refinery supply, vastly overextended *This long has pushed cruse to to a $20 premium to actual supply and demand *Risk of a $20 gap down is high *Strongest driving season in 31 years ending *Only Syria is levitating these prices *Obama will move slowly in response
Crude-Peace Breaks Out
United States Oil Fund (USO) Covered short 2 hours too early left 1.8% on the table
Energy Select Sector SPDR (XLE)
Energy Independence Here We Come!
Natural Gas-Killed by a Cool summer
Copper (CU)-Is the bottom in? China recovery will help
Freeport McMoRan (FCX) long the 10/$28-$30 bull call spread
Precious Metals-Stalling again as peace breaks out * Russian peace offer kills the flight to safety trade *Gold miners (GDX) outperforming metal for the first time in 8 years *Big hedge funds switching out of gold and into gold miners *Industry hedging at all time low *A BUY setting up at the 50 day moving average
Gold-Caught in the Syria Trap
Barrack Gold (ABX)-
SPDR Metals and Mining Index (XME)
Market Vectors Gold Miners ETF- (GDX)
Silver
Agriculture-Break Down to New Lows *Quality of crop is declining, but still aiming at record *Corn at 13.7 billion bushels, soybeans at 3.2 billion bushels *Next USDA crop forecast September 12
(CORN)-still trying to bottom
Soybeans (SOYB) - lookout below
DB Commodities Index ETF (DBC) Dead Cat Bounce
Real Estate-the boom continues (BAC), (HD) *July construction spending +0.6% *Price rising, but at a slower rate *Refinaning activity falls off a cliff, triggering bank layoffs
May S&P/Case–Shiller Home Price Index
(ITB)- US Home Construction Dow Sub index
Trade Sheet-No Change “RISK ON” Good Until Proven Guilty *Stocks- buy the small dips, running to a new yearend high *Bonds- a trading buy setting up at 3% *Commodities-start scaling in *Currencies- sell yen on any rallies *Precious Metals –stand aside, buy bigger dip *Volatility-stand aside, will bounce along bottom *The Ags –stay away *Real estate- no trade
To buy strategy luncheon tickets Please Go to Next Strategy Webinar 12:00 EST Wednesday, September 25, 2013 Live from San Francisco Good Luck and Good Trading!