The Mad Hedge Fund Trader “Closed for Business” San Francisco, CA October 9, 2013 .
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Transcript of The Mad Hedge Fund Trader “Closed for Business” San Francisco, CA October 9, 2013 .
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The Mad Hedge Fund Trader“Closed for Business”
San Francisco, CA October 9, 2013
www.madhedgefundtrader.com
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MHFT Global Strategy LuncheonsBuy tickets at www.madhedgefundtrader.com
San FranciscoNovember 1
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TradeMonster San Francisco ConferenceOctober 25-26
San FranciscoMarriot Marquis Hotel
Go to www.madhedgefundtrader.com and register by clicking the InvestMonster box on the right
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Trade Alert PerformanceRunning Away From the Pack
*2013 YTD +41.73%, compared to 12%for the Dow, beating it by 30%
*September +6.26%
*First 130 weeks of Trading +96.8%
*Versus +20% for the Dow AverageA 77% outperformance of the index143 out of 202 closed trades profitable
80% Success Rate in 201370.8% success rate on closed trades
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Portfolio Review-Waiting to Buy the Next Dipminimize risk while Washington burns
Expiration P&L+43.69% YTD
current capital at risk
Risk On
(SPY) 10/$158-$163 call spread 10.00%
Risk Off
(TLT) 10/$100-$103 call spread -10.00%(FXA) 10/$87-$90 call spread -10.00%
total net position -10.00%
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Performance Year to Date +41.43%
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Performance Since Inception+34.6% Average Annualized Return
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Strategy Outlook-Buy the Dips
*It’s all about Washington, no other issue matters
*Market risk taking has gone to zero, huge spike in 30day Treasury yields
*Cessation of all government data puts traders in the blind
*Major down leg for dollar in the cards,except against the yen
*Market ignores Yellen appointment, but willeventually add 10% to stocks
*Should get resolution around October 17
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The Jim Parker ViewThe Mad Day Trader-On sale for a $1,000 upgrade
Summer market still prevails
Technical Set Up of the week
*Buy
No trade, traders on strike, wait it out,do your homework
Emerging markets (VNM), (RSX), (PIN)don’t chase (VIX)
*Sell Short
a yen sale is near
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The Economy-Beats Me!Only the foreign data is still coming through, and it is all positive
*Government shutdown starves market of US economic data, when data resumes, it will be plagued with aberrations for the rest of 2013
*Government shutdown to roll 0.5% of GDP growth from Q4 to Q1, making Q1 a red hot 3.5% one
*BOJ Maintains supper accommodative 70 trillion money supply growth target
*Japanese CPI hits 5 year high at 0.8%YOY
*Japan to raise sales tax from 5% to 8%in April, offset with additional stimuluspackage
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Weekly Jobless Claims1,000 rise to 307,000, 5 year low
The Last Accurate Number of 2013
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ISM Manufacturing Index Surges
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Bonds-The Bull Move is Done*Debt ceiling crisis drives Treasury bond prices up and yields down, from 3.0% to 2.60%
*Most up downside moves in yields is done, possible make it to 2.45% of shutdown continues another week, but the next big move is down
*Resolution could take us quickly back to 3%
*The securities facing default have had the biggest price gains over the past month
*The shutdown puts taper off well into 2014, is very bond positive, $85 billion in bond buying continues
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Ten Year Treasuries (TLT Yields)long the (TLT) 10/$100-103 bull call spread
7 trading days to expiration
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10 Year Treasury Yield ($TNX)
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2X Short Treasuries (TBT)-Breaking Down
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Emerging Market Debt (ELD) 5.75% Yield
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Municipal Bonds (MUB)-2.98% yield,Mix of AAA, AA, and A rated bonds
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(JNK)- 6.46% Yield
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MLP’s (LINE) 10.9% Yield
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Stocks-Awaiting the Starting Gun
*The debt ceiling resolution deadline is October 17, parties will run it up to last second of the last day to maneuver for advantage
*Debt ceiling resolution will quickly send stocks to new all time highs, the performance chase will be on
*Money managers still have cash pouring into equities, must invest by year end
*Consumer cyclicals, technology, health care, and industrials will lead
*Individual Margin debt at all time highs, is peaking a indicator
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(SPX)-The 30,000 view
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S&P 500 (SPX)-Testing trend supporttargeting 1,620 on downside
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NASDAQ (QQQ)
