The Mad Hedge Fund Trader The One Way

The Mad Hedge Fund Trader “The One Way Market” With John Thomas from San Francisco, CA December 3, 2014 www. madhedgefundtrader. com

Portfolio Review Running a Small Low Risk Book at the Top of a Massive Move Adding to longs on small Dips World is Getting Better Risk On (TBT) short Treasury ETF 10. 00% (BAC) 12/$15 -$16 call spread 10. 00% 1 (SCTY) 12/$47. 50 -$52. 50 call spread 10. 00% 2 (LINN) units 10. 00% 3 4 5 World is Getting Worse 6 Risk Off 7 total net position 40. 00%

Trade Alert Performance Four Year Anniversary! *January Final +3. 05%, *February Final +6. 41%, *March Final -2. 52% *April Final +3. 32% *May Final +4. 61% *June Final +4. 24% *July Final +4. 18% *August Final 5. 86% *September Final 5. 01% *October Final 6. 69% * November Final -1. 26% 2014 YTD +40%, versus 8% for the Dow *First 208 weeks of Trading +162. 5%!

Paid Subscriber Trailing 12 Month Return +47. 9% 60. 0% 50. 0% 40. 0% 30. 0% Series 1 20. 0% 10. 0% 12/2/13 -10. 0% 1/2/14 2/2/14 3/2/14 4/2/14 5/2/14 6/2/14 7/2/14 8/2/14 9/2/14 10/2/14 11/2/14

/1 0 8/ 11 4/ 8/ 11 6/ 8/ 11 8/ 8/ 1 10 1 /8 /1 12 1 /8 /1 1 2/ 8/ 12 4/ 8/ 12 6/ 8/ 12 8/ 8/ 1 10 2 /8 /1 12 2 /8 /1 2 2/ 8/ 13 4/ 8/ 13 6/ 8/ 13 8/ 8/ 1 10 3 /8 /1 12 3 /8 /1 3 2/ 8/ 14 4/ 8/ 14 6/ 8/ 14 8/ 8/ 1 10 4 /8 /1 4 2/ 12 /8 48 Months Since Inception Averaged annualized +40. 4% 180. 00% 160. 00% 140. 00% 120. 00% 100. 00% 80. 00% Series 1 60. 00% 40. 00% 20. 00%

Strategy Outlook-Risk Back On *Now its Europe’s turn for “shock and awe, ” with ECB’s Draghi saying he will “do what he must” to boost Euro inflation from 0. 40% to 2. 0% *China in with a 0. 40% overnight interest rate cut. *Stocks deliver new all time highs right on schedule, Look for a slow grind up in stocks leading into a year end rally, volatility to stay low *Commodities, oil, gold, silver, base metals, and foreign currencies all plumping new lows *The bond top is in, but prices to grind sideways for the indefinite future *The transportation crisis finally gave the grains a low

The Jim Parker View The Mad Day Trader-On sale for a $1, 500 upgrade Technical Set Up of the week-Chase the Winners! Buy *Everything that’s up, “top fishing” *like energy names (XOM), (DIG), (COP), (OXY) *Gold may have put in a tradable bottom *Banks, bonds just topped again Sell Short *everything that’s down Avoid *Grains, too technical for mere mortals

The Global Economy- Still a US Story *Gasoline still falling nationally, is a huge surprise stimulus/tax cut, positive impacts still wildly underestimated by investors, is worth a doubling of stocks, not the 10% move seen so far *Almost all US data points coming in stronger than expected, pointing to a stronger economy next year, November auto sales blow out to the upside as buyers rush towards low mileage models, JEEP up 60%! *US GDP revised up from 3. 5% to a red hot 3. 9% ramping up to a 4% growth rate in 2015, Philly Fed Index rockets to 40. 8, strongest read in 21 years *Japanese debt downgrade yields a “ho hum”, takes yen to new lows *China interest rate cut extended global stimulus

Weekly Jobless Claims - The trend is your Friend +21, 000 to 313, 000, still hugging 14 year lows!

Bonds-Twin Peaks? *Treasury bonds put in a secondary peak last week, may test lows going into year end *Quantitative easing is over in the US, but is reborn in Japan and the US, German bond yields fall below 0. 80%! *Look for the ten year Treasury yield to break to a new 2. 30%-2. 60% range and then stay there for a long time *Take profits on (TBT) when the ten year yield hits 2. 60% *Sell off in junk bonds means that risk is rising *Fed not to raise interest rates until 2016.

Ten Year Treasuries (TLT) 2. 30% A Secondary Top?

30 Year Treasury Yield ($TYX)-Yield 3. 04% Ditto Here

Junk Bonds (HYG) 5. 68% Yield The New Lead Contract

2 X Short Treasuries (TBT) 10% long position-Cost of Carry 45 basis points a month-Avoid options

Investment Grade Corporate Bonds (LQD) 3. 49% Yield

Emerging Market Debt (ELD) 3. 57% Yield

Municipal Bonds (MUB)-2. 85% yield, Mix of AAA, and A rated bonds

MLP’s (LINE) 15. 90% Yield-Capitulation Sell Off long a 10% Position

Stocks-Slow Motion Melt up Continues *The rally was so fast, most managers were left behind, $11 trillion in cash sitting under the market *32 trading days above the 5 day moving average, the longest run since 1928 *Market has fallen during the November to April period only one time in 30 years *Now dealing with the same problem we have faced for most of the year: do we buy at the market top? *US corporate profits looking to gain another 10% in 2015 *Maybe another 25 points in (SPX) to 2, 100 by yearend *Long term investors now bottom fishing energy names

S&P 500

S&P 500 -Superheated

Dow Average-New Highs

NASDAQ (QQQ)-

Europe Hedged Equity (HEDJ)-Drinking the ECB Kool-Aid

(VIX)-Is saying no 10% correction for 3 years!

