?If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid,? said the ground breaking economist, John Maynard Keynes.
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen.
Further Update to: Trade Alert -(SPY)
Sell the S&P 500 (SPY) May, 2014 $191-$194 in-the-money bear put spread at $2.86 or best
Closing Trade - not for new subscribers
4-11-2014
expiration date: May 16, 2014
Portfolio weighting: 10%
Number of Contracts = 42 contracts
Take the money and run. No one ever got fired for taking a profit. That?s the mood I was in when I came in and saw my long volatility ETF (VXX) spiking and my short in the S&P 500 (SPY) cratering.
It helped that Mad Day Trader Jim Parker, rushed the chart below to me right after the opening showing that the NASDAQ 100, the chief whipping boy in this selloff, is becoming severely oversold and fast approaching a major area of support (the lime green line). Bonds (TLT) are stalling at $110.60, and the ?RISK OFF? move in the Japanese yen (FXY) is approaching the upper limit of its 2014 range.
This all adds up to the possibility that another one of those ?rip your face off? short covering rallies could be near.
The rule in this type of market is to take the quick profits. You especially want to date, and not marry, the (VXX), since the contango over time can cost you your shirt.
Trading on the short side is a totally different animal than traditional long side plays. It is much harder work, as shorts behave totally differently than longs. The movie is on fast forward and you must act quickly.
To be up 15.45% so far in 2014, a down year when most investors are tearing their hair out, and up a meteoric 7.89% in April, is nothing less than heroic. The email plaudits have already started pouring in. Now all your friends at the country club can hate you, but only if you followed my advice.
Let me tell you what I did right this week, so you can take a page from the playbook of the master.
1) I kept the positions small, so I could sleep at night
2) I did the hard trade, selling when everyone else loved this market
3) I took trading profits quickly
4) I ignored the talking heads on TV so I wouldn?t puke out at the bottom
5) I didn?t take the Princess cruise from San Francisco to Los Angeles, where 50 passengers and 25 crew came down with norovirus. Imagine getting sick before you get to Mexico.
Is it possible that I am improving with age? That I?m becoming a better trader as I get older? That the payoff for a 45-year accumulation of market experience keeps increasing? What a concept!
I don?t think this correction is over. Vladimir Putin can drop a bombshell on the markets at any time. We are going into the traditional May-October ?RISK OFF? seasonal with markets still very near all time highs. The midterm elections in November are introducing a new level of uncertainty. The IPO bubble continues unabated (there are seven today!), and will only end in tears.
And who knows when another cruise ship is going to come down with norovirus?
But nothing moves in a straight line. It?s time to move to the sidelines so I can reload on the short side after the next short covering rally exhausts itself.
As for me, I am going to spend the rest of the day writing checks to the US Treasury to pay taxes for myself, the numerous entities I control, and a gaggle of impoverished relatives. All American tax returns are due on Tuesday.
Then I?m going down to Union Square in San Francisco and buy myself a new Brioni suit, another pair of Bruno Magli shoes, and have a kir royal at the top of the Mark Hopkins Hotel, thankful for my good fortune that I can pay all these bills.
The best execution can be had by placing your bid for the entire spread in the middle market and waiting for the market to come to you. The difference between the bid and the offer on these deep in-the-money spread trades can be enormous. Don?t execute the legs individually or you will end up losing much of your profit.
Keep in mind that these are ballpark prices only. Spread pricing can be very volatile on expiration months farther out.
Here are the specific trades you need to execute this position:
Sell 42 May, 2014 (SPY) $194 puts at?????$11.66
Buy to cover short 42 May, 2014 (SPY) $191 puts at..??.$8.80
Proceeds:??????????????????.....$2.86
Profit: $2.86 - $2.38 = $0.48
(42 X 100 X $0.48) = $2,016 or 2.02% profit for the notional $100,000 portfolio.
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
Global Market Comments
April 11, 2014
Fiat Lux
Featured Trade:
(FRIDAY APRIL 25 SAN FRANCISCO STRATEGY LUNCHEON)
(MAD HEDGE FUND TRADER BLASTS TO NEW ALL TIME HIGH)
(SPY), (IWM), (VXX), (TLT), (GE),
?(GS), (FXY), (UUP), (GLD), (USO),
(THE RETURN OF PETER THE GREAT), (RSX)
SPDR S&P 500 (SPY)
iShares Russell 2000 (IWM)
iPath S&P 500 VIX ST Futures ETN (VXX)
iShares 20+ Year Treasury Bond (TLT)
General Electric Company (GE)
The Goldman Sachs Group, Inc. (GS)
CurrencyShares Japanese Yen Trust (FXY)
PowerShares DB US Dollar Index Bullish (UUP)
SPDR Gold Shares (GLD)
United States Oil (USO)
Market Vectors Russia ETF (RSX)
The industry beating performance of the Mad Hedge Fund Trader?s Trade Alert Service has maintained its gobsmacking pace from last year, picking up another 14.5% profit so far in 2014.
The Dow Average was down a pitiful 1% during the same period, pegging my outperformance of the index at a stunning 15.50%. April alone is up a blistering 6.89%. The trailing 12-month return is 44.4%.? 2013 closed with a total return for followers of 67.45%.
The three-year return is now an amazing 137%, compared to a far more modest increase for the Dow Average during the same period of only 31%. That brings my averaged annualized return up to 40.8%. Not bad in this zero interest rate world. It?s better than a poke in the eye with a sharp stick.
This has been the profit since my groundbreaking trade mentoring service was launched in 2010. Thousands of followers now earn a full time living solely from my Trade Alerts, a development of which I am immensely proud of.
