SPECIAL REPORT - BONDS
Here is the equity chart of the Bond System going back several years. We have just had a good sized draw down this week with consecutive losing trades. The way we monitor this is what is displayed above, a moving average of the equity. Once we have a pull back against it that exceeds a certain amount we make considerations about what to do. As you can see we are nowhere near that level yet and you can also see that the largest draw down over the last 10 years came in 2007 and it was about $800 more than we have just had. What does this mean?
It is business as usual. Trust me I trade these signals myself in several accounts so chances are this bad streak this week hurt me more than you. However, I know from experience and I have been stating this in here for as long as this has been available that there would be bad periods. We ended last month as you can see on a new equity high and I stated this in the prior month summary. You can see the last time the biggest draw down happened we were also at a new equity high. This will often be the case, the biggest set backs will happen from the high points. That is the way I prefer it as opposed to having it occur after we have already had a pull back.
From a probability stand point this is one of the best times of the last several years to start trading this so I won't miss the next trade no matter what happens. It is likely we will have a good run from this point, but of course not guaranteed. We have drawn down $4219 which is less than three full stop out losses, so as frustrating as this has been, it is not a disaster. It is points like this where the men get separated from the boys ( no offense gals just a cliche ). Any trader can just sail merrily along when we are making new equity highs every month. It is those who can stick with what they are doing during bad periods, that will succeed over the long haul. I have been through many draw downs in my career and they are not easy when they happen and neither is this one. However, they are part of the business. You should not love me for the last two months or hate me for this one. This streak takes us to only down about $500 for the year with all the trades, so keep that in mind.
The next few trades are now pretty important so let's see what happens. As to the NFP report, let's hope things are really gangbusters like they are reporting. If socialism is going to make us all prosper then I am all in with it. I have my doubts that the solution to everything is just raising taxes time and time again. However, if the jobs report is real which is unclear, things are getting dramatically better. For those who get my Newsletter, the single most important aspect of it has been me telling everyone to stay long the Stock Market. That recommendation alone is worth many times what it costs for an annual subscription. In the face of all the gloom and doom it has been clear to me that you should stay long the stock market and now I am on record for several consecutive months with that call.
If the FED can pull off what they have been doing and then back out slowly and have it stick, it will be a historic feat that has never been done in any country in history. I hope it works. I don't get caught up in all the water cooler talk about debt monetization etc. It does seem problematic to me but I don't trade based on that. I guess this week I might have been better off guessing!
We have not had any new Swing trade signals this week due to the markets mostly running in one direction. I have been developing a twist to how to catch moves and will be incorporating that soon into these signals. I have been trading it with real money first in my own accounts to make sure it stays consistent and it has. I will be incorporating it starting next month as I give it the balance of this month to continue to prove itself. It is really a minor variation of what I have done for a long time, but I figured out a way to make it a little more mechanical and also to stay in trades a bit longer. It is exciting. It it the best method I have ever developed it appears. I don't jump from one idea to the next, I focus on working with my core tools and how to best use them. This represents a way of syncronizing them that I guess I should have thought of a long time ago, but for some reason did not until a few months ago. That always seems to be the way it is with me. The best ideas come out of the blue and then I think "why didn't I think of this before?" Sound familiar?
Have a nice weekend