The Mad Hedge Fund Trader
“Special “Patience” Issue”
With John Thomas
from Incline Village, NV
March 18, 2015
www.madhedgefundtrader.com
MHFT Global Strategy Luncheons
Buy tickets at www.madhedgefundtrader.com
Honolulu, Hawaii
April 3, 2015
Incline Village, Nevada
April 17, 2015
MHFT Global Strategy Luncheons
Buy tickets at www.madhedgefundtrader.com
Chicago, Illinois
April 30, 2015
Las Vegas, Nevada
May 8, 2015
Trade Alert Performance
Up on the Year!
*January MTD +0.53% Final
*February MTD +7.73% Final
*March MTD -0.45%
*2015 Year to Date +7.81%
compared to +1.5% for the Dow Average
*Trailing 1 year return +30.8%
*First 220 weeks of Trading +160.6%!
*11 out of 13 consecutive profitable Trade Alerts, 6.43%
from new All time high!
Portfolio Review
No Positions!-100% Cash
(FXE), (FXA), (GLD), (USO) at extremely oversold
(FXY) extremely overbought
(SPY), (QQQ), (IWM) in correction which may
or may not end today
(TLT) trendless
On the Short list:
buy (IWM), (HEDJ), (DXJ), (YCS)
sell (FXE)
Paid Subscriber Trailing 12 Month Return +36.8%
50.0%
45.0%
40.0%
35.0%
30.0%
25.0%
Series1
20.0%
15.0%
10.0%
5.0%
0.0%
50 Months Since Inception
Averaged annualized +37.6%
180.00%
160.00%
140.00%
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
Series1
Strategy Outlook-Waiting for the Fed
*Multiple reallocations are changing the character of global financial
markets, could be the new trades for the rest of 2015
*out of US and into Europe
*out of US large caps into US small caps
*Out of bonds into stocks
*Out of all foreign currencies into dollar
*Oil reaching a selling crescendo on storage crisis, could hit $30 handle by
Friday
*Euro plunge now hugely overextended
*Gold threatening new lows
*Coming spring thaw brings new lows for ags
The Jim Parker View
The Mad Day Trader-On sale for a $1,500 upgrade
Technical Set Up of the Week- Waiting for Wednesday Fed Meet
Buy
Individual US biotech names
Europe (HEDJ) and Japan (DXJ) on dips
Sell Short
Run oil (USO) short with trailing stop
Avoid
US stocks, stuck in narrow range
Euro (FXE) on upside breakout
Bond (TLT) until new trend confirmed
Gold (GLD) on rate rise prospects
The Global Economy-Another Batch of Bad Data
*Welcome to the mini growth recession
*ECB raises 2016 GDP forecast from 1.5% to 1.9%, thanks to QE launch on March 9,
rising exports to the US and China
*West coast port strike, weak euro, and bad weather blamed for US GDP revision
from 2.6% to 2.2%, February retail sales off -0.6%, Producer Price Index down -0.5%,
Feb Industrial Production drops from +0.3% to +0.1%
*China cuts 2015 GDP growth forecast from 7.5% to 7%
*Weaker yen boosting Japanese economy,
has become a hedge fund favorite
Weekly Jobless Claims – Another Run at the Lows
-36,000 to 289,000
Bonds-It’s All About “Patience”
*If “patience” comes out of Fed statement, bonds crater
*If “patience” stays in Fed statement, bonds rally strong, and you want to
sell into this rally
*Weak US data giving bonds support here
*The big reallocation out of bonds into stocks has started, major unloads
by China and Russia
*Fed not to raise interest rates until
2016, reinforced by oil and bond
yield crashes, but bond market is
starting to discount it now
*Deflation is here to stay
Ten Year Treasuries (TLT) 2.04%
Is This the Top?
Ten Year Treasuries ($TNX) 2.04%
Where is the Trend?
30 Year Treasury Yield ($TYX)-Yield 2.61%
Junk Bonds (HYG) 5.48% Yield
The New Lead Contract
2X Short Treasuries (TBT)
Investment Grade Corporate Bonds (LQD)
3.35% Yield
Emerging Market Debt (ELD) 5.77% Yield - New Lows!
