DID B OF A GET THE CALL TO GET IN BEFORE THE BIG BUY PROGRAM HIT?

Here is how you trade Futures properly, just follow our fearless leaders lead. I would love to examine B of A's prop trades today and their timing. I bet they had another day with no losses. It is amazing isn't it, how they have such an uncanny knack for never losing? As I watch the asset inflation attempt, mostly focused on the stock market, it is amazing to me how much control they have. However, as I have said before, it is almost like we are in Vegas and the Black Jack dealer has shown us his hole card. The Fed has almost stated in not so many words, that they are inflating the stock market directly to help the president get re-elected. Ironically, it appears to be working, but the greater irony is going to be that in his second term he is going to preside at some point over a massive crash. It is the inevitable result of all of this manipulation. I know we have varying political views in the readers, but it is just amazing to me that anyone with this record, would get a chance for another term, regardless of what party he hails from. I think literally any of us could do a better job. When he talks it is unlike any President in history, it is just shocking. For me it is more the way he goes about the job, not the policies. It is just bizarre.

Mean while back in the world of bubbles, Greenspan at least tried to disguise what he was doing by inflating bubbles. Comrade Ben is not bothering to do that. If you can't beat em join em, and we have a massive lift off going, so do not be in a hurry to fade this move. I told everyone recently when the trend changed back to up by my tools, and we have just flown since then. I did not expect a rise this sharp, but I did expect a rise. If we go back to the mystery chart, that of the Euro COT activity, we can see that once again it has been dead on balls accurate again.

You can see that this shows a significant top on 11/30. This will be very interesting because what his happening now, and what would happen if that top were correct, are completely opposite of the typical seasonal pattern. At this point as wacky as this idea is it cannot be discounted. This is at the moment, the best road map in history for stock prices. We are also really seeing the correlation plays, as all the hedge funds hop aboard for the inflation push the Fed is conducting. This whole idea of HFT (High Frequency Trading) is very apparent on days like today. You can watch Gold and see it rise very sharply so quickly. I think McClellan is the one who first wrote about this, so perhaps do some reading on your own about him. It appears we need to look for shorting opportunities at the beginning of December.

All the signals I have for tomorrow are sells, whether or not any of them will be triggered is another matter. The grains are lagging here to some degree now, which is interesting. Relative weakness should not be ignored. Some of my sell signals are in the grains, so I am looking at those in particular.

The story of the day has to be another brilliant decision by a judge. I am going to tell you what I hope happens as a result. Judge Dingleberry otherwise known as Scoles, thinks Wassendorf is not a flight risk, and has decided to release him pending sentencing? I for one hope he either flees or offs himself, to embarass this moron. Not a flight risk? If there was a picture of one in a dictionary, it would be his mugshot. He has lied pathologically for 20 years, does anyone really think he has told anyone the truth about anything? There is a rumor that co-conspirators have been identified, but it is not confirmed. From what I can gather as part of the plea he has stuck by his story that he acted alone, which is just frankly physically impossible. Albert Einstein could not have done all of this by himself, and on top of that, the people in the know from PFG state he was computer illiterate. This tells us others had to be involved, which anyone with an IQ about 75 knows to be the case.

I hope he gets away just to prove this judge, who obviously has a soft spot for this scumbag, is no better than Wassendorf himself. I would love to be in the driveway leaning against a car when he drove up to this house he will be staying in, to give him a little welcome home present. There are some articles coming out that I have participated in, and when they are published I will provide the links to them in here. I am not privy to the content, only that my input has been included. I hope there are some discoveries in them, but I doubt there will be. I have given some quotes that I doubt got past the editor, if you know what I mean. The reporters thought they were funny.

The website is getting close now. Please realize when it launches that I am going to be building on it as we move along, so if there is something you were hoping for that is not there, let me know and I will see if I can work it in. I have to get it up and running and have it be as professional as I can make it, yet also have the conversational style that really represents who I am. This is not an easy middle ground to find.  I know there are some that are waiting for it to start trading the Bond System, so I have been trying to get it done. We have a little bit of a hang up in that apparently someone at our bank has turned out to be a pinhead, so there has been a delay in getting the account open to setup the Pay Pal arrangement with. He started off strong but faded at the finish. It is hard to find good help nowadays, you know the saying.

