August 26, 2012

take $16.87 and send that to other accounts. $3.87 will be sent to the Micro-Forex account. Yes, since we've begun carry trades, I'm going to start sending more capital to that account. In addition, I'm sending $6.50 to the Larger Trader account. That will result in a buffer of the losses I've suffered there. As well, I will send $6.50 to the Savings Side-Pocket and split it between the payout fund (adding $4.06) and the remainder can be placed in the 'drawdown kill-switch' fund (adding $2.44).

Aileron Market Balance

Issue 43
Visit Us: NoNonsenseTrading.com Email: aileronmarketbalance@gmail.com Twitter: @NoNonsenseTrade

Investing Outlook:
Note: As a reminder. the share purchases of the Dividend Investing 'Sister' will be extremely small. It is my intent to demonstrate how to grow the size of these positions from 2 shares, to 300 shares using the three sisters portfolio management style. The Dividend Investing 'Sister' Account will also implement the Permanent Portfolio Method beginning in 2012 with $1,120.00 of the cash dedicated towards it..

Overall View on the Markets ...

I've been using the following chart for the last few weeks, that highlights the 'seasonal' tendency in the stock market in years that there is a presidential election . Election Year Equities Seasonal Tendencies Source Bespoke Investment Group

Each

newsletter on Sunday that will contain my thoughts for the week ahead will have an audio file that accompanies it. The audio file that is associated with this PDF will contain my detailed thoughts moving forward into the next week. This PDF file is meant to serve as a rough, general outline to the audio file that many subscribers are finding more advantageous.

Portfolio Readjustment
Last week, we sold off Seagate Technologies (STX). This results not only in the 34.4 % profit off the position and the dividend coming later this month, but results in having more cash in the portfolio. As I have stated in the past, I like to take approximately 1/6th of the profit and use that either to pay myself, or possibly use some of that money to redistribute amongst the rest of the portfolio. So Seagate Technologies (STX) resulted in 34.4% positive profit, or $95.48 after commissions. I will

It's a bit difficult to pull ou to of the above chart, but it states that by September 3rd, we might see our intermediate high of the year, which is about 5 trading days away. And it's important to keep in mind that

August 26, 2012

when you look at seasonal tendencies, it's never an exact timing method. Remember, it allows you to know of 'approximate' turning points. I also found this chart by Ned Davis Rsearch and T. Rowe Price. It deaggregates and differentiates between all election years, when the incumbent party wins, and when the incumbent party loses. Election Year Equities Seasonal Tendencies Source Ned Davis Research and T. Rowe Price believe Crude Oil to be somewhat of a 'barometer' of global fear in the market place. In addition, last week we saw the Bond markets beginning to rally off of a 3 month point of regression in the 120 area on the TLT ETF 20+ Year Treasury TLT E.T.F Daily 3 Mos. Regression Chart

Now let's keep that all in mind and look at the C.o.T. Report for the risk market of Crude Oil Crude Oil Light Sweet Committment of Traders Report Source FinViz.com

On top of the stock market rally we've already experienced, taking us to highs of the year September E-mini S&P 500 Futures Daily Chart

The increasing spread between traders and commercial hedgers has not been seen since earlier in 2012, at the end of February or the beginning of March. Which indicates that there is a possibility of seeing the 'risk' of Crude Oil to begin falling off. For newer subscribers, I have stated for a few months that I

Considering all of the above let's just say that I'm not overly bullish on equities in the near term just right at this moment. That's not to say that I think we may not have some sort of pop higher in the Risk currencies. The exponential moving averages for AUD/JPY is coalescing to form pretty substantial support in the 82 region ...

August 26, 2012

AUD/JPY Daily Chart

Permanent Portfolio ...

