Featured Trade: (MAY 8 LAS VEGAS STRATEGY LUNCHEON), (BEN?S NEW LEG FOR THE BULL MARKET), (SPY), (IWM), (AAPL), (GLD), (SLV), (CU), (TLT), (YCS), (FXY) (PLEASE USE MY FREE DATA BASE SEARCH)
SPDR S&P 500 (SPY)
iShares Russell 2000 Index (IWM)
Apple Inc. (AAPL)
SPDR Gold Shares (GLD)
iShares Silver Trust (SLV)
First Trust ISE Global Copper Index (CU)
iShares Barclays 20+ Year Treas Bond (TLT)
ProShares UltraShort Yen (YCS)
CurrencyShares Japanese Yen Trust (FXY)
Come join me for lunch at the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in Las Vegas, Nevada on Wednesday, May 8, 2013. An excellent meal will be followed by a wide-ranging discussion and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, currencies, commodities, precious metals, and real estate. I will also explain how I have been able to deliver a blowout 40% return since the November, 2012 market bottom. And to keep you in suspense, I?ll be throwing a few surprises out there too. Tickets are available for $179.
I?ll be arriving at 11:00 and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets. The PowerPoint presentation will be emailed to you three days before the event.
The lunch will be held at a major Las Vegas hotel on the Strip, the details will be emailed with your purchase confirmation. Please make your own hotel reservations, as business there is booming.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store.
https://www.madhedgefundtrader.com/wp-content/uploads/2012/08/las-vegas-welcome-sign.jpg487325Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-05-06 09:20:282013-05-06 09:20:28May 8 Las Vegas Strategy Luncheon
I just returned from my round of monthly wine club pick-ups in California?s lush and fertile Napa Valley. I invested a half hour soaking up the breathtaking views at the hilltop Silverado winery. Duckhorn offered a lavish lunch event, which I ducked out on. The Wagner family is prospering as always, recently opening a tasting room for their spectacular Caymus private label. The trunk of my electric Tesla S-1 is brimming over with fine cabernet, merlot, pinot noir, and the odd zinfandel.
Driving through rolling hills of ripening grapevines also gave me time to digest and contemplate the implications of the dramatic events of last Friday. The Department of Labor announced a bombshell of an April nonfarm payroll, showing 165,000 in job gains in the face of dire expectations, taking the headline unemployment rate down to 7.5%, a four year low.
Far more important were the dope slapping revisions of prior months. February was taken up from a healthy 268,000 to an eye popping 332,000. As if by magic, March was boosted from a feeble 88,000 to a more robust 138,000.
I made a nice killing with my long positions in Apple (AAPL) and the S&P 500 (SPY). But I also suffered painful stop outs in my short positions in the Russell 2000 (IWM), which only had two weeks to run to expiration, sending my performance for the month down in flames. Such is the risk of betting on this notoriously volatile and always revised data point. If you play with fire, you get burned.
There were 50 data points warning that the April nonfarm payroll was going to be a disaster, the details of which you can find in my most recently posted Global Strategy Webinar. They all painted a picture of an undeniably weakening economy, paving the way for a nice ?Sell in May? and a following summer correction right on schedule.
That?s why, to a man, every hedge fund trader went into the Friday release net short. So when the announcement came, the short covering was fast and furious. And it occurred across all asset classes simultaneously. Stocks of every description and commodities (CU) soared, while the Japanese yen (FXY) (YCS) and the Treasury bond market (TLT) cratered. Only the precious metals of gold (GLD) and silver (SLV) remained moribund, still working off a long hangover.
It turns out that I was not the only one who noticed the soggy economic data. It also caught the attention of Fed governor, Ben Bernanke, ECB president, Mario Draghi, and BOJ governor, Haruhiko Kuroda, who together launched a trifecta of coordinated rescue measures designed to provide emergency life support for the flagging recovery.
In the Fed minutes released on Wednesday, Uncle Ben suggested that he might actually increase monetary easing. The European Central Bank, in a better late than never move, finally cut Euro interest rates by 25 basis points. An indiscreet minister also hinted that negative Euro interest rates might be in the cards. Of course, burning all the shorts was part and parcel of this program.
So we now have to ask, what happens next? Welcome to an S&P 500 earnings multiple of 16, a figure not seen for six years! With zero interest rates, global monetary easing still expanding, and the rest of the world tripping over each other to buy American stocks, higher multiples are in the cards. Stocks that seem richly priced to us here seem unbelievably cheap to every one else.
How high is high? One old trader?s rule of thumb says that every multiple year breakout is worth at least 10%. That takes the (SPY) up to 1,760, and the Dow average to 16,500, possibly by year end. Instead of the major 5%-10% corrections investors have been expecting all year, we may continue to get sideways time corrections before each leg up.