We had some nice moves this week, so I hope all of you caught some of them. I expect Friday to be quiet after today's action. I think the FED made it's point with today's market moves.

Cheers

TRADING FUTURES FOR A PROFIT

It is always the magic question, how do we trade futures profitably? Here is the before and after, that could be in my commercial in a video. The first chart is the one I displayed in yesterday's post, and the second one is what happened today. The basic entry is above the prior day's high, so it looks really easy here doesn't it? You just bought there went to work and came home to a nice fat profit. Not so fast. Take a look at the next chart, which shows the intraday action.

Here is my fatal flaw in the world of BS marketing and false hype, I tell you what I really did. I could have just left the top two charts there and crowed about how smart I was etc.. Well I think everyone knows at this point, that is not my style. I was filled on the buy with slippage, then stopped out on the drop. Then I was out of the trade when it ultimately ran up as I thought it would all along. Unfortunately in the world we live in now with the electronic markets, these spikes happen occasionally, and they mess up trades. In following my rules there is absolutely no way I could have avoided this. It does not bother me a great deal because my analysis was dead on. There are little things in trading that we just cannot control, and these death spikes are one of them. They do not happen very often, but they do happen.

There are certainly other ways I could have traded this and managed the stop, but I do not believe in having unlimited risk on a trade. For all we knew this could have fallen like a rock, and the loss could have doubled. For example, what if you had shorted below the low, and not carried an exit stop on the buy side? We use stops to protect from disaster, not to be so perfect with them that we have them in the exact perfect spot every day.

I am still happy with my setup, it was good, there was just a fluke here that "fluked" me. The one thing it does further demonstrate, is the value of my COT Synthetic tweak that I made. I also had called for a Crude rally, which has happened, but it has been very small. I took a small profit out of that trade, and it has gone a little higher since.

So, what about the title of today's post. The point I am making here is that this is a complex business, and we just have to focus on doing the correct thing, and live with what it brings. What it brings will not always be perfect as you can see above. Also, what I hope this demonstrates, is that if you have the right tools, this does not have to be overly complicated. I had one line on the chart and a moving average for window dressing on the price. There are details to using this indicator which I will cover in my newsletter, but you can see in general this is a pretty good tool to start with. We can't reinvent our whole structure of the rules we trade by just to accommodate a fluke occurrence like this.

The PFG update for today is a lot of noise. Basically, the trustee has more or less gotten the green light to distribute the money with a few qualifiers. He is going to shop the bulk to some FCM's to see if there are any takers. I do not expect that to yield much, but you never know. I think we will just have to wait and see. I for one, might leave my money where it lands because I want to spread it and I have accounts at two places now. If it lands in a decent third spot, I would likely stay there. There seems to be some type of battle going in over the loan on the building PFG built with some of our money. In the end I don't think it is going to fetch much it seems there is a guarantee of $6 Million by a company that Jr. is the 90% owner of. The loan is with of course US Bank. The trustee needs that released to sell it, and there seems to be a small pissing contest going on over that. The trustee thinks he can get $10 Million for it apparently.

There were some confusing comments about the forex accounts today that seemed to contradict each other. It would be nice if they would just issue state of the union types of bulletins, to tell us all where we stand, but they are not doing that. Go figure, I am getting tired of following it in all honesty, even though I have a ton of money at stake. The main reason I do this every day is because I think there are readers tuning in here to get my summary. For now it appears the first wave will go off as planned on 9/28, and they are trying to do a bulk transfer to make it less costly, and also more timely. At this point I will take my 30%, plan on taking the fraud tax loss on the 70% and call it a day. I think next year we will get another 20% or so, then possibly some trickles in over the next several years that the attorney's don't take in fees. If they don't have anything on JPM or US Bank, we are not getting much north of 50% here. You would think that US Bank who gave them a loan on that building would have thought it was odd the building cost more to build than the segregated account balance they had with them wouldn't you? To me that is culpability right there. How could a brokerage firm possibly generate enough revenue to run an operation requiring a building of that size, off only $7 Million dollars in customer funds?