Not a day goes by without finding grateful emails thanking me for changing their lives. Stories abound of mortgages paid off, college educations financed, and aging parents supported. Quite a few use my award winning mentoring service to finally achieve financial independence and told their bosses to go jump off a bridge.
I won?t pass on the pictures they sent me. To read the plaudits yourself, please go to my testimonials page. They are all real.
The hot streak continues.
I have been bearish on the market for a month now. I have been using every rally to sell the market short. I bought puts and put spreads in the S&P 500 (SPY), the Russell 2000 (IWM). I also built up a major long position in the (VXX), betting on a serious market swoon occurring sometime in May.
In the meantime, I quickly stopped out of long positions I had in Goldman Sachs (GS), General Electric (GE), and a short position in the Japanese yen (FXY).
I covered the case for my ultra bearish posture in detail at my April 9 Global Strategy webinar. There I posted charts showing that best case, the (SPY) is in for an 8% selloff, and worst case, is about to perform a 17% swan dive (click here for the Webinar page). Treasuries (TLT) should rocket, and the dollar (UUP) will take a dive, and gold (GLD) will get a love tap. Even crude oil (USO) is benefiting from a flight to safety bid.
My esteemed colleague, Mad Day Trader Jim Parker, was no small part of this success. Since the market became technically and momentum driven, I have been conferring with him before sending out every Trade Alert. Together, our success rate is 100%.
What would you expect with a combined 85 years of market experience between the two of us? Followers are laughing all the way to the bank.
Don?t forget that Jim clocked an amazing 2013 of a staggering 374%. That is just for an eight-month year! Followers are laughing all the way to the bank.
The coming year promises to deliver a harvest of new trading opportunities. The big driver will be a global synchronized recovery that promises to drive markets into the stratosphere in 2014.
The Trade Alerts should be coming hot and heavy. Please join me on the gravy train. You will never get a better chance than this to make money for your personal account.
Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011, 14.87% in 2012, and 67.45% in 2013.
The service includes my?Trade Alert Service?and my daily newsletter, the Diary of a Mad Hedge Fund Trader. You also get a real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars, order?Global Trading Dispatch PRO?adds Jim Parker?s?Mad Day Trader?service.
To subscribe, please go to my website at www.madhedgefundtrader.com, find the ?Global Trading Dispatch? or "Mad Hedge Fund Trader PRO" box on the right, and click on the blue ?SUBSCRIBE NOW? button.
The Gunslinger for Hire
Peter the Great is back!
That is what the latest rumblings out of Russia confirm, with President Vladimir Putin demanding no less than $18 billion in payments from the Ukraine for its natural gas purchases. Never mind that this is more than the beleaguered country could possibly ever use.
?Pay up, or we invade? seems to be the message. The Dow Average promptly sold off 267 points.
This is so 19th century. It reminds one of when England seized the Suez Canal from Egypt in 1875 after that hapless country?s failure to pay interest on its bonds. A perennially mismanaged Egypt practically invented the concept of sovereign debt default.
I remember it like it was yesterday.
The big problem for we stock traders is that the Russian public has been eating up Putin?s recent actions in the Ukraine, and are egging him on for more. Many are still bitter over the collapse of the old Soviet Union, and are lusting for payback. A partial reconstitution of the old Soviet Union under Russian tutelage would fit the bill nicely. Putin is simply delivering to the people want they want, as does every good politician.
Vlad certainly has a strong base on which to build. During his first premiership and presidency (1999?2008), real incomes increased by 250%, real wages more than tripled; unemployment and poverty more than halved, and standards of living rose dramatically. Putin's first presidency was marked by high economic growth. The Russian economy grew for eight straight years, seeing GDP increase by a heady 72%.
Russia's has a flat income tax of 13%, a rate libertarians here in the US would kill for. As Prime Minister, Putin oversaw large scale military and police reform. His energy policy has affirmed Russia's position as a superpower. Putin supported high-tech industries such as the nuclear and defense industries. A rise in foreign investment has also contributed to a boom in the automotive industry.
Putin is so popular that he has become a pop cultural icon in Russia, with many commercial products named after him. All of this means that he has the domestic political support to push the envelope further. The Ukraine could just be his opening gambit.
You would think that Russia would not be interested in pursuing a second cold war, as the first one drove them broke. However, he is no doubt interested in expanding his country?s power and influence.
Hitler followed a similar course, gobbling up the Rhineland, the Sudetenland, Denmark, Holland, Belgium, Norway, and eventually France, until he vastly overstretched himself and his resources. Let?s hope that Putin doesn?t try the same. The problem is that this time, the aggressor country has 8,500 nuclear weapons with our address still on them.
You can count on Putin?s antics to keep S&P 500 market volatility (VIX), (VXX) at a permanently higher level. You don?t know what he is going to do next, but you know he will do something.
If he confines his visions of grandeur to Ukraine, we might just be able to skate by with a textbook 10% market correction. If he starts to make moves on the Baltic nations of Latvia, Lithuania, and Estonia, all NATO members, then we are really back to another cold war. That would hit us with a massive recession as the ?Peace Dividend? gets returned to sender, and stock markets dive 25% or more.
That is a very sobering thought. Thank goodness I have huge short positions on.
Back for the Comeback Tour
?Putin is a man of Russia?s past, haunted by lost empire, lost glory, and lost power. As long has he remains in that office, Russia?s internal problems will not be addressed. Russia?s neighbors will continue to be subject to bullying from Moscow. While the tensions and threats of the cold war will not return, the opportunity to cooperate with the US and Europe will be limited,? said former Secretary of Defense, Robert M. Gates.
