the mad hedge fund trader “smelling the roses ” with john thomas san francisco january 8, 2014
TRANSCRIPT
The Mad Hedge Fund Trader“Smelling the Roses ”
With John ThomasSan Francisco
January 8, 2014www.madhedgefundtrader.com
Trade Alert Performance2013 Final
*2013 Final +67.45%, compared to 26%for the Dow, beating it by 41.45%
*December Final +11.41%*January MTD +3.00%
*First 160 weeks of Trading +125.50%
*Versus +47% for the Dow AverageA 78% outperformance of the index75 out of 90 closed trades profitable in 2013
83% Success Rate in 2013
Portfolio Review-Running Into Expirationwatch out for over trading and over confidence!
Expiration P&L+8.51% YTD
Risk On
(AAPL) 1/$490-$520 call spread 10.00%(SFTBY) shares long 20.00%(XLF) 1/$19-$21 call spread 10.00%(XLE) 1/$83-$86 call spread 10.00%(GILD) 1/$67.50-$70 call spread 10.00%(FXY) 1/$98-$95 put spread 10.00%(SPY) 1/$173-$176 call spread 10.00%(TLT) 1/$104-$107 put spread 10.00%(XLK) 1/$33-$35 call spread 10.00%
Risk Off
none
total net position 100.00%
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 ViewThe 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
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 firsthalf, but is already priced in
*Sell every rally
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 resumeswhen year end effects end
*Traditional New Year rally was pulledforward by December hyper bullishness
*Money moving from crap to quality
(DXJ)-Upside breakout on more aggressive monetary easing,assets up from $300 million to $12 billion in 14 months
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
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 ofnatural gas
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
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 theMidwest
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 overmarket share, creating shortgages
*Nothing to do here
Trade Sheet-No Change“RISK ON” Good Through Q1 2014
*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 towww.madhedgefundtrader.com
Next Strategy Webinar 12:00 EST Wednesday, January 22, 2014
Live from San Francisco
Good Luck and Good Trading!