The Mad Hedge Fund Trader“Waiting for Taper, Or Not ”

With John ThomasSan Francisco

December 4, 2013www.madhedgefundtrader.com

Trade Alert PerformanceThree Year Anniversary!

*2013 YTD +56.8%, compared to 21%for the Dow, beating it by 36%

*November +11.58%

*First 156 weeks of Trading +111.9%

*Versus +30% for the Dow AverageA 82% outperformance of the index75 out of 90 closed trades profitable in 2013

83% Success Rate in 2013

Portfolio Review-Waiting to Buy the Next Dipwatch out for over trading and over confidence!

Expiration P&L+63.77% YTDRisk On

(AAPL) 1/$490-$520 call spread 10.00%(SFTBY) shares long 10.00%(TLT) 12/$107-$110 put spread 10.00%(XLF) 1/$19-$21 call spread 10.00%(FXY) 1/$102-$99 put spread 10.00%(FXY) 1/$101-$98 put spread 10.00%(SPY) 1/$173-$176 call spread 10.00%

Risk Off

nothing, nada!

total net position 70.00%

Trying to double positions in bold

Performance Year to Date +56.8%!!

36 Months Since Inception+111.9%, Averaged annualized +37.3%

Strategy Outlook-Buy the Dips

*Bull market in risk assets continues well into 2014

*Bonds have topped, entetering 20 year slow motionbear market

*Energy independence creates strong dollar

*Free fall in yen continues

*Don’t catch the falling knife in gold,the world wants paper assets

*Emerging markets will outperform in 2014 off the back of China recovery

*Commodities recover as well

The Jim Parker ViewThe Mad Day Trader-On sale for a $1,000 upgrade

Summer market still prevails

Technical Set Up of the week

*Buy

If stocks (SPY) hold on Friday, buy themtook profits on Apple (AAPL),get back in low $540’sdon’t touch gold (GLD)

*Sell Short

Running shorts in bonds (TLT), (TBT)Yen short getting long in toothTried to sell oil, but missed

The Global Economy

*Global synchronized recovery still the play for 2014, the US, Europe, China, and Japan all grow together for the first time since 2007

*Looking like a 3%-4% year for the US

*Buy multinationals everywhere

*Middle East disruptions will die down, bad for oil, good for stocks and you

*Japan $181 billion stimulus packageto offset April 1 tax hike, on top ofexisting $196 billion plan, is $1.13 trillionUS equivalent

Weekly Jobless Claims-10,000 drop to 316,000,

October Nonfarm Payrolldead on the 12 month moving average

Bonds-The Fat Lady is Singing

*$147 billion in bond mutual fund redemptions since June

*Tapper will overhang the market for all of 2014

*Only support is inflation figures that are continuing to fall

*Bonds could take a big hit when “Great Reallocation” hits in January

*Most analysts targeting 3.5% yield on ten year Treasury for 2014, up from 2.70%,could spike to 4%

*Sell every rally

Ten Year Treasuries (TLT) long the 1/$107-$110 put spread-tried to double but missed

10 Year Treasury Yield ($TNX)

Junk Bonds (HYG)

2X Short Treasuries (TBT)-The next leg up has started

Investment Grade Corporate Bonds (LQD)

Emerging Market Debt (ELD) 4.72% Yield

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

MLP’s (LINE) 11.2% Yield

Stocks – The Bull Market Continues

*If Fed doesn’t taper at December 11-12 meeting, then it’s off to the races and new highs, sideways correction until then

*By the way, no chance of Fed taper in December, waiting for Yellen

*Retail mutual fund flows flip from 2012 redemptions of $116 billion to 2013 inflows on $138 billion

*Japan (DXJ) the big performer in 2013, up 39%, carries on into 2014

*Leadership in banks, technology, health care, and industrials

S&P 500 (SPX)-Another sideways consolidation has begunlong the 1/$173-$176 call spread, double on a 3 point dip

Dow Average

NASDAQ (QQQ)

(VIX)-Back to the Bottom

Russell 2000 (IWM)-Led the upturn, Now a double top?