You will notice I have rearranged a couple of things here. I know there are many beginners who read here, and I get emails on what to read. I am hoping to dial in specific books I think are good at Amazon, and I have not quite figured out how to get the exact ones I want featured. Bear with me on that. Some of the books that area is displaying I have not read, so I want to get the ones there I know are good. Some of the best ones are not expensive, yet they have very good teachings in them. I just thought it would be nice to be able to link directly to them from here, but I don't have it quite right yet. I will be trying to get the redesign here as focused to the best things I can, it just might take a bit of time. Maybe I should just write my own?

Good Trading

HMMM....................

Two interesting CYA developments are taking place right now, so I thought that basic cover your ass picture was appropriate. The NFA unexpectantly, returned the $700k fine they gave PFG that was paid with our money recently. As much as on the surface it appears to be a nice move, I would be willing to bet that being faced with lawsuits from clients, as well as likely pressure from the trustee and potentially the CFTC, they were probably pressured into doing this. They did issue a nice statement, so I would assume now they can feel good about taking their annual bonuses at the end of the year for a job well done. At the same time the CFTC is posturing publicly about the proper auditing of account records before any distribution, while at the same time the trustee has been telling us that auditing is what has caused the delay to this point. Another public relations stunt most likely by the CFTC. All in all, it is hard to accept anything at face value here, as this case continues to unfold.

There is also a story about how cooperative Wassendorf is being, and that a plea deal has been struck. While that is going on, there does appear to be some claw back talk going on regarding charitable donations and even 401k contributions. Net net this whole thing is such a mess. If you are a fellow victim, do not get too fired up over any one story, give it a day or two, and something new will come out that might contradict it. They seem set on keeping things quiet other than requisite court documents and appearances, so we really can't do much unfortunately. I don't think in the end our bottom line is changing much day to day here, but we just don't know. I think in terms of the money trail, if money can be proven to be fraudulently taken, no matter where it went, it can be forced to come back. As a result, the statement by Northern Iowa University that was basically too bad the money has not been spent, is not going to be quite good enough. They are going to have to unspend it whether they like it or not.

With that aside, onward to trading.

Here is a market that looks somewhat similar to Crude Oil from yesterday. You can see my new toy is flashing a buy signal here. Again this tool does not say buy at the market, it just tells me that the commercials are buying this market here, and to look for a long entry. You can see the last time we ventured up into this area, we got a rally after the pullback. With the stock market screaming higher here, unless that abates, our bias in most markets needs to be to the long side. I did get long Crude today in line with my setup I showed, but my plan was to trade it short term, so I have taken small profits already and am flat there. I really would have preferred to be long RB or HO which are stronger, but I did not have buys there with my short term tools. So I sit flat there at this point. Crude does potentially have a short term sell developing, so I am watching that.

Gold also continues to look strong, but there is a lot of volatility, so you have to pick your spots wisely.

We have had some incredible moves in both Natural Gas and Coffee the last couple of days. In my world I don't care about missing moves like that. You are going to lose many times, for every win you get trying to catch falling daggers like those. I do at times counter trend trade and catch some of these, and Natural Gas had one of the patterns I often trade. I guess I can thank PFG for taking away my spec money. That was a trade I probably would have done had my capital base been what it historically has been. However, I have had to change due to the theft, so it is what it is. You have to focus on what you are trading not what you are not. No matter how well you trade, you are going to miss big moves. You cannot cry over the ones you miss, I don't give them much thought.

A full day went by without any response from my web hoster, so I guess another delay in the launch is likely, arghhh! We have had a few days now with no trades in the Bond System, and that is going to happen at times. On thing that people newer to trading have to accept, is that if you want to trade with high accuracy, you will not be trading every day. There is not always a high percentage trade in the same market every day. If you feel the need to trade every day, just accept the fact, that what goes along with that is a lower percentage of winning trades.

I have talked with some of you on the phone over the last week, and that has been very enjoyable. I want to give a special thanks to an overseas reader who paid me a great compliment. I will not mention you by name, but if you are reading, you know who you are, thank you! It makes me realize that there is some good coming out of my efforts here.

Good Trading

HOLD THE PHONE!