Our variation of Permanent Portfolio within the value-dividend investing account continues to do well. As of Friday's closing prices, that segment of the portfolio is up 2.76%. Straight Permanent Portfolio (Red) A.M.B. PP S Variation (Blue)

Value-Dividend Portfolio Rotation

As everyone knows, I've been selling off stocks in the longer term value-dividend portfolio, and looking for new, undervalued stocks that I believe have room to grow, and that pay me a dividend. At the moment, the value-dividend portfolio has within it Financial Insurance: Aflac (AFL) Services: Waste Management (WM) As I've said, I would like to own something in healthcare, possibly Medtronic (MDT). I'd also like to own a couple of stocks in Consumer Non-Cyclical, and possibly something in Industrial Capital Goods, possibly Caterpillar (CAT), as well as in the technology sector. As I continue to research companies, I will watch and observe to see if the market continues to show signs, as to whether it is topping out or not

SPY: The true beauty of Permanent Portfolio as a strategy is such that it doesn't require an investor be overly concerned with whether the stock market is going up, or down. The gains from the non-correlated aspect of the strategy. If SPY does good, then great. If not, then the bonds (represented within the portfolio with the TLT) will probably be doing better, as well as the dividends and any upside we see in Gold prices. So I find myself in a position where I don't mind really what the SPY does. If it rallies? Great. If it doesn't, it doesn't matter. TLT: As I stated earlier in the newsletter, the TLT seems to be bouncing higher from lows of last week. I'll be monitoring the credit markets closely, as the Credit Markets are one of the worlds largest markets, and give some of the 'best tells' as to the state, fears or eurphorias of all of the Capital Markets. It is interesting that this year, the August seasonal pattern did not hold true. No doubt due to the Presidential elections. If the stock market is going to head higher for the month of August, this naturally is going to give some pause to the longer end of the bond curve (15+ year Bonds). In addition, probably near September 7th (about 12

August 26, 2012

total days from now, or 10 trading sessions) we'll have another dividend being paid. SHY: As a representation of cash or shorter term bonds with a yield, there's generally not much movement on this end of the Bond curve. As with the TLT, in a few days time we'll have another dividend being paid. GLD: As I have stated within recent audio updates, as well as above I believe Gold has begun it's bullish run, perhaps a bit early this year. That ok, the seasonal tendency is for Gold to run higher from the end of August, through September, to the 1st or 2nd week of October. This is Gold's strongest time period. If we do see such a rise in the GLD? Don't be surprised that by the end of October you see me tighten up some sort of profit stop for this position. Remember, this is a variation of permanent portfolio. When I see a segment has made it's seasonal move, and I believe that move is over? I may rebalance that segment. At the same time, this has given us some time to send profits from the other accounts to the Trading account, which buffers the impact of the negative trades. However, I do believe I may try a couple of Forex trades ...

Micro-Forex Trading

Methodology

Creation

and

CAD/JPY: Based on previous comments in regards to Oil prices, I am interested in shorts in this market. I don't want to 'push it'. I am more interested, somewhere near the 79.67 region, in looking at this market for a short. 79.60 to 79.67 represents central weekly pivots. GBP/USD: I'm looking at this market for a long. I'm especially interested in longs near the 1.5799 to 1.5783 region. That's a weekly central pivot, as well as an area of regression support on the 30 minute chart.

Trading Outlook:
Note: By way of reminder, since the Model Portfolio has only $9,817.83 in the Commodity Futures and Stock Trading portion of the portfolio, there will only be ' brief day trades' at this stage of the game for Commodity Futures trading in order to escape the risk of over-leveraged gap opens in the commodity futures markets. Stock trades may last more than one day. This is an attempt to demonstrate how account size relates to trading style. As I mention in my methodology series1, as the commodity 'trading sister' approaches $30,000 I will graduate the account into 'swing-trading' and demonstrate how I would go about doing this. The Forex account has $69.38 and is considered a micro-forex account for the purposes of the model portfolio.

