Tuesday, July 31, 2012


  Strategy: Blind Mans Bonds
  Symbol Tested:   ZB-067  (Active Contract: ZB-201209)

  ORDERS for:   07/30/2012    (last complete bar: 07/27/2012  O=152^08  H=152^14  L=149^08  C=150^06)

  Current Position:   NONE

 The bar to place the orders for opened at:  150^05

Place the following order(s)...

To Enter Long:     BUY 1 Contract at MARKET
         (Rule:  "G R Buy")

If entry is filled, cancel all other existing orders and place the following order(s)...
To Exit Long:     SELL 1 Contract at 1^20 below the Entry Price STOP
         (Rule:  "Exit Long: Stop Loss")

There are countless numbers of ways to trade the markets, many of which I have reviewed in the past in here. You can use patterns of Lunar Cycles, Elliott Waves, Oscillators, Tape reading, mechanical systems, or any one of a number of others. However, the one thing they all have in common is that you must manage your risk. The above example of the orders from my Bond System illustrate this point. By far the most important aspect of those rules is the very last sentence, which lays out where the stop loss is to be placed. In this case we know the max loss an any one contract with be 1'20. This is critically important. 

If we round up this means in the worst case scenario we will lose $1700. Now we can go about determining how many contracts to trade etc.. Another aspect of this system is that we exit the first profitable opening, which is not listed because we can't have a profitable opening since we have not entered the trade yet. The next set of orders after this bar closed had that component listed. The point of all of this is that we knew the exact parameters by which we would exit the trade, before we ever entered it.

All of us myself included, are subject to the emotional pulls this business exerts on us. When we are in a trade that is working we feel good. When we are in a trade that is going against us, we feel bad. It is difficult to make decisions on where to exit, once we are in the trenches with either open profit or deficit. This is why in my trading, I always know what my exit will be before entering a trade. There are not any exceptions to this EVER. It could well be that I want to ride the trade for a while, so the strategy could be to exit if the lowest low of the last 3 days gets taken out. This is still a very specific strategy and is known in advance. The most common question I get in emails is about where to exit a trade. I hope this answers that question. If you are a buy and holder, since you have no exit, this point is irrelevant. However, if you are a buy and holder you should not be reading this blog anyway.

Here is the Coffee market, one which is setup for a decline in my view. We have the textbook rally in a down trend that has attracted commercial selling. Now we are moving sideways in a ledge type of pattern which would typically but not always, break to the down side. One of the beauties of trading and also the most frustrating, is exemplified on this chart. No tool works perfectly all the time. At times my COT Synthetic is just spot on picking almost every turn right on the nose. Then there are times like this where it is just dead wrong every time. In this case the regular COT data pegged the low almost to the day, and then the ensuing high as well. I look at both for this reason shown right here.

If I do ever come up with anything that is never wrong, and I am constantly trying to do so, it will never be displayed here. It would be sold to a Hedge Fund for millions of dollars. One thing I am sure of in this business, is that neither I nor anyone else, will ever come up with such a tool.

I am still looking to the down side in the indexes, but do not have any sell signals at hand.

Good Trading

Sunday, July 29, 2012


It is always tough after a week like last week to come out and say we should be selling here, but that is what I am saying. If you look at the above chart, we are into the bands on the high side I mentioned a few weeks ago. This was a spot I was hoping to get to. You can also see both the Commercials and the LW Commercial Proxy Index ( which works better in the indexes ), are indicating heavy selling into this rally. We are also seeing Sentiment really bullish. Sentiment has not been a great indicator of when to sell in the indexes the last few years, and there is one big reason for that. In a normal market environment, legitimate natural buying and selling create ebbs and flows that spark huge rallies and then big falls when things get over done. In those instances we can tell when things are likely to swing in the opposite direction. It is just natural physics. However, in the environment we live in now, and have for a few years now, there is one trader and one trader only that matters. This is of course the US Federal Reserve. They are essentially a buy side trader with unlimited position size allowances, and unlimited margin.

They just buy this every time it is on the verge of turning down. I think it is beyond politics at this point. The bigger picture is they are trying to stop the economy from falling off a cliff. I fail to see how artificially creating bubbles like they always do, and are doing now, will save the economy. However, it is all about perception. As I have said many times, if you took every single thing in the world and left it exactly the same and took the 12 off the front of the Dow Average and replaced it with a 6, we would have panic across the world. These guys are well aware of this, so they are inflating things hoping to buy time. The problem of course is what they are doing to inflate things artificially, is going to result in them going down more at some point.

I was in a very insulated position from this until all my money was stolen by PFG, so I am as vulnerable to this now as most readers of this blog. There is nothing we can really do about any of this but put our nose to the grind stone and plow ahead. I am back into trading this coming week, assuming I can get my log in problems resolved with Fintec. This has been a royal pain in the ass. For what it is worth, I am dividing my money between Straits Financial and Knight, both of whom have not one single blemish of any kind with the NFA. Of course as we know the NFA knows jack shit, but there were some minor things with PFG they had filed, so had we looked at that we might have moved our money. I am now going to require a spotless record wherever my money is even if it has to be moved every 45 days. I found something minor with the NFA with the one place I had put some of my remaining money, so without naming them, I am moving it. The violation had nothing to do with seg funds, but I don't care. If it is a parking ticket, I am gone, PERIOD.