There also seems to be another factor at work here. Every time I take a run at a 40% return, I get thrown back. It has already happened twice this year. It?s as if 40% is an unnatural act requiring incantations in strange tongues to surpass. Black swans come out of nowhere, as do the shocks and surprises. You can do all the work in the world in these conditions, and it often ends of being for free.
That?s why in past years, when I was running my big hedge fund, I would quit for the year whenever I approached the 40% level. I then sent a letter to my investors saying I?m not working anymore until I got paid my performance bonus off of the lofty numbers. I then proceeded to take extended vacations, sending my investors postcards from exotic locales.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/Crystal-Ball.jpg204306Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-05-06 09:18:252013-05-06 09:18:25Ben?s New Leg for the Bull Market
The original purpose of this letter was to build a database of ideas to draw on in the management of my hedge fund. When a certain trade comes into play, I merely type in the symbol, name, currency, or commodity into the search box, and the entire fundamental argument in favor of that position pops up with a link chain to older stories.
You can do the same. Just type anything into the search box with the little magnifying glass in the upper right side of my Homepage and a cornucopia of data, charts, and opinion wills appear. Even the price of camels in India (to find out why they?re going up, click here). As of today, the database goes back to February 2008, and comprises some 2 million words, or triple the length of Tolstoy?s epic novel, War and Peace.
Watching the traffic over time, I can tell you how the database is being used, and the implications are fascinating:
1) Small hedge funds want to see what the large hedge funds are doing.
2) Large hedge funds look to see what they have missed, which is usually nothing.
3) Midwestern advisors to find out what is happening in New York and Chicago.
4) American investors to find out if there are any opportunities overseas (there are lots).
5) Foreign investors wish to find out what the hell is happening in the US (about 1,000 inquiries a day come in through Google?s translation software in a multitude of languages).
6) Specialist traders in stocks, bonds, currencies, commodities, and precious metals are looking for cross market insights which will give them a trading advantage with their own book.
7) High net worth individuals managing their own portfolios so they don?t get screwed on management fees.
8) Low net worth individuals, students, and the military looking to expand their knowledge of financial markets (lots of free online time in the Navy).
9) People at the Treasury and the Fed trying to find out what the private sector is doing.
10) Staff at the SEC and the CFTC to see if there is anything new they should be regulating.
11) More staff at the Congress and the Senate looking for new hot button issues to distort and obfuscate.
12) Yet, even more staff in Obama?s office gauging his popularity and the reception of his policies.
13) As far as I know, no justices at the Supreme Court read my letter. They?re all closet indexers.
14) Potential investors/subscribers attempting to ascertain if I have the slightest idea of what I am talking about.
15) Me trying to remember trades which I recommended, but have forgotten.
16) Me looking for trades that worked so I can say, ?I told you so.?
It?s there, it?s free, so please use it.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/Woman-hitting-head.jpg213185Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-05-06 09:14:212013-05-06 09:14:21Please Use My Free Data Base Search
I sit here with my fingertips battered, bruised, and bleeding. My lower back aches, and my shoulders are as tight as a drum. After promising to take it easy for a while because the risk/reward in the market so badly sucks, I knocked out six Trade Alerts in one day. That is on top of conducting a one-hour strategy webinar and writing a 1,600 word daily newsletter. So I lied.
So far in 2013, I have issued an exhausting 114 opening, closing, and updated Trade Alerts. That includes one amazing run of 19 consecutive profitable trades. You have to strike while the iron is hot, make hay while the sun shines, yada, yada, yada. Making money in the market this year has been a turkey shoot.
Since writing about my performance a few days ago, which now stands at an eye popping 35.88% for 2013 and 90.93% over the past 30 months, I have been deluged with inquiries about how I pulled off this trading miracle from the incredulous. Is he using insane amounts of leverage? Or is he just telling porky pies, a not unheard of practice in this sullied industry.
So in the interest of full disclosure, I am posting below every trade I have alerted readers to since January 1, along with the profit and loss. Of the 43 trades executed in 2013, 37 have been profitable, some quite impressively so. Each trade is shown in terms of its contribution to the portfolio?s total annual return. That is a success rate of 86%, which rightly earns me an honored place in the Hedge Fund Trader?s Hall of Fame.
Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011 and 14.87% in 2012. The service includes myTrade Alert Service, daily newsletter, real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars. To subscribe, please go to my website at www.madhedgefundtrader.com, find the ?Global Trading Dispatch? box on the right, and click on the lime green ?SUBSCRIBE NOW? button.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/2013-Trades.jpg681419Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-05-03 09:46:122013-05-03 09:46:12So I Lied
On my way back from Lake Tahoe last weekend I saw that every bend of the American river was dotted with hopeful miners, looking to make a windfall fortune. Weekend hobbyists were there panning away from the banks, while the hardcore pros stood in hip waders balancing portable pumps on truck inner tubes, pouring sand into sluice boxes. Welcome to the new California gold rush.