This came out this afternoon in another odd wrinkle to the bizarre case. Even with today's discussion of dollar amounts, there still appears to be an incredible lack of clarity as to what the facts actually are. One place where there is clarity, $650 per hour every hour of every day to the Trustee. He will net millions while in the process most of us will maybe get half of our money back. It is amazing to me that if the idiots at the CFTC who could not find a fire hydrant to piss on if they were dogs at a fire station, could find $45 Million of bogus entries, why can't a firm charging $650 an hour and also employing Price Waterhouse at surely another sickening rate, find these same entries.

Many of us, myself as one of the prime instigators, have pushed the Trustee very hard to get us some of our money back. His argument has been they need to check all the books. They have had 2 months and been paid millions at this point, why the hell can't they tell us what they have and have not found. Why does this have to be such a gigantic secret? We already know the news is bad, just tell us the frickin truth! If there was truly a $45 Million discrepancy in bogus accounting out of $400 Million, that is a significant percentage. There supposedly was one or more transactions, where money was wired from one PFG account to another one. I suspect that this is how this guy stole the money, and it is probably what the CFTC found. If they happen to pay out 30% of a fake balance to one of the co-conspirators, that would be unforgiveable. I see King DB ( I think most of you get what that stands for ), is trying to get released. It would be just like a judge to grant that, so he either offs himself, or does a duckout out of the US. The duckout is a move I would like to make. It would be nice if he would accept my offer to meet me in the Octagon for a pay per view event.

The saga goes on, but it certainly appears there is likely to be a hold up in the first distribution now. As to whether or not the bogus 45 Large here means they in reality have a larger or smaller percentage of our money, who knows. I think in any event, this is not being handled well by Bodenstein. With his experience he ought to be able to do better than this. On to the markets.

Here is one market that seems to be setup for a buy right here, Crude Oil.

You can see my new tool I debuted this past weekend, and why I like it so much. This is my new improvement on the COT Synthetic indicator. It does not always pick all the swings, but it sure has here up to now. This last signal is yet to be determined, but it does indicate a rally should happen. I don't just trade on one thing alone, and would not do that with this either. However, it does seem to indicate we should have another leg up.

One place today where I was looking the wrong way, but did not get hurt, was Soybeans. This is why I generally buy above highs and sell above lows. It forces the market to drag me into the trade, and if it does not prove itself first, I don't get into the trade. In this case having the stop above the market kept me out of trouble. It never rallied enough to get to my buy stop. As a result, even though I was looking the wrong way, I did not lose any money. I don't feel bad in situations like this. It is just a trade nothing more. The fact that I was looking the wrong way, does not faze me at all. The reason I have entry rules is for just this type of situation. I don't just blindly buy at the market because I think a setup is there. I need a bit more than that.

We have had some large ranges here so the stops are a bit wide for me in a few places, so I am waiting  on some setups to give me better entries.

The website is going slow, I am having a hard time with the FTP stuff from the hoster. It is not working right at the moment which is delaying me launching it. I hope to have it done this week but who knows.

THIS RAISED AN EYEBROW

I am not an Interactive Brokers client, yet I got this in the mail over the weekend. My initial unfiltered reaction to this was WHAT THE .........? I like to listen to my gut reaction, then sit back and think about things rationally and reconcile the two viewpoints. Essentially what they are encouraging here is insane leverage for people to take on. Of course that type of thinking is what got us all into this economic mess we are in. It really falls upon an individual if they are dumb enough to take on the levels of leverage that can ruin them. Far be it for me to think a brokerage firm would take the morally higher ground EVER! What bothers me about this is where the actual collateral is coming from for the loans? From a sheer timing perspective, there has to be a float here somewhere and I am suspicious where that might be coming from. In this day and age where I think we all suspect customer funds are being used inappropriately at firms that have not as of yet been caught doing so, this raises an eyebrow to me. At the very least this is an example of a business going into things outside of their main expertise, and we have seen enough instances of ruin in those cases in all industries for this to be a red flag to me.

I have checked into this firm in the financial ratings, and they are rated well. There is no obvious cause for alarm there. As much as I hate them, I have contemplated opening an account there once I start spreading things out as more money comes in. This is going to make me look elsewhere first. I just don't like the feel of this even if there is nothing funny going on. I don't want my money in a place where it is encouraged to leverage to this degree. The one problem everyone needs to be aware of is that is one big account blows up, the FCM has to cover the loss. If they can't, the rest of the segregated holders collectively share it. This just does not feel right.