It is starting to look to me like the comment by the CCC lawyers about no money this year from the PFG trustee is most likely accurate. In my opinion, the only reason things are this quiet, is that they are not good, and they are desperately trying to find some money. They don't want the first distribution to be 30% or less, but that is what it is going to be. In my mind I am planning on only getting 30% total back, anything beyond that is going to be fortunate. If the situation were better, we would be on the verge of getting something now, which we are not. For now it is all gone anyway. My plan is to build my little account back up to beyond the heights I achieved before, then once I do and get some liquidity, become predator with that cool laser he had with all the regulators. Until that time I will be a good citizen. Unfortunately, as I learned last week in several conversations with people on some software problems, you just have to get nasty sometimes to get what is rightfully yours. I always try to be nice as long as I can, but at some point you have to get after it. I took an HP printer back to Best Buy a couple of weeks ago, the Officejet Pro 8600. I am now on my third one in less than a year. I love this machine, but they constantly break so I took out the extended warranty for $25, and boy has that paid off in spades.

However, the last time I took it back they starting giving me the run around on the USB connector to the computer. They told me it no longer comes with one, and once I turned mine in with the chord I was SOL. I think most of you can imagine my response to that. I did walk out of there with a chord after I "convinced" the kid in front of me it was in his best interest to go get me one. I took it, went home, and found out it was half the length of the one I turned in. Now I was really pissed off. I put on a tank top so they could see my physique just in case any one of them might think about not taking me seriously if push came to shove, and went back to the store. Once I got there they told me again, I could not have the longer chord. I purposely calmed myself before going in hoping things would be easily resolved. When they told me that I said point out the person in this store that you think can stop me from going and taking a chord of the proper length and leaving with it? I then went back into the shelves, grabbed the chord and walked it to the counter and told them to ring it up for free, which they did without making a sound.

This might seem like an off beat story which it is, and I wish it had not happened. The point is I was very nice until I saw it was getting me the run around, then I wasn't nice. Folks, there is going to be a time in this PFG process for us victims to get really nasty I suspect. That time is not now it is in the future. I will be ready at that time to fight for all current and future victims. This is getting almost no press, which just goes to show how quiet they are trying to keep this. In the mean time Corzine has still not been charged with a single thing as far as I know. We can only hope they are building a case against him. I don't think getting nasty will get us more money, we are going to get screwed in this. However, we have to fight to make sure the solution becomes something that really protects people from this type of thing. Funds can not be held at FCM's PERIOD. It needs to be physically impossible, not just illegal for the Corzine's and the Wassendorfs to get to our money.

I have read they are investigating one person at US Bank whose signatures repeatedly appear on the documents, and that investigation is incredibly tight lipped. I suppose this guy could have forged that signature, but it seems he had to have had some contact with someone else at the bank, to get the money. It seems hard to believe he could have gotten away with it without someone at the bank being involved. Maybe that is why things are so quiet, they are squeezing the bank. We just don't know.

Some of the cyclical work I use has forecast down moves in many markets starting at the beginning of August. As a result, I am looking for sell signals this coming week. The energies in particular intrigue me here on the short side. The Bond System gets launched on the first to those who have expressed interest. If you have any interest and have not contacted me, you need to do so in the next day, or it will roll to next month. I am having to do this in a unsophisticated manner initially for the reasons previously explained.

I should be back in business now for regular blog posts going forward.

Good Luck to everyone this week

Friday, July 27, 2012


One of the things I have turned to recently is music. Do not get the impression I play music, I am talent less in this area other than a little guitar playing. I meant listening to it. I used to have the TV on the back ground in my office, generally ESPN or the 50th viewing of Underworld etc.. My wife is a Fox News whore. Don't worry I tell her that to her face. We have our great room adjacent to my office with of course what most guys have, the biggest Flat screen that could possibly fit on the wall! She always has Fox news on. I get tired of it, and particularly in these troubled times for all us PFG victims, I find it difficult to listen to all this political babble. It is all that BS that resulted in us all getting screwed. It also most likely stands in the way of anything every being done about making sure this does not happen again. It will happen again, and soon is my guess. It will be a different methodology, but it will involve the use of Segregated funds once again in an inappropriate manner that results in them being lost and the investors getting screwed.

I did come across an article yesterday that addressed the impatience of people like us who have had our money stolen. We are about at the point where in the MF Global case, people got their first distribution of money, yet we are seemingly nowhere near that in any way here. For those who felt that in the wake of MF this one would be handled more quickly, they could not have been more wrong about that. I spoke with a friend yesterday who was aware of the situation but not that my money was there, and he told me he was surprised at how calmly I was talking to him about it. My response was that there is really nothing I can do at this point. That is not exactly true.

I had a very nice long chat with a reporter yesterday from Thomson Reuters about all of this stuff. They have apparently been looking into this for a couple of weeks. She was very nice, and although they have not really uncovered anything yet that the rest of us do not already know, her focus in this matter was impressive to me. They know how to ask the right questions, and to get to the truth. I felt relieved when I got off the phone because I felt that I now knew someone who was looking out for us. There has just been such a total lack of information of any kind on this, it has just left a very eery feeling. You know the saying, "no news is good news." I don't think that is true in this case. In case she happens to read the blog today I want to say thank you PJ so much for trying to help us. I will say here what I said to you directly, you are the best hope we have in this matter.

