the mad hedge fund trader “special “patience” issue” with john thomas from incline village,...
TRANSCRIPT
The Mad Hedge Fund Trader“Special “Patience” Issue”
With John Thomasfrom Incline Village, NV
March 18, 2015www.madhedgefundtrader.com
MHFT Global Strategy LuncheonsBuy tickets at www.madhedgefundtrader.com
Honolulu, HawaiiApril 3, 2015
Incline Village, NevadaApril 17, 2015
MHFT Global Strategy LuncheonsBuy tickets at www.madhedgefundtrader.com
Las Vegas, NevadaMay 8, 2015
Chicago, IllinoisApril 30, 2015
Trade Alert PerformanceUp 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 ReviewNo 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)
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 ViewThe 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 namesEurope (HEDJ) and Japan (DXJ) on dips
Sell Short
Run oil (USO) short with trailing stop
Avoid
US stocks, stuck in narrow rangeEuro (FXE) on upside breakoutBond (TLT) until new trend confirmedGold (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
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
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 targetNikkei hits multiyear highs
*Volatility recovers $17 handle
S&P 500-Breakout from Another Sideways consolidationtook profits on the long 3/$200-$204 vertical bull call spread
Cisco Systems (CSCO)-took profits on our long 3/$27-$29 vertical bull call spread
China bans purchases of foreign technology
Foreign Currencies-Waiting for the Fed
*Euro QE has begun, buy the rumor, sell the news
*Immense profits have built up in Euro, short positions are the largest in history
*If “patience” stays in, watch out for round of Euro and Yen profit taking
* if “patience” comes out, dollar soars to new highs on rate rise prospects
*Watch for rotation out of euro shorts andinto yen shorts so yen can play catch up
*Aussie (FXA) can’t catch a break, withweak oil dragging all of itscommodities down
Euro ($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
Energy-New 7 Year LowsStorage 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 througha potential $30 handle and are buying stocks now
*Iran peace deal is the wild card, monthend deal puts another 1.5 million barrelsa day on the market, taking pricesto $20
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
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
•
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 levelbuyers out of market
Trade SheetSo 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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Good Luck and Good Trading!