Russell 2000 (IWM)-Poised for a Breakout

Technology Sector SPDR (XLK), (ROM)

Industrials Sector SPDR (XLI)

Health Care Sector SPDR (XLV), (RXL)

Financial Select SPDR (XLF)

Consumer Discretionary SPDR (XLY)

Energy Select Sector ETF SPDR (XLE)

Apple (AAPL) – Getting Overheated

Google (GOOGL)Relaunch Postponed

Bank of America (BAC)- 11/$15 -$16 vertical bull call spread-run to expired at maximum profit long the 12/$15 -$16 vertical bull call spread-2 weeks to expiration

Alibaba (BABA)- stopped out of the 12/100 -$105 call spread

Solar City (SCTY)- long the 12/$47. 50 -$52. 50 vertical bull call spread-2 weeks to expiration

China (FXI)- China modernizes financial system with the introduction of certificates of deposit, on the path to a free float of the YUAN

Japan (DXJ)-Hedged Japan Equity Yen Collapse Brings New Life

Emerging Markets (EFA)Getting a Boost from Cheap Oil

India (EPI) –Biggest Beneficiary of Cheap Oil

Foreign Currencies-New Lows! *Mario Draghi’s latest blast crushes Euro, more to come, Italian ten year yields fall to 2. 23% *Snap Japanese elections in December bring a further collapse of the yen *Aussie hits four year low on collapsing commodities and weaker growth, iron ore meltdown *Sterling still weak *Emerging currencies in free fall

Euro (FXE)Taking a rest on yearend profit taking

Long Dollar Index (UUP) New Four Year High!

British Pound (FXB)-

Japanese Yen (FXY)- No Friends New Seven Year Low!

Short Japanese Yen ETF (YCS)

Australian Dollar (FXA) –New Four Year Low

Chinese Yuan- (CYB) China modernizes financial system with the introduction of certificates of deposit, on the path to a free float of the YUAN

Emerging Market Currencies (CEW) Dragged down by commodities and rising US interest rates

Energy*OPEC meeting brings no production cuts and the fastest price falls in history *US imports from OPEC hit 30 year low *Expect financial crisis in Russia, Venezuela, Nigeria, and trouble in Canada *Long term players moving in to scoop up MLP’s for double digit yields *Don’t expect a rapid bounce back, winding down 15 years of leverage accumulation

Oil-Trying to Find a Bottom

Oil 10 Years-Approaching 5 year support at $70

United States Oil Fund (USO)

Exxon (XOM)

Occidental Petroleum (OXY)

Conoco Phillips (COP)

Natural Gas (UNG)-

Copper-

Freeport Mc. Mo. Ran (FCX)-New Lows

Freeport Mc. Mo. Ran (FCX)-10 Year View

Precious Metals-A Bear Market Rally *Still trading like death *No demand for metals in a disinflationary world *Referendum on Swiss national gold overwhelmingly fails, triggers new leg down in prices *No room for gold in a disinflationary world *Still targeting $1, 000

Gold-Another Bear Market Rally Gone

Barrack Gold (ABX)-New Lows

Market Vectors Gold Miners ETF- (GDX) No Friends

Silver (SLV)-New 5 Year Lows

Silver Miners (SIL)

Agriculture *Transportation crisis is providing support under market • *Collapse of Russian Ruble gives the huge price advantage in international markets *Strong dollar hurting US sellers, will get worse *Volatility has gone out of the market, look elsewhere for better trades *Focus on 2015, but it will be another record crop without extreme weather

(CORN) –

(SOYB)-Not Much of a Rally

Ag Commodities ETF (DBA)

Real Estate-Looking Soft *October existing home sales up a strong 1. 50% *October new home sales a soft 0. 7%, pending home sales (signed contracts) down 1. 1%, inventory up 5% YOY *Tight credit, increasing supply, less competition from all cash institutional home buyers *Big just in median price from $264, 00 to $305, 000 *Foreclosures rising again, Mortgage volumes falling, despite record low interest rates *Underwater houses, still 25% of the market, are still weighing on prices, as sellers get out at even

May S&P/Case–Shiller Home Price Index +14% YOY down to +4. 9%, Still Slowing

US Home Construction Index (ITB)

Trade Sheet So What Do We Do About All This? *Stocks- buy the dips, with Financials, technology and health care leading, we’re running to new highs *Bonds- sell rallies across all fixed income, the end is here *Commodities-stand aside until global economy recovers *Currencies- sell every Euro rally forever, and the yen too *Precious Metals –stand aside until the $1, 000 bottom is in *Volatility-stand aside, the peak is in *The Ags –stand aside until next season *Real estate- stand aside, the dead cat bounce is done

To buy strategy luncheon tickets Please go to: www. madhedgefundtrader. com Next Strategy Webinar 12: 00 Wednesday, December 17, 2014 Live from San Francisco, CA Last webinar of the year! Good Luck and Good Trading!