September 9, 2012

year1. The market is rallying, in expectation of a possible round of asset purchases ( sometimes popularly called QE or Quantitative Easing). Why? Because last week, the latest data demonstrates that the jobs situation is deteriorating, and many are beginning to believe that the Fed will institute such a round of asset purchases. So although there are no Fed asset purchases of what the market is expecting, the market believes they will, so it's rallying, conforming to usual seasonal tendencies. On something that hasn't occurred yet. Despite an economy that is performing more poorly. That's contradiction number one. Election Year Equities Seasonal Tendencies Source Ned Davis Research and T. Rowe Price

Aileron Market Balance

Issue 45
Visit Us: NoNonsenseTrading.com Email: aileronmarketbalance@gmail.com Twitter: @NoNonsenseTrade

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.

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 April 2012 with $1,120.00 of the cash dedicated towards it..

Many markets are now looking to the United States economy as a consuming nation. Many other economies are suffering as the United States economy, which is sort of the last man standing at the moment has the aforementioned poor economic employment fundamentals. Usuallly, a stronger U.S. Equities market would mean a weaker U.S. Dollar. But the U.S. Equities (stock) market really isn't rallying based on healthy fundamentals. Economies around the world are struggeling, and the U.S. Equities markets are rallying off of 'hope'. Not really based off of any idea of 'risk on'. Would commodity
1 Exact Link http://www.nypost.com/p/news/business/fe....B6NwNIx o9vCGnkK

Contradictions Abound ...

The macro-view of things at the moment is quite contradictory. Things that would normally appear to work, simply are not working. Perhaps this is one reason why so many hedge funds are struggeling this

September 9, 2012
based currencies (Canada, Australian Dollar) tend to do well in such an environment? Yet the U.S. Equities market is rallying. So trying to base the idea of weaker U.S. Dollar and long risk currencies from a rallying U.S. Stock market really hasn't worked either There's contradiction number two. Crude Oil seems to have held onto gains, and not really fallen off. It's simply 'holding steady' at the moment. Is this market stalling, holding back behind the equities market, waiting to see if it will be a 'true risk on', or whether the markets will fall to a greater degree? Crude Oil December Contract Daily Chart AUD/JPY fell steadily, then had a tremendous rally, and then collapsed. The carry trade remains flat, while earning interest. But looking for normal correlations is very difficult. There are many contradictions. So what does that mean? I don't think it's time to make a bold call, one way or the other. Equities (stocks) seem to want to rally. That's helped the portfolio overall. Let 'em rally.

Value-Dividend Portfolio Rotation

As a matter of fact, this has been very fortuitous for the Aileron Market Balance. Not only have we enjoyed rallies, we have been able to sell off overvalued stuff while they were rallying, and then bought undervalued assets during the middle of a rally. That's why it's beneficial to know where the 'market cycle' is at currently. You can sell the over-valued asset in a rally, which would give that much more strength, so you can get a better price when you're selling. So at the moment, with so many contradictions present, with so much in the way a breakdown in normal correlations is present, I will continue to do just that. Continue to research. Find undervalued assets to invest in.

And bonds bonds are all over the map as the entire world is held with indecision ... December 10 Year U.S. Treasury Note Futures One Hour Chart

At the moment, the value-dividend portfolio has within it Financial Insurance: Aflac (AFL) Services: Waste Management (WM) Health Care: Medtronic (MDT) Consumer Cyclical: Johnson Controls (JCI) I am continuing my research. I would prefer to find a nice technology company. Actually, Seagate Technologies (STX) may help us out once again on that route. As I mentioned, it's a stock that I will continue to watch. Although it is an 'automotive stock', I do want to research MGA so that I have a better handle on both that company as well as the sector, and I also have to research KMT, another

September 9, 2012
'industrial' company. And I will continue to go over data with technology stocks such as Seagate Technologies (STX).

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 Balance3 for an explanation of this system).

Trading Outlook:
Note: By way of reminder, since the Model Portfolio has only $9,817.90 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 series2, 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 $69.43 and is considered a micro-forex account for the purposes of the model portfolio.

S&P 500 Year to Date: + 14.34 % AMB Total Portfolio Return Year to Date: + 2.288 % Investing Account Balance: $4,216.79 4 Positions have been sold YTD for profit on each ... 0.71 % Yield redistributed to other accounts year to date Return / Yield up + 4.663 % year to date Return / Yield up + 5.42 % since inception 8.081305 shares of WM (DRIP off Current Yield is 4.12 % Yield on Cost is 4.38 % )
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: September 21, 2012 Ex-Dividend Date: September 5, 2012 (Dividend Due)

Overall Trading Thoughts

I've been spending a lot of time with my investing research as I rebalance the value-dividend investing side of my portfolio.

