February 26, 2012

Dan Shy

dan.shy@gmail.com

IN FOCUS:
No Nonsense Trading Forum

Equities and Dividend Investing Outlook

The forum for No Nonsense Trading is now setup and available.

You can find that forum here1. Simply go to that forum, and then click on Register. Then continue the process to register your profile to the forum. I have everyone's emails. So when I see someone register, and your email as a subscriber is associated with that profile, I will modify that profile so that it can see the Subscriber area. Forums provide a wonderful area to discuss in a group setting the plays and thoughts that I discuss in this newsletter. I have found interchanges with other thoughts and other ideas invaluable. Of course, the Forum was only just setup. As time passes, I will add more 'polish' to the Forum And as I have mentioned, sometime in April I will be adding a voice server. This will be a Ventrilo server, and will only be available to you as my subscribers. At the beginning of each week, I will attempt to provide a rough schedule as to when I will be available in the voice server. You will be able to join in, speak, or only listen as you wish as I discuss my trading day live. This will be an attempt to consolidate my efforts, and make it easier for you to 'look over my shoulder'. Which really, is what this service is all about.

Trading Outlook

AMB Portfolio Summary

1 Exact Link - http://nononsensetrading.proboards.com/index.cgi?

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Equities Outlook

and

Dividend

Investing

Trading Outlook:
Note: By way of reminder, since the Model Portfolio has only $10,061.66 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 and option plays may last longer than one day, since the risk is lower. This is an attempt to demonstrate how account size relates to trading style. As I mention in my methodology series2, as the 'trading sister' reaches $30,000 I will graduate the account into 'swing-trading' and demonstrate how I would go about doing this. Stock trades may last more than one day. The Forex account has $66.32 and is considered a micro-forex account for the purposes of the model portfolio.

The march for equities continues onward and upward.

S&P 500 Index Daily Chart

Well, as I mentioned in the Week in Review podcast3, Sugar opened, and simply headed higher all week. As I brought out last week, this trend can either a) continue, or b) reverse at any moment, with little warning. We can see that the 5, 13 and 22 period E.M.A. is providing the initial trend support. The whole goal I have for the A.M.B. dividend portfolio at this point is: Keep in mind that DRIP will do it's work. This takes some time, and it's only begun to build with two stocks. Work towards the $10,700.00 goal that I have built for myself, so that I can perform a 'redistribution' among the three sisters, and the dividend investing 'sister' account will have more maneuvering capital. May Sugar One Hour Chart

Perhaps on Thursday, there was an opportunity at the resistance that had developed at 24.80 to short. But clearly, the trend was up. If you look at Tuesday, when the market was at the 23.90 region, we see there was barely any congestion. And then the market headed higher. No trade. Tuesday night, the market congested near 24. It then headed higher at the active open. Again, no trade.
2 Exact Link http://nononsensetrading.com/methodology.html 3 Exact Link http://airelon.podbean.com/2012/02/25/week-in-reviewfocus-and-forums/

We've been doing good on the last bullet. We're up +5.947 % in our trading account to this point for 2012. It's just a matter of keeping that work up. I have 'weighted' the dividend investing portfolio of A.M.B. and the purchases within that portfolio such that any drawdown is more than made up for by the trading gains we experience. Again it highlights the importance of portfolio management.

February 26, 2012

It is very important, when learning the skill of trading, to be patient. Wait for the exact pattern one is looking for. Congestion, and then a break to the downside in this care. We got the congestion a couple of times, but then the market simply headed higher. Once again, this places importance on developing parameters, and not 'jumping the gun' as it were, or entering a trade too prematurely. April Gold One Hour Chart

Commodity Futures Trading Thoughts

Commodity Market #1 April Gold (GCJ12 or /GCJ2 in the ThinkorSwim Platform for the big contract. There is also the mini contract at /YGJ2 or the GLD for the ETF): Well, I started off the year right, by believing a rally would begin in Gold and Silver. Now let's see if I can get the opposite direction correct. I'm basically looking, for Gold to 'top out' in the next few days, and for us to begin to see weaker prices. So I'm looking for shorting opportunities. Seasonally, this tendency can occur, and as well, we see Gold approaching resistance on the Daily Chart April Gold Daily Chart We clearly see that an area of support has developed near the 1772 area. Let's move to the next smaller time frame April Gold 10 Minute Chart

And now we see that the moving averages that I use, as outlined in my methodology series of videos, are showing a downtrend. So I would look for rallies (as is beginning at the time of this writing), congestion of two or three bars and then a break to the downside with which to short. So we have two points that coincide nicely with each other. And indeed, the price of Gold beginning to fall over the next few days would also technically paint a 'mean deviation' trade as well. So, how will I look at this, at least from this point out? Well, I would naturally move to the next smaller time frame Commodity Market #2 May Silver (SIK12 or /SIK2 in the ThinkorSwim Platform for the big contract. There is also the mini contract at /YIK2 or the SLV for the ETF): I am basically looking for the same scenario in Silver, that I am for Gold. In essence, the daily chart is showing that we are

