Monday, April 01, 2013


BONDS - $3000

The final tally is in and this is where we wound up last month. If I display it like this during most months where we make money I have to give equal billing when we don't. The highlights and low lights were as follows.

The Bond System had it's worst month since we went public with it but we did recover from a larger mid month dip. I went through in another post the re-insertion of a filter which has worked like a charm since I did it letting 3 trades through that all won including today's buy, and it screened 3 bad ones. That is pretty darn good in my book. This is how systems work and it is also how any trading approach works, there are losing trades. I have told people from the very get go not to get too carried away with themselves when we had that incredible winning streak last year. I know there is also going to be periods like this. We risk $1600 per trade so if you look at this, the net for the month was not even the equivalent of two full losing trades. That is little consolation if you happened to just start trading it right when the losing streak started. There were a couple of people who signed up at about that time. There were also a couple who started trading the Robbins auto trade right after the losing streak and have caught the three straight wins we have had as their first 3 trades. In the end all of this evens out over time.

You have to stay in these types of things for a while to get the full benefit. Most people are not patient enough to do this so we do have some people coming and going. I will say for the most part though the group has been stable. If you started with it from the beginning you have one heck of a net profit on your hands even after this month, so I suppose it is easier to deal with a losing month, with that much profit already in the bank. I take the trades to as I think most everyone knows.

We only had one trade in the Notes version of the system that made a profit of $63 so not worth even reporting. We will monitor that as we go along. If you are a system trader whether it be my system here or somebody else's, if you believe it will remain profitable you should start trading it when it has a losing streak, not when it is on a new equity high. It is human nature to wait for it to be "safe" and the statistics work against you if you do that. I started trading it more heavily at the trough and it has paid off for me.

The Swing Trades worked out ok in the end. It is never ok to have a losing month, but I do have them and when they are that small it is almost a scratch in my book. We had a very nice Crude trade at the end that helped us a great deal. The changes I described I have made to how these trades will be done which subs are already probably noticing in the orders and how they are being placed, will lead us to catching some larger trades. We are also going to be staying in trades longer. We are starting to move enough size where we can't get too cute with orders since we have been picked off a few times and in reality trying to catch little wiggles is no way to go about this anyway. I did have one bonehead trade trying to short the ES which killed us, what a dummy.

All in all last month was not good by any stretch of the imagination, but we did have a good last two week comeback from where we were. For those Newsletter readers, I sent out a PDF sharing link to get this month's edition because we could not shrink it enough to get it under the Aweber file size limit. I am ready to kick them to the curb and will do so at some point. It will be available through our web site going forward and we won't have to deal with that kind of stuff.


I have to admit to something that I normally would not but this forum is somewhat of an inner monologue for me so here goes. I keep getting a nagging feeling that comes back to me over and over and over. At times it stays away for a while but ultimately it comes back. That feeling is that all of this nonsense that is going on is going to end very badly. The Cyprus situation has paved the way the same way the tax increases at the beginning of the year did for more of the same. One of my favorite readers emailed me something today that was somewhat alarming in that it was legislation elsewhere in the world thousands of miles from Cyrus, where it is being written into law that banks can confiscate deposits in the event of an unexpected insolvency. This is not a third world country, in fact it is one that is considered to be among the most stable of any country financially. This country is even being praised for having done the right things and as a result is not in as precarious a position as places like the US. Then I read this stuff about the Bitcoin! If that is not a scam they should remove that word from the dictionary. A supposed asset that nobody knows how the value is determined and some small company is making a fortune selling it! Talk about a dog named POOF, that is what will happen to that money..... POOOOF!!! They should call it the POOFCOIN.

I just see this overall sign of people knowing the governments are BS'ing them and scrambling to try and find a way to protect themselves. What it all tells me is what I have been saying for the last few years. If you took every single thing in the world and left it unchanged tomorrow and just changed on thing, DOW = 5600 instead of DOW = 14500, you would have a scene around the world like the scene in Caddyshack where the caddies take over the pool. This is exactly why the FED is so focused on keeping the stock market rallying, they know what they are doing in terms of manipulating the collective psyche of the public. I just have a nagging feeling at some point when this does roll over, it is going to be really ugly. I do not believe that roll over is necessarily near, but when it does happen it is going to be really interesting. If the Gold market does follow stocks down instead of rallying, it is going to be even worse because a lot of people have been sold that idea. Maybe it will be a safe haven I don't know, there is no consistent historical bias either way on that contrary to what they say so it is a 50/50 proposition.

I have been looking to buy Gold but have not found a way in yet and Silver is on the verge of collapsing again, so it makes me wonder if Gold won't follow it off a cliff. That mid 1500's price is still a line in the sand for Gold. You Gold bugs better hope that does not get taken out, it will be another POOF if it does. I also find the Copper weakness a bit surprising when comparing it to the ES.


Since we are light a few dollars after last month lets look at the Dollar to see what is brewing there.

I think good ole Uncle Joe might say "this is a big f___ing deal." The commercials have taken on their largest short position in years right now. We are kind of in no man's land in terms of a trend since we have essentially gone sideways for 5 years.This is what irks me about these morons who talk about how the dollar is getting killed. Is is really? The dollar index is at the same price as it was 5 years ago. This is when they break out all their cute little new age formulas that they have back figured to support their argument. "Well adjusted for the price of inflation, blah blah blah." Have any of you gone to McDonald's and told them you will give them the inflated adjusted dollars for your food. As my dad says that stuff is just horseshit. BTW he is thrilled because he lives in Michigan and they made the final four in Hoops in spite of the referees in his mind trying to make sure they lost every game. He is a pill, he would have been the best color man for Monday Night Football ever had they discovered him.

I will never forget a guy I met several years ago that was always factoring in inflation adjusted dollars to everything he did. He was European and very bright and wanted to be a trader. I had lunch with him a couple of times and was amazed at how he was so infatuated with inflation adjusting everything. All the inflation numbers are doctored, how could you possibly ever do that accurately? Before we know it the CPI will be reported as not only ex autos, ex food, it will be ex inflation. "The CPI today ex inflation was ..." He could not make a trade in the currencies because he was tied up in his underwear with all these inflation calculations. Good grief! He could not understand how I could trade my Bond System when it had no calculations for inflation. That was 2007 when I came in third in the Robbins contest trading the Bond System alone and nothing else.

What we don't know at this point with the DX is whether or not this is just the standard hedge the rally deal with the commercials. Often they go from a heavy long to a short like this when trends change and it is not an indication to get short. You can see an example of that in Feb of 2010 on this chart. Had you shorted that right when they got heavily short you would have gone on quite a ride. Had we been rallying steadily and reached an obvious resistance point and this shift had occurred it would make me more bearish than this does. I am unsure on this one right here. The seasonal does tell us down and my shorter term momentum indicators have rolled over, so I am leaning short here but have not done anything just yet.

Good Trading


John M said...

Hi, Chris. I was reading in the monthly newsletter about how bonds usually drop and then are followed by stocks sometime later.

How long-term do you have to look at the charts to see anything worthwhile vis a vis that? I was just looking at charts and ended up putting ZB and ES next to each other for the past 10 months and ZB has dropped quite a bit while ES has soared. Is that way too short a time period to mean anything?

Sorry to bug you, I get confused pretty easily sometimes! Thanks.

Chris Johnston said...

John it is not too short of a time that is a potential problem here

John M said...

OK, thanks, Chris.