Micro-Forex Trading

Methodology

Creation

and

CAD/JPY: I do have a 'short bias' on this market this week. So I'm looking, or on the lookout, for short entries. Commodities have rallied substantially (looking at Canada through it's Commodity Spectrum), and I can't believe with the world economic situation, there is too much more upside there. Especially as this years summer crops are pretty much 'solidified' as known data point. All things considered, as long as there is no serious QE3 implementation, I would look to short CAD/JPY

6 shares of AFL (DRIP off Current Yield is 2.73 % - Yield on Cost is 2.93 % )
6 shares at $45.05 on 8/6/2012 w/ $5.00 Commissions $1.98 in Cash on 9/1/2012 Keeping full amount in Account Next Dividend: Not Yet Announced

6 shares of MDT (DRIP off Current Yield is 2.50 % Yield on Cost is 2.54 % )
6 shares at $40.94 on 8/29/2012 w/ $5.00 Commissions Next Dividend: October 26, 2012 Ex-Dividend Date: October 3, 2012

9 shares of JCI (DRIP off Current Yield is 2.59 % Yield on Cost is 2.63 % )
9 shares at $27.41 on 9/6/2012 w/ $5.00 Commissions Next Dividend: October 2, 2012 Ex-Dividend Date: September 5, 2012 (Not entitled To Oct Div)

Permanent Portfolio $1,120.00 of cash I reserved for Permanent Portfolio Purchases Return from $1082.72 = + 4.33 % from 4/23/12
2 Exact Link http://nononsensetrading.com/methodology.html 3 Exact Link http://www.scribd.com/doc/73238645/Aileron-MarketBalance-Special-Reference-Issue-Portfolio-Management

September 9, 2012
- 2 shares @ 156.12 of GLD ( $312.24 ) ( Currently $336.88 ) ( 29.82 % of P.P ) - 2 shares @ 139.58 of SPY ( $279.16 ) ( Currently $288.66 ) ( 25.56 % of P.P ) - 2 shares @ 118.17 of TLT ( $236.34) ( Currently $248.06 ) ( 21.96 % of P.P ) - 3 shares @ 84.45 of SHY ( $253.35) ( Currently $253.38 ) ( 22.43 % of P.P )

Total Trading Balance: $9,887.33 ( Return / Yield up + 1.539 % Year to Date ) Commodity Futures and Stock Balance: $9,817.90 Return / Yield up + 1.578 % Year to Date Interest Payment on 8/31/2012 of $0.07 Next Re-Distribution Goal: $10,700.00 Original 3% risk tolerance gives us approximately $282.54 for my drawdown tolerance ALREADY USED $ 286.80 available from Slush Fund There were no trades in the larger account last week, as I was concentrating on the investing account and research ... Futures and Stock 'Sister' Account Year to Date

Remaining Cash: $2,021.67 ( 47.94 % )

Percentages of that Cash -$1,718.67 of this Remaining Cash I reserve for Hedging and New Purchases ( 85.01 % ) -$63.00 ( 3.66 % ) of this Hedging and New Purchases Cash I reserve to Dollar Cost WM further in the future DCA Price w/ no fundamental changes on WM $28.00 -$85.00 ( 4.94 % ) of this Hedging and New Purchases Cash I reserve to Dollar Cost AFL further in the future DCA Price w/ no fundamental changes on AFL $40 to $38 region -$80.00 ( 4.65 % ) of this Hedging and New Purchases Cash I reserve to Dollar Cost MDT further in the future DCA Price w/ no fundamental changes on MDT $37 to $35 region -$75.00 ( 4.36 % )of this Hedging and New Purchases Cash I reserve to Dollar Cost JCI further in the future DCA Price w/ no fundamental changes on JCI $22 to $24 region

$ 286.80 ( 6.80 % of this account ) available from Slush Fund Dividend Investing Sister Year to Date As there were no trades in this account last week in the larger account, the Money Management Statistics remains ...

September 9, 2012
CARRY TRADE POSTIONS AUD/JPY current mark at 81.34(1) 4 Units AUD/JPY at 83.35(3) on 8/16/2012 3 Units AUD/JPY at 81.95(0) on 8/23/2012 3 Units AUD/JPY at 80.34(0) on 9/3/2012 NZD/JPY current mark at 63.55(9) 4 Units NZD/JPY at 63.81(3) on 8/23/2012 2 Units NZD/JPY at 62.55(7) on 9/3/2012 INTEREST ADDED LAST WEEK: $0.0054

Micro Forex Account Year to Date

Micro-Forex Balance: $69.43 Capital up + 3.472 % Return / Yield - 3.703 % Year to Date Return / Yield - 0.216 % in Phase 3 $ 286.80 available from Slush Fund

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

There was one Forex Trade Last Week

CARRY TRADE POSITIONS INITIATED ON 9/3/2012 Short 70 EUR/USD @ 1.2607(2) on 9/5/2012 Exit 42 @ 1.2604(1) PROFIT 3.1 Pips $0.0130 Exit 28 @ 1.2603(0) on 8/5/2012 PROFIT 4.2 Pips - $0.0118

And with that trade, we have included the new money management numbers for the Micro-Forex account

PIPS FOR PREVIOUS WEEKS OF 9/2/2012 to 9/8/2012: 7.3 PIPS GAINED (Pips do not Reflect
Differing Position Sizes)

September 9, 2012
Savings Side-Pocket Account Balance: $1,822.71 Received $1.30 to the Savings-Side-Pocket from Interest Payment on 8/31/2012 Capital is - 10.14 % Year to Date. Yield Return on Capital + 1.028 % Added $1.30 of Interest to the Slush fund / Drawdown Kill Switch fund bringing total to $286.80 ($218.34 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 % )

$505.14 for Emergency Savings Getting Paid Fund: $20.48

September 9, 2012

Total Portfolio Balance: $15,926.83 - Total AMB November Inception to Date Return: + 6.179 % Return / Yield up + 2.288 % year to date) S&P 500 Year to Date: + 14.34 %

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 principles4. 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