Overall Trading Thoughts

Lately, I have not been short term trading quite as much, as I have been focusing on researching companies to place within my value-dividend investing account. I will continue that process, and if I find a company worth investigating further, I will continue to create the Value-Dividend Investing 'Quick-Note's to send to subscribers.
1 Exact Link http://nononsensetrading.com/methodology.html

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Summary of the A.M.B. Model Portfolio

Note: In the beginning of this hypothetical portfolio, the share purchases of the Dividend Investing 'Sister' will be extremely small. It is my intent to demonstrate how to grow the size of these positions from 2 shares, to 300 shares using the three sisters portfolio management style. It is also understood that readers of this newsletter have a firm understanding of my 'three sisters' portfolio management system (See the Special Reference issue of Aileron Market Balance 2 for an explanation of this system).

( 29.12 % of P.P ) - 2 shares @ 139.58 of SPY ( $279.16 ) ( Currently $283.32 ) ( 25.46 % of P.P ) - 2 shares @ 118.17 of TLT ( $236.34) ( Currently $249.50 ) ( 22.42 % of P.P ) - 3 shares @ 84.45 of SHY ( $253.35) ( Currently $253.29 ) ( 22.77 % of P.P )

Remaining Cash: $2,518.50 ( 61.00 % )

Percentages of that Cash -$2,358.50 of this Maneuvering Capital I reserve for Hedging and New Purchases ( 93.65 % ) -$80.00 of this Maneuvering Capital I reserve to Dollar Cost WM further in the future ( 3.176 % ) DCA Price w/ no fundamental changes on WM $28.00 -$80.00 of this Maneuvering Capital I reserve to Dollar Cost AFL further in the future ( 3.176 % ) DCA Price w/ no fundamental changes on AFL $40.00 to $38.00

S&P 500 Year to Date: + 12.21 % AMB Total Portfolio Return Year to Date: + 2.059 % Investing Account Balance: $4,182.54 4 Positions have been sold YTD for profit on each ... 0.71 % Capital redistributed to other accounts year to date Return / Yield up + 3.813 % year to date Return / Yield up + 4.985 % since inception 8.081305 shares of WM (DRIP off Yield is 4.14 % )
8 shares at $32.39 on 12/22/2011 w/ $5.01 Commissions 0.081305 shares DRIP at $34.93 on 3/23/2012 $2.86 in Cash on 6/22/2012 Sent $1.43 to Sav. Side-Pocket Next Dividend: Not yet announced

$ 285.50 ( 6.826 % of this account ) available from Slush Fund Dividend Investing Sister Year to Date

11 shares of STX (DRIP off Yield is 3.76 % )

11 shares at $24.78 on 6/29/2011 w/ $5.01 Commissions Next Dividend: August 29, 2012 Ex-Dividend Date: August 10, 2012

SOLD 11 SHARES OF STX ON 8-21-2012 AT $34.37 FOR + 34.4 % PROFIT ( $95.48 ) SENDING $16.87 TO OTHER ACCOUNTS $3.87 to the Micro-Forex Account $6.50 to the Savings Side-Pocket $6.50 to the Larger Trading Account

6 shares of AFL (DRIP off Yield is 2.93 % )

6 shares at $45.05 on 8/6/2011 w/ $5.00 Commissions Next Dividend: September 4, 2012 Ex-Dividend Date: August 13, 2012 ($1.98 Cash Dividend Due)

Total Trading Balance: $9,887.21 ( Return / Yield up + 1.538 % Year to Date ) Commodity Futures and Stock Balance: $9,817.83 Return / Yield up + 1.578 % Year to Date Received $6.50 to the Larger Trading Account from the profit of STX Next Re-Distribution Goal: $10,700.00 Original 3% risk tolerance gives us approximately $282.54 for my drawdown tolerance ALREADY USED

Permanent Portfolio $1,120.00 of cash I reserved for Permanent Portfolio Purchases Return from $1082.72 = + 2.76 %
- 2 shares @ 156.12 of GLD ( $312.24 ) ( Currently $323.94 ) 2 Exact Link http://www.scribd.com/doc/73238645/Aileron-MarketBalance-Special-Reference-Issue-Portfolio-Management