The debut of a breakthrough....

Here is a Soybean weekly chart, a market that many people seem to want to short except me. I have had several readers email me about this or ask me about it when we have been on the phone together. I have discussed at length my Synthetic version of the COT data in the blog, and it's short comings. There will never be the perfect indicator, but that will not stop me from trying to create it. Here I have the latest version of this, with some new tweaks, that is the best of anything I have done with this so far. It is not perfect yet, but there are a couple of basic rules for the signals that filter out most of the ones here that are wrong such as the one that is at hand right now. I will be covering this in my newsletter once it is launched.

You can see that in general, from a COT perspective, this is about as good a sell setup as there could be. We have the Small Specs heavily long, the Commercials with a big net short position. We also have the seasonal tendency which is not shown indicating down. The biggest red flag in all of that is the Small specs. It is impossible for rallies to exist and thrive based on them alone. They do not have the firepower to sustain moves. We do see the Large Specs with a big long position, that is what can drive price to a certain point. There are position limits there, so at some point they too run out of the ammo to keep things rolling. Timing that is never an easy proposition. I think long time COT experts, one in particular whose name I will not mention, have gotten stuck in being bearish in too many places for too long, with this type of pattern. Yes it should lead to a decline at some point, but that is where the art aspect of trading comes into things. If you don't trade and just are an analyst, being wrong for extended periods just does not have the same feedback to your views.

What we really need to wait for here is some type of a trend break. You might be able to be a hero and guess the top right, but the streets are littered with such attempts that have failed and written epitaphs in the process. For whatever it is worth, my main filter for the new indicator here is not confirming the sell yet.

I think with the election upon us, and the FED on full get Barry four more mode via inflating things, it is not likely we will see any major declines until afterward. It should not be this way, but it is. So it is with Gold also. That market will follow the Dow just like it has been doing. They are both being manipulated by the same people so of course they move together.

PFG Update

For those of you who are fellow victims, here is what I got from the Friday conference call hosted by the CCC.

1) It appears some co-conspirators have been identified through the investigation. They were tight lipped about who they are, perhaps due to legalities. If I had to guess based on the way it was discussed, I would say it is other officers of the company. This seems sort of obvious, we all knew he did not act alone. The problem with that is I doubt but do not know, that any of them have any significant assets to litigate for. It would have been nice if some big dog where on the board, but there are no such people involved in this that I know of. If we are fortunate enough for it to be someone at the NFA that would be a home run, but I doubt it. It would also be great if it were US Bank, but we really don't know the money trail, so there is no way of knowing who else might be able to be drawn into this.

2) There is a meeting on Monday where the assets are being discussed and perhaps the pecking order of who stands where in line is going to be established. If you live in Chicago you can go down to the court room on the day in the court docket which I think is 9/12, and be heard. Go to www.pfgchapter7.com to get the details.

3) PFG's real assets are $270 Million against liabilities of in excess of $500 Million. The  $270 I believe is there book value, so the fetching price will likely be much much less than that number. In theory, seg holders should be first in line to get that money, but in this day and age the judge could give it all to a dog for all we know. Nothing is ever guaranteed in a court room. What if any money comes to us through the sale of these assets, will likely take a year or more. Certainly the office building could take a very long time to sell, and that is valued I believe at $24 Million. I think it will sell for under $5 Million in the end.

4) The first distribution is 30% for those who traded on US Exchanges (4d) and 40% for those who traded on foreign exchanges (30.7). Forex people get nothing and are not likely to ever see a penny if the law is followed correctly. Again the award to a dog factor is always lurking.

5) They are holding back about $58 Million due to suspicions of some of the accounting being phony. This is about another 15%. That will likely be distributed at a future date, bringing the total to 45% assuming the same ratios are applied when it is returned. There is no date set for that.

6) There has been some friction between the CCC and the trustee, but it seems to be abating some

7) The class action suits are going to be consolidated into one reasonably soon. The NFA is named as a defendant but the burden of proof there is bad faith ( basically someone had to have deliberately done something wrong ) which is very tough to prove. There certainly is an argument for that based on the email to them in 2011, but again the dog factor... I doubt in the end that anyone in a regulatory position will even lose their job, much less be part of a larger award back to us.