Municipal Bonds (MUB)-2.70% yield,
Mix of AAA, AA, and A rated bonds
Stocks-The Stealth Bear Market
*1/3 of Dow stocks now at 52 week low
*If “Patience” stays in, stocks rally to new highs, if not, we could get a 10% correction
*Massive shift out of the US into Europe going on, $33.6 billion out of US equity
mutual funds in 2015, $35.6 billion into Euro funds
*Assets in (HEDJ) International ETF up 10X in 12 months to $12 billion
*Money that is staying in the US is moving out of big caps into small caps to dodge the
Euro hit on corporate earnings
*Remaining US focus is on biotech
and health care
*Japan is another big reallocation target
Nikkei hits multiyear highs
*Volatility recovers $17 handle
S&P 500Breakout from Another Sideways consolidation
took profits on the long 3/$200-$204 vertical bull call spread
Dow Average-Head and Shoulders Topping Risk
NASDAQ (QQQ)-
Europe Hedged Equity (HEDJ)-New 7 Year Highs
assets up 10X in a year
(VIX)- Coming Back to Life
Russell 2000 (IWM)-Going from Strength to Strength
Technology Sector SPDR (XLK), (ROM)
Industrials Sector SPDR (XLI)
Health Care Sector SPDR (XLV), (RXL)
trend is still up
Financial Select SPDR (XLF)-Rally on Bond Bust Fades
Consumer Discretionary SPDR (XLY)
Apple (AAPL) –Apple TV network boost
Cisco Systems (CSCO)took profits on our long 3/$27-$29 vertical bull call spread
China bans purchases of foreign technology
China (FXI)Shanghai Index hits 7 year high
Japan (DXJ)-Hedged Japan Equity
Japan Nikkei Average
Japanese Yen
Sony (SNE)
Emerging Markets (EFA)-
India (EPI) –New 4 Year High
Foreign Currencies-Waiting for the Fed
*Euro QE has begun, buy the rumor, sell the news
*Immense profits have built up in Euro, short positions are the largest in
history
*If “patience” stays in, watch out for round of Euro and Yen profit taking
* if “patience” comes out, dollar soars
to new highs on rate rise prospects
*Watch for rotation out of euro shorts and
into yen shorts so yen can play catch up
*Aussie (FXA) can’t catch a break, with
weak oil dragging all of its
commodities down
Euro ($XEU), (FXE), (EUO)
took profits on long the 4/$112-$115 vertical bear put spread
$105 Target hit, next is $85 after a rest of weeks to months
Long Dollar Index (UUP)-Short term overshoot
British Pound (FXB)-
Japanese Yen (FXY)-
Short Japanese Yen ETF (YCS)
Australian Dollar (FXA) –No Friends
Chinese Yuan- (CYB)
Emerging Market Currencies (CEW)
Dragged down by commodities collapse
Energy-New 7 Year Lows
Storage crisis now in play
*New US fracking supplies still coming on stream, will add 500,000 b/d over
next three months
*The world is rapidly running out of storage, prompting a global capping surge
*US rig count falling off a cliff, 1,600 to 1,000 now, to 500
*Inventories rising at tremendous rate, up another 9.6 million barrels this week
*Long term investors willing to look through
a potential $30 handle and
are buying stocks now
*Iran peace deal is the wild card, month
end deal puts another 1.5 million barrels
a day on the market, taking prices
to $20
Oil-Yikes!
$30 here we come!
United States Oil Fund (USO)
Energy Select Sector SPDR (XLE)
MLP’s (LINE)-Buy on the next Melt Down
Exxon (XOM)-Warren Buffet unloads holding
Occidental Petroleum (OXY)
Conoco Phillips (COP)
Natural Gas (UNG)-
Copper-
Freeport McMoRan (FCX)-New Lows
Precious Metals-A Bear Market Rally
*Gold Down 10 days in a row for the first time in 40 years
*It’s entirely a strong dollar story
*If “Patience” stays in you might get a $50 gold rally
*(GDX) worst performing sector of stock market in March, down -15%
*(GLD) is breaking down, wait for
new range to establish and then
trade that
*If “patience” comes out,
gold craters on interest rate fears
GoldSTOP LOSS on long 3/$107-$112 bull call spread
Barrick Gold (ABX)-
Market Vectors Gold Miners ETF- (GDX)
Silver (SLV)-
Silver Miners (SIL)
Agriculture-More Bad News
*Coming spring thaw pushing prices to new lows, disappearance of
winter kill
•
*DBA hits new lows! Yikes!
*US grain now the world’s most expensive, thanks to strong dollar, last
Egypt buy went to Russia and the Ukraine, not us, thanks to cheap ruble
*2015 will be another record
crop without extreme weather
*Pass for now, bigger fish
to fry elsewhere
(CORN) –
(SOYB)-
Ag Commodities ETF (DBA)-More New Lows!
Real Estate-A Dramatic Slowdown
*Cold weather slams home sales more
*New housing starts down a stunning -17% MOM from 700,000 to 593,000, 3% YOY, northeast took biggest hit, -56%
*New permits down big, Builders Sentiment plunging
*10% of all US homes, or 5.4 million units, still underwater on mortgages,
preventing trade ups and creating a drag on the entire market
*Market ran ahead of affordability
2012-2014, waiting for incomes
to catch up
*Huge student debt keeping entry level
buyers out of market
December S&P/Case–Shiller Home Price Index
+14% YOY down to +4.5%, Still Slowing
US Home Construction Index (ITB)
Trade Sheet
So What Do We Do About All This?
*Stocks- buy the dips, with technology and health care leading
*Bonds- sell rallies
*Commodities-stand aside, buy the next oil down leg
*Currencies- sell Euro, Yen
*Precious Metals –stand aside, wait for new low
*Volatility-middle of range, stand aside
*The Ags –warm weather brings new lows
*Real estate- stand aside, the dead cat
bounce is done
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12:00 Wednesday,
April 1, 2015
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Good Luck and Good Trading!