The trustee is solely motivated by money here, so we can trust him I think to go after whatever he can, he just makes more money that way. I think the whole matter boils down to the following issue. When the money was wired to JPM then passed through to US Bank what happened on that trail? How did it get taken out of a Segregated account and into his personal hands? Here is a excerpt from Rosenthal Collins about what they do in accordance with segregated account regulations

In compliance with segregation requirements that are applicable to futures, and options on futures referred to above, RCG does the following:
  • Customer funds are maintained at banks in clearly identified "segregated funds" accounts separate and apart from any other funds of RCG.
  • Each bank signs a written acknowledgment that (i) the segregated funds are held in the account in accordance with the Commodity Exchange Act and CFTC regulations, and (ii) the bank will not hold, dispose of, or use any of the segregated assets for anyone, including RCG, other than the RCG customers.
  • The assets of one customer at RCG are not used to purchase, margin or settle the trades or positions, or to secure or extend credit, of any other customer.
  • RCG will invest segregated assets only in funds guaranteed by the United States or other allowed instruments. Investments may include U.S. Treasury securities, municipal securities, government sponsored agency securities, certificates of deposit or money market mutual funds.
  • Segregated assets are only invested through, or deposited in, customer segregated funds accounts.
  • RCG keeps a daily record of customer segregated funds and assets
  • Every business day, the total amount of customer assets required to be segregated and the total amount of assets actually deposited in segregated accounts is calculated as of the close of the previous business day.

I have highlighted in red where I think our hope lies. Although this is not a copy of the law, it appears to reflect what the law requires in the handling of segregated money. If in fact this is the law and a bank signs an agreement to handle the funds this way, there is no question at all that the bank has violated this regulation. First if JPM is the pass through for Segregated money, and they are forwarding it to a non-segregated account that appears to be a violation of the law. Second, assuming they forwarded it to a segregated account, how did it get taken out of that account by PFG or king douchebag himself? Neither of them are eligible by what is written above, to have access to the funds.

The bottom line in this case, if this is in fact a clear statement of the law in these matters, guess who is culpable here..... US Bank! If we have a clear path to sue them, and this is the law, we can release the balloons here. If they have breached that law for this many years, we can take them down, and they have the money to pay us. I am surprised that there is not one single thing I can find on the web talking about the Bank's actions in this matter, NADA. WHY?

I have been told that this local bank in Iowa was acquired by US Bancorp. If that is true, it is likely there was a pre-existing relationship between DB(douchebag) and them that went back a long ways. They probably knew him so well they relaxed many of the rules in handling his accounts. This is typical of friends I know who are wealthy. They have banking relationships at the branches, they are well known to the people, and they get different treatment. However, in the matter of segregated funds, it is my view that the relaxation of the requirements of the handling of them, is a clear violation of the law. I am sure the forensic accountants will find the money trail, and I am hopeful that it will show these laws were broken. If they were we will pile drive this bank into submission together. Until we know the exact path the money followed we cannot be sure on this matter. I am sure the trustee is looking at this because he gets paid a percentage in this so the bigger the recovery, the more money he is going to make.

The one final point to make on this is, I am not sure if the above is what Rosenthal requires specifically, or it is a direct requirement of the regulations placed upon the banks. I have tried to find this on the web and I am just getting caught up in a bunch of legal jargon that iritates me.

On to the markets. It does appear to me that we are at an interesting inflection point in many places right here. The retracements in the down trends have gone far enough now, that the trends are on the verge of changing to up. However, if we roll back down here, the trends will be re-asserting themselves.

Here is Crude Oil and you can see from a COT perspective, this has been pretty well setup for a move up for a few weeks now, and we have gotten one. As everyone knows, COT buying often is very early, but in this case it picked the low almost exactly to the week it was made. Now we have bounced up a good bit, so the easy money on the buy was made. In reality it is never easy buying into drops like that and I do not do it. When I look at the daily chart next, I see more of an inflection point type of situation than what I see above on the weekly chart.

Here the picture looks a little different. It is not bearish in my view at this point, but would become so if that trend line I have drawn in there were to break on a closing basis. If we do take out the highs of last week, we could be off to the races here. Many markets look just like this now to me, so this will just be a proxy for the rest of them. One thing I do find interesting, is how much this is lagging the stock market in recent weeks. That makes me lean a bit more to the down side for whatever that is worth.

I am going to be up and trading again next week. Mentally I was just not really ready until now. I have been working diligently on some new things, and they are getting close to being ready for prime time. The Bond system is being rolled out now for subs at the beginning of the month. As I said, I do not have Pay Pal setup yet. If it gets rolling and a lot of people decide to give it a whirl, I will re-open my other web site. I am not going to the expense of that at this point in light of what has happened to me with PFG. Also, I know some of you do not live in the US, but I am not going to give out my account numbers for wiring. There is no way in light of what has just been taken from me that I can risk that for only $60 a throw. I am sure most of you can understand that.

Have a great weekend

Wednesday, July 25, 2012


Back in the good ole days when brokers didn't steal your money and markets moved freely, a big bar used to be a sign of more to come. In this day and age where everything is seemingly controlled by the hedge funds and the PPT, things have changed. If you just look at the above Coffee chart, you can see what I mean. In almost every instance, the big bars were followed by chop or reversals of the big bars moves. I think what we have going on here is that all these fancy algorithms are written to mechanically pile on moves the minute everything starts rolling on one of these days where the ES moves a lot.

It is pretty clear when the ES goes up or down a large amount in a day, most everything else goes in the same direction with it. This has been happening now for long enough that it is now the new normal. You can see in the above chart, the COT data was spot on in telling us to look to the short side. The truth be told, this was a trade on my radar that I did not do, because I am pretty much taking this month off and waiting until the next month. I have found on some days my head is still not completely clear of the wipe out at PFG.