8) The prospects for longer term recovery are not very good unless the banks are guilty of something. The trustee stated directly on one of his released statements, that the long term prospects for recovery are not very good. ( paraphrased )

9) The industry as a whole is not supporting the insurance option. This strikes me as particularly troubling. Why wouldn't they want this? I can think of many reasons, none of which are any good. It is my contention that many firms are using client money illegally on some level, so that would be one possible reason why reform would be resisted. The argument of the cost is bullshit, they are just going to charge extra fees to cover it, so it really tells me they think they will not be able to mess around the way they are now, and as a result make less money on the trades they do with client money.

Net net, here is where I think we are. We are looking at probably getting between 50 and 60% of our money back in the end after several years, with probably getting about 45% within the next few months. After that we will have to wait for years of litigation and keep in mind the trustee is charging $650 and hour, so he will get millions of our dollars just by running the clock here. He will wind up with most of what they get from asset sales most likely.

Website update

I have been working hard all weekend on this and I don't know when I will be done. I want this to be as professional as I can make it, have good explanations of things etc.. However at the same time I don't want it to be too verbose and an autobiography. I will give an update when it is ready to go and I sure hope it is this week. I have re-written it several times and I am still not happy with it.

This week I expect rallies to continue for the most part, dips are most likely buys in most places in spite of COT sell setups. It is the time of the year when declines usually happen, but the FED seems intent on stopping that from happening. We know that betting against them is a tough proposition.

Good Trading

A WASH

I did 3 trades today and the net was basically a scratch. I like to show things like this so everyone who just stumbles upon this realizes that it is not all show. It is real trading and not always brilliant. The first trade I did on Thursday was to go long Gold where indicated. I mentioned I was looking at upside action in the metals, and here is where I played. I probably should have played Silver because it was stronger, but I went here because I had a good pattern from my bank of things in my little head I like to use. For a while this trade was gang busters, and with the Dow blazing ahead, this one seemed destined for stardom. Alas, it lagged the DOW all day long and finished way off the high. When that drop happened, I exited the trade at the close taking only about $400 per contract out of it.  

I knew as I checked in when the DOW was up 225 and saw this had dropped off it's high a bit that I was likely going to exit before the end of the day and not hold it over night. Had this closed strong I was going to hold it for a run of a few days, but it did not. I should have done Silver the stronger market. The next chart is that of the Aussie Dollar. I also mentioned that I thought this was due for a rally, so I went long there in line with my comments. 

You can see I exited last night in the night session, again another quickie that just made about 70 points. You can see the Seasonal low was due right about now, and there were some divergences in some of the short term things I look at, so I thought this was worth a shot. The COT Synthetic was worthless here giving us nothing at all. The market still is in a longer term up trend in spite of the recent decline on the daily chart. As a result since this had pulled back into the bands I show here at times on weekly charts, this trade was a go. Again, when we got that monster stock move, I felt with all the correlations that go on, this should have gone further than it did. To me that was a divergence, so I exited this one in the night session for a few more points. This has gone on to rally big today, but I don't care. This was an against the trend short term trade, so I followed by rules and 70 points is a good profit for something like this.

Now to the blunder......

You can see here in Heating Oil we have followed the seasonal path very closely. When we pulled back for a couple of days, some of my methods were telling me to go long, along with the other energies. I felt Crude had been the weakest, and also had a crazy large range bar, making the stop there also way too big. RB had been the strongest, but one of my confirmation tools was giving me marginal indications of saying yes. As a result I settled on Heating Oil, and went long. I knew when everything took off and this barely filled, I had a problem with this trade. When the end of the day came around and this had reversed back down, I just decided to exit the trade along with the above two, and scratch the day. This trade basically lost what the other two made collectively, so net I made about $100. My logic was that I should have been in RB, and why just keep pressing a bad trade hoping it will work out. Today had I held this like my rules said to, it is back above the entry price and would have been ok. However, if you look at RB, it is on new yearly highs, validating you always by the strong and sell the weak, which I did not do in this case. For me when I realize I have made a mistake, I like to get flat and regroup. It is just a personal choice.