Apple (AAPL)-Break to new yearly highs imminentlong the 1/$490-$520 call spread

Technology Sector SPDR (XLK), (ROM)

Industrials Sector SPDR (XLI), (UXItook profits on the (XLI) 12/$45-$48 call spread

Cyclicals Sector SPDR (XLY), (UCC)

Health Care Sector SPDR (XLV), (RXL)

Financial Select SPDR (XLF)long the 1/$19-$21 call spread

Citigrouptook profits on the 12/$45-47 call spread

Shanghai-New Policy Statement is revolutionary

(DXJ)-Upside breakout on more aggressive monetary easing

Emerging Markets (EEM)Trapped by the commodity complex, and rising rates

Dollar-Yen is the Big Story

*Successful breakdown targets ¥125 in the cash, $75 in the (FXY), will be the big foreign currency trade of 2014, again

*Aussie hostage to the US bond market, dragged down by weak commodities, and killed ADM’s takeover bid for GrainCorp.

*Euro overvalued again at $1.36

*Taper talk will support dollar,then eventually push it upthrough higher interest rates

Long Dollar Basket (UUP)-Breaking Down

Japanese Yen (FXY)-Major breakdown underwaylong the 1/$99-102 put spread

long the the 1/$98-$101 put spread

Short Japanese Yen ETF (YCS)-

Euro (FXE)-Took profits on short

Australian Dollar (FXA)-Talking down the Aussie againtook profits on the 12/$89-$91 call spread-get out if still in

Emerging Market Currencies (CEW)

Energy-Supply Glut*Accelerating US supply is killing the market

*Creates a de facto tax cut for the rest of the world

*Every $10 price cut adds 0.5% to global GDP

*A peace deal with Iran on nukes could drop oil prices for another $20, as 3 million barrels a day in new supply hits the market.

*International Energy Agency says US to become worlds top oil producer by 2016

*Sell on next $5-$10 rally

Crude-Breaking Down, $92 Targeting Hit

United States Oil Fund (USO)

Natural Gas (UNG)-Bouncing along the bottom

Copper-Waiting for another China catalyst, also caught the gold disease

Freeport McMoRan (FCX)-2013 Losers punished one last time

Precious Metals-The Unloved commodity

*Gold has no place in a paper world

*Will the final bottom be $1,200, or $1,000?

*Will we see it in 2014?

*Yearend capitulation selling taking the barbarous relic to new lows

*Don’t try to catch the falling knife

Gold-Breaking to new lows

Barrack Gold (ABX)-

Market Vectors Gold Miners ETF- (GDX)

Silver (SLV)-

Agriculture-No Trade Until 2014

*Ties with gold as the worst trade of the year

*Perfect weather produces record crops across the board

*2012’s high prices cured high prices, rushed farmers to over plant

*El Nino failed to show

*Buy dips next year and pray for a draught

(CORN)-Ethanol cut back kills

DB Commodities Index ETF (DBC)-Yikes!The worst performing sector of 2013

Real Estate-Slowing Down

*October new home sales, contracts only, up 25.4% to 440,000

*New construction lagging demand, forcing prices up, inventories at 4.9 months, builders are derisking.

*S&P Case-Shiller still rising at fastest pace since 2006, up 13.3% YOY, with the West leading by a large margin. Las Vegas up 29.1% YOY, followed by San Francisco, up 25.7%

*Seasonal slowdown also hurting

*Prices still rising, but at slower rate

*Big money has been made,expect slow grind up from here

September S&P/Case–Shiller Home Price Index

(ITB)-US Home Construction Dow Sub indexFlat lining since March

Trade Sheet-No Change“RISK ON” Good Into 2014

*Stocks- buy the dips, running to a new yearend high*Bonds- sell rallies, trade the 2.50%-3% range*Commodities-start scaling in on dips*Currencies- sell yen on any rallies*Precious Metals –wait for the final flush *Volatility-stand aside, will bounce along bottom*The Ags –stay away until next year, no trade*Real estate- no trade

To buy strategy luncheon tickets Please Go towww.madhedgefundtrader.com

Next Strategy Webinar-Last One of 2013 12:00 EST Wednesday, December 18, 2013

Live from San Francisco

Good Luck and Good Trading!