Whatever way you trade, you have to figure out a way to catch some of these big days, it is just that simple. I don't have any secrets as to how to identify when they are coming, I am just making the point that all the money is being made on these days now.

Yesterday was another good example of why filtering the Bond System trades is impossible. I felt that one was not a good one to do, yet another great winning trade happened that was exited at last nights open for 26/32's profit. I am looking forward to getting started on the service, but am also at the same time hesitant because there has to be a loss or two out there waiting to happen with the roll this system has been on.

One story that came out yesterday which will be interesting to follow, is the head of the Mercantile Exchange said all seg funds should be held there. It would be the safest place for them to be. He said he was tired of seeing traders getting screwed. There of course was an immediate rebuttal by brokerage firms, and a cry that fees would have to go up. You really have to ask yourself why they would object and why fees would go up. They should go down. It is my speculation that a lot of firms do make use of Seg money from time to time even though it is illegal, and this would cause them cash flow problems. Does anyone really think this guy was the only guy dicking around with Segregated Funds? The brokers want to have that available to them, so they can break the law and take them when they get into a pinch like MF did. Is there any other reason anyone can think of that would explain why they would object to this? I can think of some other reasons, all equally untoward.

I think politicians will fight this because I think they like these wipe outs, it gives them less control when fewer people don't rely so much on them.

Try to find a way to catch the big bars is today's main message.

Monday, July 23, 2012


I sat in on the CCC conference call today on PFG, and I have to say it was great. They covered a number of issues related to all of this, and had some seemingly very competent attorneys on the call. Without re-hashing all they discussed, I will summarize my take on all of this, and what I plan on doing.

First, it is becoming pretty clear that this is going to be the biggest loss as a percentage of the funds of any of these things that have ever taken place. I say this because it is becoming increasingly clear, he just spent the money running his company, and buying a few things that do not add up to that much. I think this is going to take a long time to get back a little. It does appear the best guesses by some smart people in the know here it that about 55% of the funds are unaccounted for. It also appears it is going to be quite a while before anything is distributed here, and also the initial amount is going to be pretty small.

These guys are completely on top of this, and there are class action suits that are already filed. You do not have to do anything to be part of them. As a customer you are already part of it. If they get anywhere, notifications will come to you with paperwork to fill out etc.. Until that time or the time that any distributions take place, I plan on operating on the assumption that this is all gone and my goal is to try and make it back by the time we get some of it back. It appears that bad debt bets are in the 30% range now which tells us they are handicapping 50% or 60% of it as the best case in their world. Keep in mind that at the same stage, MF offers were in the 70% range at this point, so that tells us this is likely much worse than MF. This is not news we already knew this.

At this point it is time to move on. I will plan on writing off this whole thing, and that should allow me to go back in time and refile prior years to get some money back to help offset this. The Madoff rule should apply here. Other than that it is time to get back to business and make some money again. I won't and neither should any of you, let this set back ruin our lives. I just won't let it happen. Make no mistake he has put me in a terrible spot, I have already changed my life dramatically to scale back the way I live. I have given up things I have had for 20 years, it is what it is. He has done his damage now and it is up to us to fight back and shrug it off. I am not going to be talking about this in here any more after this post. There will be things in my other blog about regulators once that is up, but this won't be discussed here any more than possibly to refer to a post over there etc..

There was a bond buy generated at tonight's open in the system, I sure hope it takes a loss. I would like to start the service after a loss or two. Once the first of the month comes around and people have subscribed, I will not be talking about the service other than after the trades are over. It would not be fair to those using it to have others get the signals for free. I will review it in here after the fact for those who might be interested in the future.

Here is the crash in Soybean Oil, what a monster move for the night session here. Now I will be looking to see if we can bounce over the ensuing sessions. If it just falls off a cliff which it could here, I will miss the trade. I still maintain that selling below a small inside bar like that in a strong uptrend, is a low percentage entry. Once it broke below the ledge I have drawn in and retraced back into the range, it made more sense to short there. I am not convinced this is going to crash here but you never know, it has a good start if it is going to do so.

In the world of second guessing the bond signals, which I mentioned in yesterday's post I do not do very well, this would be one I would not be crazy about. I say that because for the most part I don't have a single other thing I look at that says to but this right here. As a result from a discretionary stand point I would not do this, but I am not using discretion with this system. It is a system, it says to buy, so buy it is. The exit as always is the first profitable opening with a $1600 stop.

On a house keeping note, I have moved half my money out of TradeStation to Knight. I am just not comfortable with another private company after PFG, and unfortunately TS falls into that category. Once the first half is moved, the other half will follow. I have no reason to believe there is anything unsafe at TS, just being prudent. I have had money there for years and never had any real problems other than pissing matches over fills. If you have equity money there it is covered by SIPC, if you have futures, we now know that is not covered by anything, and is really only safe in Canada. I still don't have an answer about opening accounts there, hopefully I will soon.

Good Trading


Above is the summary of all the trades in the Bond System since I went public with it here in this Blog, from April of this year forward. Obviously these results are very good and I have to make sure to make this as clear as it can be made, this cannot in any way be assumed that the performance will be the same as this in the future. I guarantee it will not be the same. It could be better or worse, but it will not be the same. I am rolling this out to those who have expressed interest to me, and I will be sending you an email with more details. Basically it is going to be $60 per month paid in advance, and needs to be received by me no later than the 30th of the month preceding the subscription period. This along with all the details about how to use this, how to place the trades, where to exit, etc.. will all be in a PDF you will receive once I get your initial payment. I will also have a cell number in there so you can call me with questions.

