The Mad Hedge Fund Trader “Commodities Back from the Dead!” With John Thomas from San Francisco,...

The Mad Hedge Fund Trader“Commodities Back from the Dead!”

With John Thomasfrom San Francisco, CA

February 4, 2015www.madhedgefundtrader.com

MHFT Global Strategy LuncheonsBuy tickets at www.madhedgefundtrader.com

Honolulu, HawaiiApril 3, 2015

Portfolio ReviewRunning a Small Hedged Risk Averse Book

Risk OnWorld is Getting Better

(FXY) 2/$84-$87 put spread 10.00%

Risk OffWorld is Getting Worse

(T) 2/$35-$37 put spread -10.00%

total net position 0.00%

Trade Alert PerformanceUp on the Year!

*January MTD +0.53% Final*February MTD +0.86% MTD

*Trailing 1 year return +28.7%

2014 FINAL +30.31%, versus 7% for the Dow

*First 216 weeks of Trading +154.2%!

Paid Subscriber Trailing 12 Month Return +28.7%

50 Months Since Inception Averaged annualized +37.0%

Strategy Outlook-Hiding on the Sidelines

*Collapsing oil and bond yield stall US stock markets, technical damage is worsening

*Plummeting US rig count triggers an oil short covering rally, but the bottom is not in

*Bonds continue bull run, targeting 1.37% for the 10 year

*Euro and yen are exhausted on the downside, taking a break

*Multiple crisis bring gold back to life

*Generous snow, and mild temperaturesbring new down leg for ags

The Jim Parker ViewThe Mad Day Trader-On sale for a $1,500 upgrade

Technical Set Up of the week-Waiting to see if stock rally holds

Buy

Biotechs, Industrials, Consumer Staples (PG)watch DAX for all risk guidancemight be another $2 in oil

Sell Short

Avoid

Gold is done for this cycleDollar, is topping outBonds until more convincing breakdown

The Global Economy-So it is the Economy!

*US Q4 GDP slows from 5% to 2.6%, still above trend.

*There is no recession on the horizon, but you have to let the fears work their way through the market first

*Euro Consumer prices down -0.6% YOY, deflation rules

*January Chicago PMI 58.8 to 59.4 on cheap gas

*Expect Greece to live in the headlines, but there will be no real consequences

*Expect to hear a lot about defaults in high cost oil producers, like Venezuela and Canada, presenting headline risk

Weekly Jobless Claims – New Lows!-43,000 to 265,000

Bonds-Reaching a CrescendoGunning for 1.36%

*All Fixed Income are Putting in Blow Off Tops

*German ten year bunds now lower than JGB yields

*US 10 Year Treasury poised to test record low 1.36% yield set in 2012, (TBT) aiming at $37 handle

*Fed not to raise interest rates until 2016, reinforced by oil and bond yield crashes

*Deflation is here to stay

*A short term top may be in

Ten Year Treasuries (TLT) 1.62%Is This the Top?

Ten Year Treasuries ($TNX) 1.62%

30 Year Treasury Yield ($TYX)-Yield 2.22%Ditto Here

Junk Bonds (HYG) 5.09% YieldThe New Lead Contract

2X Short Treasuries (TBT) stopped out of a 10% long position-Potential move to $37

Investment Grade Corporate Bonds (LQD)3.05% Yield

Emerging Market Debt (ELD) 5.20% Yield

Municipal Bonds (MUB)-2.62% yield, Mix of AAA, AA, and A rated bonds

Stocks-Turning the Corner

*This is another 5%-10% correction, not a new bear market, if bonds make a run to 1.36%, it will be 10% more than 5%

*Hard bounce in commodities and their stocks add 500 points to Dow in 2 days

*The entire commodity space moved in unison, including ags and solar

*This is creating a great entry point for 2015 for the best non oil sectors, like technology, health care, and solar

*Several technical services said the bottom was in on Tuesday,after the 500 point rally, ad that we are running to new highs

*Volatility to stay high

S&P 500-Consolidation Within Long Term Uptrend

took profits on the 2/$189/$194 call spread

A Perfect Head and Shoulders TopS&P 500 Equal Weight (RSP)

Dow Average-Targeting 16,400?

