The Mad Hedge Fund Trader“Special Earthshaking Issue’”

With John Thomasfrom San Francisco, CA

August 27, 2014www.madhedgefundtrader.com

Trade Alert PerformanceStill Another New All Time High!

*January Final +3.05%, *July Final +4.18% *February Final +6.41%, *August MTD 5.86%*March Final -2.52%*April Final +3.32%*May Final +4.61%*June Final +4.24%

2014 YTD +29.78%, versus 3% for the Dow,an outperformance of 26%

*First 185 weeks of Trading +152%!

Portfolio Review- Running Out of Positions!Everything worked! (almost)

current capital at risk

Risk On

(TBT) short Treasury bond ETF 10.00%

Risk Off

none

total net position 10.00%

Trailing 12 Month Return +60%

44 Months Since Inception-50 BP Short of All Time High

+152%, Averaged annualized +40.5%

Strategy Outlook-*Collapsing bond interest rates in Europe has become the main global driver of all asset classes

*Watch the German 10 year bund, now yielding 0.90%, targeting JGB’s at 0.50%

*Nothing else matters, not Ukraine, the Middle East, Libya, or Ebola

*”Normalization” is the word of the week in Jackson Hole

*Data says major growth improvement still in the cards for H2

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

Technical Set Up of the week

Buy

*Grind up continues, (SPY) targeting at least 2,060

*No breaks until after month end

Sell Short – *Euro on next short covering rally*Yen 103.30 in cash market

Avoid –

*Bond market until melt up in Europe finishes

The Global Economy-US Accelerating, Europe Decelerating

*US August Markit PMI up a strong 55.8 to 58.0

*German Q2 GDP drops -0.2%, threatening a recession, hugely negative for the Euro

*Fed meeting at Jackson Hole picks “normalization” as the new word du jour, meaning that interest rates will rise some time in the future

*China August Markit PMI drops 51.7 to 50.3

Weekly Jobless Claims-The trend is your Friend-14,000 to 298,000, new 7 year lows!

Bonds-Stand Aside Until Europe Tops Out

*Global bond rally continues, German 10 year bunds hit 0.90%%

*Fed tapers quantitative easing to zero in October, but interest rates rises not until late 2015

*Driven by geopolitics and a global cash glut

*Switch out of bonds into stocks about to become major factor

*2.33% was the spike low on the 10 year Treasury, next spike to 2.25% should hold

*Huge rally in (JNK) chases the stock market

Ten Year Treasuries (TLT) 2.37%failure here is key, proves my top for the year call

stopped out 8/$117-$120 put spread expired at cost

The (TLT) Expiration Short Squeeze

*Slow Friday

*Option expiration day

*False rumor of Russian invasion

*I covered short 15 minutes before it hit

*No one wanted to be short (TLT) over the weekend

*Anyone who acted late on the Trade Alert to cover got hurt

30 Year Treasury Yield ($TYX)-Yield 3.13%

Junk Bonds (HYG) 5.79% YieldThe New Lead Contract-Wow!

2X Short Treasuries (TBT)long 10% position-keeping for a quick turnaround

volatility is low

Investment Grade Corporate Bonds (LQD)3.56% Yield

Emerging Market Debt (ELD) 3.14% Yield

Municipal Bonds (MUB)-2.92% yield,Mix of AAA, AA, and A rated bonds

MLP’s (LINE) 9.40% Yield-

Stocks- Best August in 14 Years*There are still plenty of bears around, so the bull market in stocks is still on track

*Reallocation from bonds and stocks into cash us underway, stocks will lead the rebound

*Use the next dip to reload on Tech first and foremost, for a yearend rally,

*(SPY) could add 10% by yearendfrom the August low, provided that geopolitics stay on a low boil

*$125/share in S&P earnings X 16 earningsmultiple = (SPX) 2,000

*Volatility back down on the floor

The Trend is Your Friend

Dow Average

NASDAQ (QQQ)-Still an Uptrend

Europe Hedged Equity (HEDJ)-Weak Euro Helping Stocks

(VIX)-Back to the Bottom

Russell 2000 (IWM)-Recent lag is a concern

Russell 2000 (IWM)-Channeling Too

Technology Sector SPDR (XLK), (ROM)As predicted, it’s all about technology!