Here are the ground rules for calls on this. First, I am always happy to talk to people about the markets at any time. It is my life's interest, I love to talk to all levels of people about things relevant to trading. What I don't want to get into is conversations about whether I think a particular trade will work and why? This is a systematic approach to trading. It is rules based, when the rules say to do something you do it. It is really that simple. You just follow the rules. None of us myself included, have any idea when a trade will work or won't. Often times I look at trades this has generated and think they are terrible, and would not want to do them, then watch them go on to make a big profit. At other times the ones I think are great, take a loss. So it is with the world of trading any style, this is not mutually exclusive to systems trading.

I also don't want to commiserate on losses. I am going to be doing these trades also, so I will also be losing when losses occur. This system has been on such a good run, it is inevitable some losses are going to show up here. However, we never know when they will occur. I can assure you that if you just arbitrarily start cherry picking these, you will under perform the system. You may get lucky once and dodge a bad one, but that reinforces bad behavior unfortunately. I would suggest doing them all. Whether or not you combine these with something else you are already doing or not, the responsibility falls on you. What you will get are trades to make. What you do with them, how you manage them will be up to you. The rules have everything covered, there are no judgement calls you need to make. If you make them, that is on you.

There are not going to be any refunds. This is month to month, if you don't like it just don't send in the next month's check on time, and you will be off the list. It is only $60 a month, so it is not as if you are committing hundreds or thousands of dollars to something. The commitment is $60 basically. I should sell this for more in all honesty, but it is time to get this started and see where it goes. Assuming it holds up, I will likely raise the price to newcomers down the road. You will be grandfathered in as an initial subscriber, so you will be guaranteed that rate as long as you stay in the program. If you leave and come back, you will have to pay the going rate if it happens to be higher at the time you come back.

The orders are going to come through emails to you. An email will go out within the next day to those of you who have expressed interest, so look for that. 

There are not really any updates on the PFG situation. The one good piece of news is that you will be able to write off the whole amount of your loss due to this fraud against your income and can possibly carry it backward if it exceeds your income, or forward. That is a new accounting rule called the Madoff rule I believe. It does appear the company had about $25 Million in cash when it went down. The guy has a jet worth $7 to $10 Million, a few condos worth a Million and another house worth a million. He also has a wine collection worth about 100k. What other assets exist and where they are, who knows. There is word that a petition was served to the NFA and CFTC demanding they reimburse the victims for this, I have no idea if that is true or not, or whether there are any legal merits to it. I have determined that lawsuits against the NFA are a real challenge. This whole thing is setup for there to be no recourse for victims in these situations. There is no sense throwing good money after bad here.

I am launching a Blog to on a daily basis attack some of these problems in hopes that we can effect some change. You will see a link to it here once it is ready to go. I like the name I came up with, I hope my readers do as well.

Back to the markets. we are in a challenging spot here. We have several markets that have really run up here, enough to make them tough sells because we are on the verge of trend changes in them. Yet chasing them here is not a good idea. Here is one market I talked about recently and a trading lesson on it.

What you can see from this is that it is very important to identify the correct trend break areas, especially when trading reversals. There is no question Bean Oil has been the weakest grain, the chart looks completely different than the other grains. It is always tempting to just go in below a prior bars low, to keep stops small. When that break turns into a big day, it is always great because then your risk winds up being very small. However, the flip side to that is that entering in these little wobbles, often gets you chopped up with a bunch of small losses. It depends on your emotional makeup as to whether you can handle losing a lot trying to catch the big ones. Personally, this wears on me when I have a bunch of losses even if they are small. I remember the recent trading service I told readers I signed up for,  it had 18 out of 20 trades lose at one point. The losses were small, but that was so disheartening, it just wore on me as I think it would on most people.

In this case to me even though we have a break of the prior low that went a ways, I really see this whole market as being in a sideways or ledge type of situation, which is basically right at the highs of the last couple of months. This is not really a sell pattern in my opinion, no matter what fancy lines I can draw in here. I would prefer to see a break down of the ledge, then a rally back to the bottom of it or slightly above that level. At that point I would want to short this market. I hope that makes sense. It is a judgement call of course.

I have the two possible ways of trading this on the short side labeled and the one I would prefer. It is true, if this just does fall out of bed, the more conservative entry won't set up and I will miss it. However, I think when trading against a trend and looking for a reversal, you need to be sure where you enter is a trend change and not a wiggle.

That is it for today

Friday, July 20, 2012


You can see the Bond System had a buy on the opening last night in what appears to be another very good trade right now. I have to admit I am surprised how well this is doing. It is rare that a system makes more money out of sample than in sample, although I have had it happen before. The one asterisk to that comment is that this is the exact system I used to use before, with the aspects of it that were ruined by the electronic markets removed. As a result it could be argued this is not really out of sample since it was not just created. It was created basically 10 years ago.

We still are not at the level of interest I require to launch this, so if you are interested please email or call me at the numbers I put in the post two days ago. As luck will undoubtedly have it, since we are on such a roll here, once we launch it the first loss in a while will probably happen on the first trade we take! I have missed many of these trades due to being out of business due to the PFG situation.

