The Mad Hedge Fund Trader
“It’s Game On”
San Francisco, CA
September 25, 2013
www.madhedgefundtrader.com
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October 25-26
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Trade Alert Performance
Running Away From the Pack
*2013 YTD +46.06%, compared to 17%
for the Dow, beating it by 29%
*September +8.48%
*First 128 weeks of Trading +101.11%
*Versus +27% for the Dow Average
A 74% outperformance of the index
140 out of 198 closed trades profitable
81% Success Rate in 2013
70.7% success rate on closed trades
Portfolio Review-Waiting to Buy the Next Dip
current capital at risk
Expiration P&L
+47.71% YTD
Risk On
(FXY) 10/$103-$106 put Spread
(FXY) 10/$102-$105 put Spread
(AAPL) 10/$400-$430 call spread
(FXA) 10/$87-$90 call spread
(SPY) 10/$158-$163 call spread
10.00%
10.00%
10.00%
10.00%
10.00%
1
2
3
4
5
Risk Off
6
7
(TLT) $100-$103 call spread
-10.00%
8
9
10
11
12
total net position
40.00%
Performance Year to Date +46.06%
Finally, a New All Time High!
50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
Series1
20.00%
15.00%
10.00%
5.00%
0.00%
12/31/12
1/31/13
2/28/13
3/31/13
4/30/13
5/31/13
6/30/13
7/31/13
8/31/13
Performance Since Inception
+35.7% Average Annualized Return
120.00%
100.00%
80.00%
60.00%
Series1
40.00%
20.00%
0.00%
Strategy Outlook-Buy the Dips
*No Taper extends the “RISK ON” move well into 2014
*Investors are caught by surprise and underweight
*Major down leg for dollar in the cards,
except against the yen
*Gold and silver get demolished again by India
*Interest rates stabilize on no taper,
2.50%-3% range on ten year for foreseeable future
*Rebirth of the emerging markets and currencies
*Washington has zero credibility over debt ceiling crisis
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
Trade gold (GLD) and silver (SLV), use
the volatility to buy big dips and sell big
rallies
Bonds (TLT), hold here and we get a big
rally
*Sell Short
(SPY) Sell every rally until market closes
over a new high at $1,730. Negative for
next four weeks
The Economy-The Taper No Show Changes Everything
*Fed says the economy is weaker than we thought, so it will stimulate
economy more than we expected
*A sudden burst of positive data could bring taper at the next meeting in six
weeks
*August PPI 0% up to 0.3%
*China HSBC flash PMI 50.1 to 51.2,
a six month high
*Japan August exports up a red hot 14.7%
*Taper could be back on in 6 or 12 weeks,
or in 6 months
Weekly Jobless Claims
9,000 rise to 309,000, 5 year low
last week’s reporting error corrected
Bonds-New Trading Range
*$85 billion a month in Fed bond buying in place for at least 6-12 more weeks
*Could last longer if Bernanke’s wants to pass the ball on the Yellen
*Treasuries hit a ceiling at 3%, new trading range is 2.50%-3%
*Money moving back into the highest yield
sector, like MLP’s and Junk
*Munis have a lot of risk here,
only keep them if you plan to die soon
*Emerging market debt offering best value
for money
Ten Year Treasuries (TLT Yields)
long the (TLT) 10/$100-103 bull call spread
2X Short Treasuries (TBT)-Breaking Down
Emerging Market Debt (ELD) 5.75% Yield
Municipal Bonds (MUB)-2.98% yield,
Mix of AAA, AA, and A rated bonds
(JNK)- 6.46% Yield
MLP’s (LINE) 10.9% Yield
Stocks-Suddenly, They Look Cheap Again
*No taper sets my (SPX) 1,780 in cement, buy the next 3%-7% dip,
focus on consumer cyclicles, industrials, and technology
*A new year reallocation push should carry current rally well into 2014
*In 2007, stocks sold for a price/sales ratio of 1.7X, today only 1.4X,
need to rise 22% to reach 2007 level
* We could be only four years into an
8 year rally
*Ben’s move caught the world short
or underweight
(SPX)-The 30,000 view
S&P 500 (SPX)-5 Week Downtrend Reversal?