NASDAQ (QQQ)-

Equal Weight Technology (RYT)-A Head and Should Top that is breaking Down

Europe Hedged Equity (HEDJ)-Demolished by Russia

(VIX)-Setting up a Triple top

Russell 2000 (IWM)-Consolidating after BreakoutTook profits on the 2/$107-$112 vertical bull call spread

Technology Sector SPDR (XLK), (ROM)

Industrials Sector SPDR (XLI)

Health Care Sector SPDR (XLV), (RXL)another head and shoulders top

Equal Weight Consumer Discretionary (RCD)Yet, another head and shoulders top in an economically sensitive sector

Financial Select SPDR (XLF)-Complete Breakdown

Consumer Discretionary SPDR (XLY)

Apple (AAPL) –

Small Cap Financials (PSCF)-A head and shoulders top in an interest rate sensitive sector

Alcoa (AA)- took profits on the 2/$17-$18 vertical bear put spread

Gilead Sciences (GILD)- took profits on the 2/$85-$90 vertical bull call spread

guidance disappointment delivers 10% hit, and another entry point

AT&T (T)-long 2/$35-$37 vertical bear put spread

China (FXI)-

Japan (DXJ)-Hedged Japan Equity

Emerging Markets (EFA)-Biggest Beneficiaries of Cheap Oil-Go figure

India (EPI) –Biggest Beneficiary of Cheap Oil

Russia (RSX)

Foreign Currencies-Digesting Moves

*European QE arrives five years late, crashes Euro, as predicted here

*BOJ to buy Y80 trillion in bonds this year, the MOF to issue only Y40 trillion, the rest to be spent on stocks?

*Reserve Bank of Australia cuts rates to 25 BP to 2.25%, record low

*Currency area has gone to sleep to digest recent moves

Euro ($XEU), (FXE), (EUO)-Taking a RestTargeting $105, and then $85

Long Dollar Index (UUP)New Four Year High

British Pound (FXB)-

Japanese Yen (FXY)- long 2/$84-$87 vertical bear put spread

Short Japanese Yen ETF (YCS)

Australian Dollar (FXA) –New Four Year Low

Chinese Yuan- (CYB)

Emerging Market Currencies (CEW)Dragged down by commodities collapse

Energy-More Pain to Come

*New US fracking supplies still coming on stream, will add 500,000 b/d over next six months, Cushing rapidly approaching capacity at 1.5 million barrels

*US rig count plunge from 1,609 to 1,223 in 3 months triggers oil short covering rally

*Crude prices may keep falling until spring, when demand seasonally fades

*With 3%-3.5% global growth in 2015, 1.1 million b/d in new demand arises

*This year will be the bottom, but where and when is anybody’s guess,15% of US production now losing money

*Pros scaling into quality now,will continue for rest of year

*Chevron cuts capex by 13% to $35 billion

*We will be back to $70/barrelin 2 years

Oil-Trying to Find a Bottom

United States Oil Fund (USO)

Energy Select Sector SPDR (XLE)

MLP’s (LINE) 13% Yield-Capitulation Sell Offstopped out of a long a 10% Position, out a day early

Exxon (XOM)

Occidental Petroleum (OXY)stopped out of the 2/$70-$75 vertical bull call spread

Conoco Phillips (COP)

Natural Gas (UNG)-

Copper-

Freeport McMoRan (FCX)-New Lows

Precious Metals-A Bear Market Rally

*Vix spike creates a tradable rally

*But it may be over for now

*Charts starting to put in a convincing, multi month bottom, setting up a trading rally

*Gold is trading off oil like everything else, weak oil = strong gold, so expect more trading rallies to come

*Biggest moves in the Miners (GDX) and Barrack Gold (ABX)

Gold-An Upside breakout with a throwback

Barrick Gold (ABX)-

Market Vectors Gold Miners ETF- (GDX)New Friends

Silver (SLV)-

Silver Miners (SIL)

Agriculture

•*Oil rallies feeds into ags as well

*Snow cover with not too cold temperatures helping yields, hurting prices

*US grain now the world’s most expensive, thanks to strong dollar

*2015 will be another record crop without extreme weather

*Pass for now

•

(CORN) –

(SOYB)-

Ag Commodities ETF (DBA)

Real Estate-Gone to Sleep

*Big hits in housing stocks hint of slow market this year

*Waiting for new wage growth to boost demand, but it could be a long wait

*To see the market this quiet with interest rates this low is amazing

*Waiting for rising rents to drag up home prices

October S&P/Case–Shiller Home Price Index+14% YOY down to +4.5%, Still Slowing

US Home Construction Index (ITB)

Trade SheetSo What Do We Do About All This?

*Stocks- buy the dips, with technology and health care leading, we’re running to new highs*Bonds- stand aside, its gone crazy*Commodities-stand aside until global economy recovers*Currencies- sell every Euro rally forever, and the yen too*Precious Metals –don’t chase up here, wait for dip*Volatility-is peaking, get ready to sell*The Ags –stand aside until next season*Real estate- stand aside, the dead cat bounce is done

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Next Strategy Webinar 12:00 Wednesday, February 18, 2015 Live from Incline Village, NV

Good Luck and Good Trading!