PFG - There does not seem to be anything new here other than some story about another potential scam going on with precious metals. It has been my suspicion all along that he did not act alone, and if the PM story is true, that may open this up to the broader truth of all of this. The story I read about that scam would have required others to be involved. It is my hope that someone from US Bank was somehow complicit. If we are lucky enough for that to be true, we all would wind up fine in the end, since they have deep enough pockets to make us whole and could be easily forced to do so. That may be a pipe dream on my part, but it is the only way I can see that we will wind up ok here. Barring that the outcome is not going to be good for us. I wrote my senator and congressman yesterday, you should do the same if you are effected. Here is what I would emphasize if you choose to do that. I made it clear that I relied upon the regulators comments that there were no other firms with problems out there, in determining not to move my money. As a result, they are on the hook for the money and need to make us whole. The way they structured the oversight through an SRO to essentially block us from recourse, is further evidence of them treating US Citizens unfairly. Further I emphasized that the only way to make sure my funds were safe was to get them out of the US and into a Canadian firm. What they have done is driven money out of this country.

I doubt anything will happen, but we have to try everything we can. Just sitting here and hoping out of the kindness of their hearts they help us, is not likely to bring in a good result in the end.

Here is a market I was looking at last night, the Russell. You can see how well my COT Synthetic has worked in this market. I was contemplating shorting this today, but it wound up not making it through my checklist being eliminated on one of the very first filters. You can see that in general, the COT Synthetic has been bullish the last week here. I have lines drawn in at + 15 and - 15 here. I have a hard and fast rule with those numbers, that is why there is no arrow in a few spots where it gets close to those lines. It has to go past those levels to be a signal, I won't bore you with why. It was months and months of finding the best levels with this before I realized those levels were critical. I would not pass on a trade if these levels were not lining up, but I do in general like to see what this is telling me. In this case it is bullish still.

I think something we all need to check into is opening accounts in Canada to protect ourselves. However, I suspect that you have to be a Canadian citizen to get the protection from their government even if you don't live there. This is something we need to get clarification on. My brother in law was involved in a case as an attorney where a non Canadian Citizen was not given certain protections he thought he had up there, although it was not this same scenario. I have him checking into this for me as well. I think some of you readers should make some calls, and let's compare notes on this in here.

Thursday, July 19, 2012


Before I get to the discussion on the Bond System, I have something else to discuss. I called the Trustee's office today and was able to actually get Ira Bodenstein on the phone. This was a fluke, I was just talking with his assistant and he came into the office and overheard our conversation and joined in. He seems like a very nice guy, and also completely on top of this. They are bringing in forensic accountants to get a second set of eyes on all of this stuff. This is a good thing obviously, but also something that is probably typical anyway.

He had to go off to court for more filings in this matter, so I only got about 5 minutes with him. They have a web site up


This supposedly has all the pertinent information, forms etcc. I would suggest going there first for the most updated information. I don't think there is any point in calling the trustee as I just did. They are getting a lot of phone calls as you can imagine. I have had some people call me telling me their balances when they check them are a lot lower than they should be. Personally I had 3 accounts there and one prop account I was trading that was awarded from the Robbins contest last year. I have only been getting updated statements on 2 of the 4 and the balances in those have not changed. The other two statements I have not been getting in the last few days. I would suggest writing to the trustee with copies of the correct balances, if your account statements are not showing the correct balances. I asked them today to get me the current statements on the two accounts I have not been getting them on and they are looking into that for me. I think as hard as it is we just have to move on and let this process play out. The best case scenario is we are going to lose some money here, so I think we need to focus on getting it back through trading. If our statements are not correct we don't have anything we can do about it now, other than make the case when the time comes to do so. To me all the money is gone right now, and I am proceeding on that assumption with the thought that I might get half of it back. I will fight with all I have for all I can get once the time comes to do so. I have had enough stress over this for a lifetime, and I am just not going to let this ruin my life. It has been a major life changer for me obviously, but there are things we can learn. We now know that all segregated funds are at risk, they are not safe in any way. There will be other schemes to steal them and they are probably going on now somewhere as yet unidentified. The government will not help us. We know we have to have things spread out all over the place to safeguard against a wipe out like I have had. We also know that living in Canada is the best solution to being protected against this. Sometimes bad things happen in life.

Shifting back to the Bond System. I have had some interest but not enough yet to get to my threshold to launch it. I have a folder where I am placing all people expressing interest, so email me and once we get to the level I want, here is what I will do.

Send out a detailed PDF explaining exactly how this works, how to place orders, stops, exits etc.. I will suggest account minimums and risk levels in terms of contracts taken per trade, but those are going to be up to you. One thing I will emphasize here.


We have seen a few since I have been posting them, and they have not been too large. However, there will be instances where we take the full stop amount losses, and perhaps more than one at a time. You have to manage your money to accommodate the draw downs. I will explain this some in the PDF. This is not for everybody, and it is not the ticket to riches, so please understand that going in.

I do not see any market setups that are that inviting today. I am looking at Bean Oil, the weakest grains on the short side, but we need to break the two day low in my view there to get short. I also am interested in Cocoa but not for today, on the short side. Once these trades get setup to my liking I will post the charts.

Good Luck to everyone, and let's look forward here.

Wednesday, July 18, 2012


Here is the table of the summary of trades in the Blind Man's Bonds since I first announced it here. You can see it does include a current open trade which was a long triggered on last night's open after yesterday's short was exited profitably. I think with this out of sample success, we have something that is viable. I am going to take the suggestion a few of you have had to offer this up now as a subscription service. The cost is going to be $60 per month. For those interested please email me at mktwzrd1@gmail.com. The way this will work is that I will email out the signals every day during the afternoon, so you will be prepared when the night session opens. Many of these trades are entered at the openings. You can always try to "price" them, meaning if you miss the open enter them on limit orders or some other way. In doing so, you may make more on the marginal ones. However, you will also miss some of the good ones since they tend to just roll right from the opening.