Industrials Sector SPDR (XLI)

Health Care Sector SPDR (XLV), (RXL)

Financial Select SPDR (XLF)Hit by Strong Bond Market

Apple (AAPL) – We got the Run to New Highsrebuy on next dip, but watch out for September

Google (GOOGL)

China-Positive PMI’s hint at breakout

Japan (DXJ)-Weak on poor GDP figures

Emerging Markets (EEM)

India (EPI) – Still Grinding Up on EEM Strength

Foreign Currencies-Here Comes Euro QE!

*Draghi absolutely has to cut interest rates and expand QE to head off a Russian sanctions induced recession, targeting $127 in the (FXE).

*Draghi hints of accelerated quantitative easing at Sept 4 ECB meeting accelerates the Euro downturn. “All available tools comment.”

*Ditto for BOJ governor Kurodaand the yen

*Ultra low bond interest ratesalso dragging down the Euro

Euro (FXE)-The Freefall is Ontook profits on the 9/$133-$135 put spread

2% drop in (FXE) boosted our 2014 return by 4%

Long Dollar Index (UUP) – Euro and Yen Collapse Great for Dollar

British Pound (FXB)Ditto for Sterling

Japanese Yen (FXY)-A Breakdown at Last!

Short Japanese Yen ETF (YCS)

Australian Dollar (FXA) – Flat lining on Neglect

Chinese Yuan (CYB)-The bull market has resumed

Emerging Market Currencies (CEW)

Energy-Collapse!*Technical breakdown of the charts in ominous

*Contango weighing heavily on prices

*North Sea oil glut crushing Brent prices

*Libyan exports resume, potentially adding 1.5 million barrels/day to global supply

*Gasoline prices at one year lows

*Natural Gas sees 88BcF going into storage, largest weekly injection inhistory, but prices rally

Oil- Back to Multi Year$77.50-$112.50 Range

United States Oil Fund (USO)

Natural Gas (UNG)-

Copper-Don’t Chase

Freeport McMoRan (FCX)-

Global Copper Miners (COPX)

Precious Metals-Gone Dead

*Gold trying to put in bottom on charts

*Simultaneous acceleration of quantitative easing in both Japan and Europe is very gold negative

*Seasonally support turning positive as Indian wedding and Chinese New Year approaches

*CME margin cut for all metals is price positive

*Gold imports by China and India waning in recent months

*Will India president Mordi dump gold import tariffs, as promised?

Gold-Plunging Interest Rates Crushing Prices

Barrack Gold (ABX)-

Market Vectors Gold Miners ETF- (GDX)

Silver (SLV)-Show Me the Rally

Silver Miners (SIL)-

Agriculture

* Most ag funds are heavily short, while prices are bouncing along a bottom, setting up a coming short squeeze

*Canadian wheat crop coming in 25% smaller than last year

*Ukraine, Russia, and Poland are producing wheat crops of lesser quality than last year, boosting international prices

*Farm incomes to plunge 14% in 2014

*Stand aside

(CORN)-New Lows!

(SOYB)-Free Fall!

DB Commodities Index ETF (DBC)-

Real Estate-An Autumn Revival?*Dramatic improvement in the data in July.

*33% of sales still for cash, which is amazing, given how low interest rates are, reflects institutional participation in market

*30 year fixed mortgage hits 4.15%, a new low for the year

*July existing home sales up 2.4%,to 5.14 million, a ten month high

*July Housing starts up 15.9%, an 8 month high

*July new home sales -2.4%(signed contracts)

*

May S&P/Case–Shiller Home Price Index+9.3% down to +8.1% YOY

(ITB)-US Home Construction Dow Sub indexpositive data is feeding into stocks

Trade Sheet-keep positions small, better not to trade at all

than pursue marginal trades

*Stocks- buy the dips, but keep size small, with tech leading*Bonds- sell rallies across all fixed income, end is near*Commodities-stand aside*Currencies- sell every Euro rally forever, and the yen too*Precious Metals –stand aside, buy the next bottom*Volatility-stand aside, could be a long summer*The Ags –buy new lows*Real estate- stand aside

Next Strategy Webinar 12:00 Wednesday, September 10, 2014, Live from San Francisco,

California

Good Luck and Good Trading!