A sharp-eyed veteran can take in $2,000 worth of gold dust a day. The new 2013'ers were driven by a price of gold at $1,450 and the attendant headlines, but also by unemployment, and heavy rains that flushed new quantities of the yellow metal out of the Sierras. They were no doubt inspired by the chance discovery of an 8.7 ounce nugget in May near Bakersfield, worth an impressive $12,615.
Local folklore says that The Sierra's have given up only 20% of their gold, and the remaining 80% is still up there awaiting discovery. Out of work construction workers are taking their heavy equipment up to the mountains and using it to reopen mines that have been abandoned since the 19th century.
The US Bureau of Land Management says that mining permits in the Golden State this year have shot up from 15,606 to 23,974. Unfortunately, the big money here is being made by the sellers of supplies and services to the new miners, much as Levi Strauss and Wells Fargo did in the original 1849 gold rush.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/05/Panning-for-Gold.jpg165504Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-05-03 09:17:022013-05-03 09:17:02The New California Gold Rush
I am building lists of emerging market ETF?s to snap up during any summer sell off, and Turkey popped up on the menu. The country is only one of two Islamic countries that I consider investment grade, (Indonesia is the other one). The 82 million people of Turkey rank 15th in the world population, and 16th with a GDP of $960 billion GDP. Some 25% of the population is under the age of 15, giving it one of the planet?s most attractive demographic profiles.
The real driver for Turkey is a rapidly rising middle class, generating consumer spending that is growing by leaps and bounds. Its low wage labor force is also a major exporter to the European Community next door.
I first trod the magnificent hand woven carpets of Istanbul?s Agia Sophia in the late 1960?s while on my way to visit the rubble of Troy and what remained of the trenches at Gallipoli, a bloody WWI battlefield. Remember the cult film, Midnight Express? If it weren?t for the nonstop traffic jam of vintage fifties Chevy?s on the one main road along the Bosporus, I might as well have stepped into the Arabian Nights. They were still using the sewer system built by the Romans.
Four decades later, and I find Turkey among a handful of emerging nations on the cusp of joining the economic big league. Exports are on a tear, and the cost of credit default swaps for its debt is plunging. Prime Minister Erdogan, whose AKP party took control in 2002, implemented a series of painful economic reform measures and banking controls, which have proven hugely successful.
Foreign multinationals like General Electric, Ford, and Vodafone, have poured into the country, attracted by low costs and a rapidly rising middle class. The Turkish Lira has long been a hedge fund favorite, attracted by high interest rates.
Still, Turkey is not without its problems. It does battle with Kurdish separatists in the east, and has suffered its share of horrific terrorist attacks. Inflation is a worry. The play here long has been to buy ahead of membership in the European Community, which it has been denied for four decades. Suddenly, that outsider status has morphed from a problem to an advantage.
The way to get involved here is with an ETF heavily weighted in banks and telecommunications companies, classic emerging market growth industries like (TUR). You also always want to own the local cell phone company in countries like this, which in Turkey is Turkcell (TKC). June elections could provide us with the trigger to move into this enchanting country. Turkey is not a riskless trade, but is well worth keeping on your radar.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/04/Istanbul.jpg270363Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-05-03 09:13:512013-05-03 09:13:51Turkey is on the Menu
The real shocker today in the Fed?s announcement is that it may increase monetary easing from here. As if we haven?t had enough already, with the US and Japan throwing in a combined $170 billion a month worth of monetary stimulus!
More easing means that the America?s central bank thinks the global economy is even weaker than you and I realize. Yikes! Man the lifeboats, pass out the parachutes, and tighten your seatbelts! This is bad for commodities and even worse for precious metals, especially gold.
The barbarous relic has managed an impressive $155 rally off its $1,325 bottom made two weeks ago. This is one of the sharpest and fastest moves up in the yellow metal in history. It has been largely achieved through massive buying of physical coins in India and the US, as well as short covering in the futures markets and the ETF (GLD). The disappearance of margin calls has also been a major help.
The heavy hand of the China slowdown is still with us. So I am more than happy to buy the SPDR Gold Trust Shares June, 2013 $150-$155 in-the-money bear put spread. The big attraction here is that I have a generous $97 safety cushion over the next six weeks before I lose money on this trade.
You can thank the sky high implied volatilities on the (GLD) puts for getting such a great deal on this spread. Just for the sake of comparison, the implied on the (GLD) $150 puts you just sold short is 18.2%, some 30% higher than the 14% front month implied on the Volatility Index on the S&P 500. If you don?t understand why this is important, please buy the book, Options for the Beginner and Beyond, at Amazon by clicking the title or the book cover below.
https://www.madhedgefundtrader.com/wp-content/uploads/2013/04/Gold-Nuggets.jpg414617Mad Hedge Fund Traderhttps://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.pngMad Hedge Fund Trader2013-05-02 10:12:202013-05-02 10:12:20Selling Gold Again
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There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
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