There are no promises to be made on these. I have done the best safeguarding I can by what I have done here which I will review now. If you recall I mentioned this system in April and explained how I put it together. It was a combination of the best patterns from my old system I traded exclusively for years, and one year came in 2nd in the Robbins contest, and some newer patterns I have developed. I did find that when the electronic markets started, some of the old patterns became ineffective. However, many of them have now stood the test of 20 years. Once I combined all of this, I launched it here live to see how it would do out of sample. Many things do great in testing, then fall flat on their face live. This has happened to me a few times over the years. In this case the first couple of weeks were crappy, a couple of small wins, one decent sized loss. Typical for this type of approach or any other one for that matter. Then it has gotten back on track. The win percentage is a bit lower than what the testing showed, but the amount of dollars won for just this brief time is pretty good for something like this.

For the sake of accounting, I am just going to have people come in effective at the beginning of the month, so I know when to include people in the emails and when not to. If I find a broad enough interest, I will re-launch my web site and have it all done there, and will accommodate mid month beginning and end enrollments. You will be able to log in and get to a page that has the orders. You will be able to use Pay pal to pay etc.. Initially, please just contact me at my email address if you are interested, and we will get started. You can also call me if you would like to discuss this at 760-734-6927. This is my home phone number so please be aware of the time, I live in San Diego, which is PST and my wife does not wake up until 8 am typically, even though I am awake at 5 am. Please don't call until after 8 am. I am going to set the minimum at 10 meaning I have to have at least 10 people interested to do this. I have no idea what the level of interest is on this in here.

There are no promises on this at all or any representation this will continue to do what it has done since April. I can only promise it will not be the same, it may be better or it may be worse. Systems trading is a different animal, you are completely removing yourself from the equation. You just follow the rules and take the trades as they are spit out. If you try to cherry pick the trades, you may get lucky and miss a loss, but inevitably you will under perform the system as a whole. This will fall on you if you do that. There are not going to be any refunds, it is cheap to begin with. Just for legal purposes I will have a disclaimer in the emails to cover myself so be prepared for that. I will likely be in the most of the trades, but I am not promising that. I have to trade a bit differently than I normally would due to what has happened. As a result risk parameters at any given moment might restrict my ability to take a particular trade. In summary, either call me or email me if you are interested.

As for today, I was looking at potentially shorting the Naz or Russell had we broken yesterday's lows, but that seems unlikely at this point. Due to how far that travel range is, I will do it on a bounce if we get down there. I was also looking at a buy in Sugar and potentially shorting the Euro, but those did not make it through my final filters.

I am supposedly getting a call from the President of Trade Station following up on that situation with them I mentioned the other day. It appears to be an internal glitch having nothing at all to do with security of funds, but in light of current events they are addressing this fully with me. I will summarize the discussion here after I speak with him in case anyone is considering going there. I don't want to misrepresent what may or may not be going on there.

Good Trading

Tuesday, July 17, 2012


It is hard for me to get completely clear of all of the crap surrounding the fraud situation, so here is the latest for those readers who have exposure. I spoke with a childhood fathers friend, who is a well respected professor of law at the University of Michigan, one of the top law schools in the country. I did not gain much additional insight but I am pretty clear now on one thing. Any suits against the government are not likely to succeed. Apparently there are so many prior rulings in their favor on so many things, that it is very hard to win a judgement against them. This is no surprise. We also know now that the accountant was a one man operation, so a dead end there. For those who may have contacts, or are attorney's, I think we need to find a way to go after either US Bank or JPM.

I don't know if any arguments that are reasonable are to be found with either of them, but we at least have to look there. The question is was there any negligence on the part of either of them in this matter. I do not know the answer to that. I can conceive of a few possibilities, but we just don't have enough facts yet. I think the net of all of this is, we will be fortunate when all is said and done to get half of our money back. We need to move on and barring legal action against either of those banks or someone else who might develop as an accessory, this guy just got over on us. The government will not in this matter or any other matter, protect us. I read the minutes of Gensler from the CFTC in congress, and basically he just said they can't catch all of the criminals just like the local police.

I am going to my local congressman's office today to try and get something going, but that is likely a huge waste of time. I am doing so just for closure basically. However, here is my big picture plan. Once I get back on my feet again, which could in all honesty take years, I am going to launch a public relations campaign against the regulators like nobody else has ever seen in history. It will become my mission to bring every one of them down. I will do it through this and other similar forums. Each day I am devoting just a little time to bank away some ideas about how to do it when I start it. Then at the right time, likely years from now, I will have at it. Until then, time to put this behind me. I think it is reasonable to plan on 30 to 50% back.

I have asked Trade Station to put me in touch with a management person at their bank to verify their segregated account and they are considering it. I will report the conversation if it happens.

The above chart is one possible opportunity I see, Natural Gas. I think if today's low were to be taken out tomorrow, this market could be shorted. Some of my indicators not shown, are close to turning down here.

The Bond System long was reversed to short on the opening today, losing 3/32's but producing what appears to be a big winner today. That trade indicates an exit on any open under 151'18 tonight.

That's all for today. Since I am not trading yet although that TS account is open, I don't have as much as I normally would have. My life has kind of been taken away from me, and I am focusing on a job I have now. Once whatever money comes back that is coming, it will be time to re-evaluate. I have to protect my family first and survive this, before I can be real aggressive about re-building.