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(VIX)-A Pulse Returns
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Russell 2000 (IWM)-Led the Upturn
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Financials SPDR (XLF)-Leading the downturn
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Apple (AAPL)-Throw Back still in Play,Icahn, buyback, Jeffries upgrade, technical's, already trading off
iPhone 6, 11 months away
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Technology Sector SPDR (XLK), (ROM)
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Industrials Sector SPDR (XLI), (UXI)
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Cyclicals Sector SPDR (XLY), (UCC)
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Health Care Sector SPDR (XLV), (RXL)
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Cyclicals Sector SPDR (XLY)
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Tesla (TSLA)-Don’t Touch hereEvening a burning car can’t send the stock down
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Shanghai-Double Bottom in place
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(DXJ)-Early and Ouch!long the 11/$43-$46 bull call spread
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Emerging Markets-Bottom fishing
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Dollar-Beaten Up
*Debt ceiling crisis very dollar negative, brought dramatic fall in US interest rates on flight to safety trade
*Loss of interest rate advantage
*End of shutdown will bring massive dollar rally
*Use this dip to sell yen, buy Ausie
*Stand aside on euro until it hits $1.40
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Long Dollar Basket (UUP)-
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Euro (FXE)-No Trade
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Australian Dollar (FXA)-Long the 10/$87-$90 call spread, 7 days to expiration
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Japanese Yen (FXY)-The range holds,but is biggest position in the market
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(YCS)-For Non Options Players200% Short Yen ETF-head and shoulders top risk
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Emerging Market Currencies (CEW)
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Energy-Gone Quiet
*Middle East has gone quiet
*Shutdown kills the demand argument
*Supply keeps coming
*Oil hit my first downside target at $102,
*The next target is $92
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Crude-
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United States Oil Fund (USO)
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Natural Gas-First heavy snow fall helps
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Copper-Coiling for upside break
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Freeport McMoRan (FCX)-looking to get back in
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iPath Dow Jones-UBS Copper Sub Index ETN (JJC)
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Precious Metals-Short Term,Is the Bottom in?
*Shutdown delivers the best case scenario for precious metals
*Government defaults, but gold falls
*Failure to respond shows we’re still in a bear market,stocks in a bull market
*Shutdown hammers the miners
*Looking for a short term bounce to $1,420 on a medium and long term bear market
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Gold-
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Gold (GLD)
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Barrack Gold (ABX)-
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Market Vectors Gold Miners ETF- (GDX)
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Silver (SLV)-Silver says we’re still going lower
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Agriculture-No Trade Until 2014
*Worst hit sector by government data freeze, farmers flying blind
*Early heavy Midwest snowfall should help prices, delays corn harvest
*Russia cuts back winter wheat plantings 20% to 13 million tonnes
*China returns to market as buyer
*Bottom line: no trade in 2013
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(CORN)-still trying to bottom
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Wheat (WEAT)
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DB Commodities Index ETF (DBC)Dead Cat Bounce
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Real Estate-Target Number 1
*End of government loan processes stops 95% of all transactions
*August pending home sales -1.6%
*Will be worst hit sector if Washington stalemate continues
*Housing stocks get slaughtered
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June S&P/Case–Shiller Home Price Index
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(ITB)-US Home Construction Dow Sub index
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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, is peaking here*The Ags –stay away until next year, no trade*Real estate- no trade
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To buy strategy luncheon tickets Please Go towww.madhedgefundtrader.com
Next Strategy Webinar 12:00 EST Wednesday, October 23, 2013
Live from San Francisco
Good Luck and Good Trading!