February 26, 2012

nearing a point of resistance. The one hour chart is demonstrating that resistance has developed in the 35.76 region. I would begin, almost immediately, to begin to look for breaks to the downside to short, since we have already congested in this market. Commodity Market #3 May Sugar (SBK12 or /SBK2 in the ThinkorSwim Platform): At the current time, I would say that I am watching this market for a shorting opportunity. But I'm just 'watching' it. That's all. I would have to see serious resistance develop, and then see the market fall. Without shorting it. In other words, I want to see a 'ceiling' develop. I would want to see the market stop. Then congest. Then the market fall. After that point, I would watch to see if the Sugar market rallies, and then try to short any rallies that develop, after any said rallies congest, and then break to the downside. Does that make sense? It did not behave as I thought it would last week. So for now, I'm going to watch this market for a very specific top pattern. Commodity Market #4 April Live Cattle (LCJ12 or /LEJ2 in the ThinkorSwim Platform): I would like to see this market rally up to resistance on the daily chart, which is around 130.75 to 132. I would like to see this happen within the next two or three days. At that point, I would look for congestion, and then try to short such congestion if the market breaks to the downside on the smaller time frames.

Forex Thoughts
At the present time, I really have no Forex thoughts. Since I'm still regaining my balance from the standpoint of the trauma of last week, I'm going to give Forex another bit of a break. At least until next week.

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 Balance4 for an explanation of this system).

S&P 500 Year to Date: +8.49 % AMB Total Portfolio Return Year to Date: + 4.205 %

Investing Account Balance: $ 4,067.85 Return / Yield is 0.2711 % Year to date 4.032263 shares of PEP (DRIP on Yield is 3.29 % )
4 shares at $63.31 on 11/15/2011 w/ $5.01 Commissions 0.032263 shares DRIP at $66.95 on 1/3/2012

4.032392 shares of PG (DRIP on Yield is 3.15 % )

4 shares at $61.94 on 11/28/2011 w/ $5.01 Commissions 0.032392 shares DRIP at $64.830822 on 2/15/2012

4 shares of JNJ (DRIP on Yield is 3.54 % )

4 shares at $62.31 on 11/28/2011 w/ $5.01 Commissions

4 Exact Link http://www.scribd.com/doc/73238645/Aileron-MarketBalance-Special-Reference-Issue-Portfolio-Management

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8 shares of WM (DRIP on Yield is 3.98 % )
8 shares at $32.39 on 12/22/2011 w/ $5.01 Commissions

Cash: $3,000.61 ( 73.76 % )

Percentages of that Cash - $2,680.61 of this cash I reserve for 'maneuvering' capital / hedging / new purchases ( 89.34 % ) -$80.00 of this cash I reserve to Dollar Cost Average PEP further in the future (2.66%) -$80.00 of this cash I reserve to Dollar Cost Average PG further in the future (2.66%) -$80.00 of this cash I reserve to Dollar Cost Average JNJ further in the future (2.66%) -$80.00 of this cash I reserve to Dollar Cost Average WM further in the future (2.66%)

$503.49 available from Slush Fund ( 12.38 %)

Dividend Investing 'Sister' Account Inception to Date

Futures 'Sister' Account Inception to Date

Stock / Futures / Forex Trading Balance: $10,127.98 ( Return / Yield up +6.768 % Year to Date ) Commodity Futures Balance: $10,061.66 Return / Yield up +5.947 % Year to Date Next Re-Distribution Goal: $10,700.00 Original 3% risk tolerance gives us approximately $282.54 for my drawdown tolerance. $503.49 available from Slush Fund There were no trades from last week, following Rubi's funeral. As follows are the new Commodity Futures and Stock Money Management Performance Statistics

Micro-Forex Balance: $66.32 Return / Yield -2.799 % Year to Date $503.49 available from Slush Fund

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Savings Side-Pocket Account Balance: $2,029.37 Return / Yield up +0.04289 % Year to Date $504.84 for a Slush fund / Drawdown Kill Switch fund $1,009.69 for a Base Savings
Percentages of that Cash:

Total Portfolio Balance: $16,225.20 - Total Inception to Date Return: +8.168 % Return / Yield up +4.205 % year to date) S&P 500 2012 Year to Date: +8.49 %

$813.69 of this cash reserved for 'burn rate / maneuvering' capital ( 80.59 %) $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% $20.00 of this cash reserved for the first side-pocket purchase ( 1.981 % ) $20.00 of this cash I reserve for the second sidepocket purchase ( 1.981 % ) $36.00 of this cash I reserve for the hedging account ( 3.565 % )

$504.84 for Emergency Savings Getting Paid Fund: $10.00 If you have any questions regarding my personal outlook, or any other comments, please feel free to contact me at dan.shy@gmail.com. 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. Any trades or investments that I discuss within this newsletter are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. 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. 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 principles5. 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