Sunday, July 15, 2012


Of course I can't help at times surfing the web for stuff on PFG. I found something that likened it to the Stanford case, but that is irresponsible. In that case people bought a bogus product, a CD with false promises, and involved a lot of offshore money. In the PFG case the issue is segregated funds here in the US. This is what makes it like MF Global. Segregated funds were used for company business. That is not a ponzi scheme at all. Where all of this will lead is anyone's guess, and I doubt it will be a good outcome for me. However, I felt it was important to make this clear distinction. Further, the pass through nature of the wiring instructions that initially went to JPM, is another odd twist. I am not sure why this arrangement was in place, and I don't know how unusual or normal it might be. I does seem strange though, the other bank was pretty good sized also. There would be no need for this. I suspect I will be suing JPM before this is over. There are things to learn still at this point, so lawsuits are a long ways off for now.

I find myself now waiting for the funding of an account at Trade Station, and as luck would have it, there seems to be a problem. As a result I am most likely closing that account immediately and getting the money out of there. I have existing accounts there, and I was simply moving money within, yet there was some type of glitch. I am going to have a zero tolerance policy for this going forward and readers should probably have the same thing. I asked them for the name of a banker I could talk to at their bank, who could verify they spoke directly to the NFA recently and confirmed the segregated accounts balance. If they don't give me that I will close out. The minute you see anything at all that raises a red flag, bolt immediately. We know segregated funds are not safe now anywhere. I did find that Schwab has $10 Billion in fraud insurance, so if you are an equity person, that might well be the place where the segregated funds might be the closest to being safe. I suspect their commission rates are probably high, but you would be protected it appears against fraud and malfeasance there.

Another thought I have is contacting Lloyds of London to see if they would write a policy insuring a segregated balance against fraud. They would not insure principle obviously since we could lose it trading. I am talking about just the current balance in the event of a fraud type of event like this. It might be expensive, but might be worth it. The government is going to do nothing to help solve this problem, that is pretty clear.

In the trading world all I see for tomorrow is a short in Crude, but it did not meet all my rules, so it got filtered out. The Bond System has a buy at 151'21 on a stop. I don't know if I will be doing that because I don't know the status of my funding as per my comments above.

I can't wait to make it all back and more, then focus my attention on bringing down the CFTC to their knees. They are going to rue to day they let all of us get hosed like this and did nothing to help. I will make it my sole mission in life once I get back in the high life, to make their life miserable. Also, believe this, I will never give up in my attack on them. NEVER!!!

Don't screw with an ex-wrestler, we don't ever give up.

Good luck to everyone this week. If you are a victim, tune out all the noise for now. That is what I am doing. Once they make a transfer, that will be the starting point. Until then it is all a bunch of speculation by everyone, myself included. It is not productive, and also very stressful.

Friday, July 13, 2012


I mentioned the Aussie yesterday as a possible short trade, but that I was not doing it because my account was not opened yet at the new place. It is open today, but I am just going to wait until Monday to start again. Had I been short the Aussie yesterday, I would have been stopped out for a scratch this morning. After that good sized break down, that quickly reversed, with the market still in a daily uptrend, I would have had my stop at break even or a bit better than that. The stock market is really oversold, and this correlates pretty highly with stock indexes. I would not want to be short on any strength there in this situation.

This is where you have to think about what you are doing at times, and kick the systems aside. You can see on the weekly above, we are in a good sell zone. We had a decent sell pattern on the daily, with a lower short term high and a break of a trend line. However, the market by it's price action told us it was not going down. This is more important. The markets are very highly correlated. You have to be careful about shorts, when they occur after the stock indexes have already gone down a good bit. The Aussie was the last guy to the party, so he would get a very short leash. Chances are very good that currencies will rally along when the indexes do, and the DX will decline. There is no sense just holding onto a trade that is swimming up stream, just to pat yourself on the back and say you followed your system.

I hope this makes sense, it is just an example of how you have to mix together sound judgement with mechanical methodology. If a car is coming right at you in your lane, and you can either swerve across a solid line to save yourself, or follow the rules and be run over, cross the line.

I had a very nice conversation with a guy from the NFA this morning. I am not going to dwell on this anymore, but I wanted to give his name and number in case anyone wants to talk to a real human being, who will talk to you and not read the play book. He is non committal of course, but at least he will talk to you. There isn't any more new news on this today that I am aware of. My gut feeling at this point is that we are looking at some time here before anything comes back to us. Apparently, statements are coming out now showing positions were liquidated as late as yesterday with some accounts. I am skeptical that this is correct, the accounting could be messed up here. In any event, everyone should be out at this point. I suspect, but am not sure and have no facts at all on this, that most trades were liquidated pretty fast and the statements are wrong.

Here is the contact information for the guy from the NFA I spoke with:

Michael Mason
Manager, Compliance

He might be hard to reach, and there is not any new information as of 6 am PST, but if you want to have that conversation with someone, he is a good choice. This is a mess and it is going to take time for them to figure all of this out unfortunately. Hopefully the balance sheet is real with PFG but I suspect it is not. This guy went pretty far in what he did, so there is no reason to believe he did not doctor other things as well. I suspect we will be going after the accounting firm in time here legally. There will also be people in line in front of us when it comes to things other than segregated funds even though there should not be. Also, there could be some claw back stuff that takes place like settling that one problem with our money and not customer money. This could take years and will likely not represent much to us by the time it is all said and done.

I don't have much else for today, I did not see any new trades to do, and the BOND Systems did not trigger anything either.

Have a nice weekend