September-Up the first half, down the second half
NASDAQ (QQQ)
(VIX)-Back to the Graveyard
The spike for the year is in
Russell 2000 (IWM)-Leads the Upturn
Financials SPDR (XLF)-Topping Out?
JP Morgan (JPM)-Head and Shoulders Top
General Motors (GM)
Apple (AAPL)-Throw Back in Play
9 million phones, Wow!
Technology Sector SPDR (XLK)
Industrials Sector SPDR (XLI)
Cyclicals Sector SPDR (XLY)
Tesla (TSLA)-Don’t Touch here
Up 600% in 2 years, Headed for $400?
Tesla Crash Rating Affirmed
Shanghai-Double Bottom in place
(DXJ)-the only way to play Japan
-Nikkei with hedged yen – Olympic Pop
Emerging Markets-Bottom fishing
Dollar-A Body Blow
*Suddenly, US dollar interest rates aren’t rising
*Puts the US dollar at a disadvantage when compared to other currencies
*Taper will weaken dollar until it happens,
possibly not until next year
*Buy Euro, Ausie, and British yen
*Keep selling yen, and fundamentals
there overshadow interest differentials
Long Dollar Basket (UUP)-
Euro (FXE)-No Trade
Australian Dollar (FXA)China Bounce plus Conservative election win
Japanese Yen (FXY)-Flat Lining for Now
Japanese yen positions
Running a triple position-strong conviction
*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
Emerging Market Currencies (CEW)
Energy-Gone Quiet
*Diplomacy overtakes hostilities in Syria, Peace overture from Iran
*No taper only good for a one day pop in crude
*New ship charters for Libya
*Seasonals still weighing heavily
on the market
*We are one more headline
away from another $5 pop
*No trade here, wait for the
extreme move
Crude-Peace Breaks Out
United States Oil Fund (USO)
10/$39-$42 bear put spread expired at maximum value
cut 2.7% off of performance
Natural Gas-Killed by a Cool summer
Copper-Is the bottom in?
Freeport McMoRan (FCX)-looking to get back in
iPath Dow Jones-UBS Copper Sub Index ETN
(JJC)
Precious Metals-Taper delivers a one day wonder
*Puts the bottom in for gold at $1,180,
and the secondary bottom at $1,275
$1,300 cost or production is the real floor,
anything below is a temporary overshoot
*Indian Rupee collapse killed gold, is now done
*The world’s largest buyer cut purchases by 95%
*Indian government implemented new gold import taxes
*Peace in Syria was the gasoline on the fire
*Buy big dips, gold may get a nice boost from October debt ceiling crisis
Gold-
Barrack Gold (ABX)-
Market Vectors Gold Miners ETF- (GDX)
Silver (SLV)
Agriculture-No Trade Until 2014
*USDA WASDE report drops another bombshell on the ags
*Corn pegged at 13.8 billion bushels,
with yields at 155.3 bushels/acre
*highly bearish for prices
*Wheat production globally
is being marked up,
with Ukraine and Canada
figures revised up
(CORN)-still trying to bottom
Soybeans (SOYB)-lookout below
DB Commodities Index ETF (DBC)
Dead Cat Bounce
Real EstateIs Housing What’s Scaring Ben Bernanke Not to Taper?
*No taper may be heads up for a housing market weakened by higher
interest rates? Rates stay lower, longer
*Is housing now more sensitive to interest rates than in the past?
*August existing home sales
+6.5% down to +1.7%, new
home sales 7.9%
*Refinancing activity has already
fallen off a cliff
*Inventories fall from 5.2 months
to 5 months
June S&P/Case–Shiller Home Price Index
(ITB)-US Home Construction Dow Sub index
Trade Sheet-No Change
“RISK ON” Good Into 2014
*Stocks- buy the dips, running to a new yearend high
*Bonds- trade the 2.50%-3% range
*Commodities-start scaling in on dips
*Currencies- sell yen on any rallies, buy Ausie dips
*Precious Metals –buy bottom of range only
*Volatility-stand aside, will bounce along bottom
*The Ags –stay away until next year, no trade
*Real estate- no trade
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