August 26, 2012

$ 285.50 available from Slush Fund There were no trades last week, as I was concentrating on the investing account and research ... Futures and Stock 'Sister' Account Year to Date Micro-Forex Balance: $69.38 Received $3.87 to the Micro-Forex Account from the profit of STX Capital up + 3.398 % Return / Yield - 3.606 % Year to Date $ 285.50 available from Slush Fund There were no Forex trades last week

CARRY TRADE POSTIONS AUD/JPY current mark at 81.937(1) 4 Units of AUD/JPY at 83.35(3) on 8/16/2012 3 Units of AUD/JPY at 81.95(0) on 8/23/2012 NZD/JPY current mark at 63.841(7) 4 NZD/JPY at 63.81(3) on 8/23/2012 INTEREST ADDED: $0.0045

As there were no trades in this account last week, the Money Management Statistics remains as they were follows ...

Micro Forex Account Year to Date

As well as the Capital Graph for the Forex Account in Phase 3

August 26, 2012

Since there were no Micro-Forex trades, the money management stats remain the same Savings Side-Pocket Account Balance: $1,821.41 Received $6.50 to the Savings-Side-Pocket Account from the profit of STX Capital is - 10.21 % Year to Date. Yield Return on Capital + 0.9556 % Added $2.44 to the Slush fund / Drawdown Kill Switch fund bringing total to $285.50 ($219.64 owed to this Fund) $1,010.29 for a Base Savings
Percentages of that Cash: $814.29 of this cash reserved for Long Term Variable Capital PP - ( 80.60 % ) $120.00 of this cash reserved for CD Ladder creation ( 11.88 % ) - One $10.00 One Year CD purchased on 11/21/2011 at 0.60% - One $10.00 One Year CD Purchase on 12/21/2011 at 0.50% - One $10.00 One Year CD Purchase on 1/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 2/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 3/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 4/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 5/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 6/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 7/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 8/21/2012 at 0.50% $20.00 of this cash reserved for the first side-pocket purchase ( 1.98 % ) $20.00 of this cash I reserve for the second sidepocket purchase ( 1.98 % ) $36.00 of this cash I reserve for the hedging account ( 3.563 % )

Remember that last week, on the 21 , was the day of the month that the one year CD's were considered as 'purchased' for the A.M.B. portfolio. Two more CD's in that ladder, and it will be complete.

st

$505.14 for Emergency Savings Added $4.06 from STX Sale to Getting Paid Fund bringing the total to: $20.48

August 26, 2012

Total Portfolio Balance: $15,891.16 - Total AMB November Inception to Date Return: + 5.941 % Return / Yield up + 2.059 % year to date) S&P 500 Year to Date: + 12.21 %

If you have any questions regarding my personal outlook, or any other comments, please feel free to contact us at aileronmarketbalance@gmail.com. Our twitter account is @NoNonsenseTrade. I will say that if you have questions about your own trading and you want to ask for my input? Please include your most recent money management performance statistics in any email correspondence.
Until next time, stay safe trade well, and remember that loving other people doesn't cost a dime.
Note: I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. The above statements should not be construed as an investment or trading recommendation. Aileron Market Balance is a newsletter that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this newsletter; as larger accounts may require a different strategy as the ones presented here. Any trades or investments that I discuss within this newsletter are simply my own thoughts regarding my own investing and trading outlook. I discuss which trades I take and do not take on the No Nonsense Trading Forums, as well as the Ventrilo Voice Server. Remember that entering any market is an individual decision. This newsletter simply contains my trading and investing thoughts for the next week. I personally only enter any market after watching and reading the tape and I trade using money management principles3. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 16 years of experience in trading and investing in these markets. The Model Portfolio accounts are hypothetical accounts,with all of the inherent problems therein, which are used within this newsletter in an attempt to track the results of this newsletter, and is run for the education of other traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this newsletter are believed to be public domain. Any charts that are displayed using the ThinkorSwim platform, and other pictures were obtained through Wikipedia's public domain policy.

Exact Link - http://nononsensetrading.com/MoneyManagement.html