What you can learn from my mistakes here is that comparative strength and weakness in sectors does matter, buy the strong and sell the weak. Basically I did the wrong thing here based on a few technical things that are not discussed here because they are proprietary, but in the end it is all about making good judgements. I did not do that yesterday, it happens.

I made the news yesterday see the link below

http://in.reuters.com/article/2012/09/06/peregrine-bankruptcy-distribution-idINL2E8K63YT20120906

PFG - they have not updated us as to whether or not claim forms need to be filled out or not at this point. There is a CCC conference call today, I would suggest listening in on that if you are a PFG victim. They have had good information on this from the get go. It does appear now that there is a rift between Koutoulas and the Trustee, so that may result in less good quality information going forward, but we will see about that. Go to the CCC website there is call and timing information. It appears the small accounts get the money first ( 50 k), this month, then people like me next month. Forex gets nothing, that is non-segregated money, so that will likely be a 100% loss. It becomes company money and if the law is followed, which is never a guarantee, all money recovered will go to the segregated holders first, before other creditors. As a Forex holder, you are behind segregated holders in the pecking order for money. You will not get any money back until all the segregated holders get all of theirs first. This is why trading forex is the most risky thing anyone can do with their money. It is just a layup for theft at a brokerage firm. Since the money is not segregated ( it should be but is not ), it just becomes company money. I am sure some egghead accountant could come out and explain why this is the case and be so proud of himself in doing so. The bottom line is that is a law that needs to be changed. Just because you trade FOREX, that should not mean people can just take your money like this and have no recourse at all. I have no idea how anyone could possibly justify that. However, in a bankruptcy company money just goes into the pot for distribution to creditors, and you are not in front as a forex client. I know this is crappy, but it is just the truth unfortunately.

BOND SYSTEM

I wanted to touch on this briefly since I have had several phone conversations with people about this during the week.

The Bond System is a short term, completely mechanical system, with an average time in trade of a couple of days. We look to exit and take profits very quickly. It trades the ZB symbol. You basically just have to watch the open, then place the orders and check in at the next open and follow the rules. The original stop stays in place until the trade is either exited for a profit, stopped out for a loss, or reversed to a trade in the other direction. It is about as simple as trading gets.

I have personally used this system for close to 10 years. I have made slight changes to it to accomodate market changes such as the move to electronic markets. However, in it's basic form, it has remained unchanged for about 10 years. As a result it has a significant track record of real trading. The only reason I have made this available to people is the massive theft of my money at PFG. For those new readers if you read the above link to my quote in that article, you can see I had a significant amount of money stolen from me. That theft has forced me to change my whole life. One of those changes is going back into business with my trading web site.

I am very excited now about having that site going again, and in hindsight I probably never should have shut it down before. This is my top interest in life and always will be. There is no reason why I should not be in the business, and just being a selfish trader on my own with a blog was short sighted on my part.

One of the things that makes me feel really good is seeing people doing so well using this method. I have a conscience, which is a problem some times. Many of my competitors don't seem to have that problem. If a trade in a service loses money for subs, I lose too, both emotionally and financially. Although I can't guarantee that I am in every trade, I am in most of them. There are always margin considerations or other things that could happen which might result in me not being in every one of the trades. I could over sleep, I could break my leg, I could make a bad judgement like I did yesterday in what I explained above. However, for the most part trades I recommend in any service I would offer, are going to be trades that I am also doing.

The only thing I can guarantee at all is that the future will not duplicate the past. It may be better or worse, but it will not be the same. The BOND SYSTEM has had an incredible run this year, and especially the last 90 days or so. There are going to be periods where it loses money and or has losing trades. No matter how many times I say this, I know there will be some who will sign up and leave the second one losing trade happens. I also know there are people that won't follow the rules, and will under perform my system and blame it on me. These are things I cannot control. What I can control is offering the best possible thing I have, which this system is.

I am going to limit the number of people using this, and then beyond that there will be a waiting list. I did want a minimum number of people using it to launch it, which I did get before the launch last month. What I don't want to have happen, is have so many people using it that it effects the results. In the Bond market that could be thousands since the volume is so high, but this system is very important to both me and my partner Michael, since we use it our selves. We cannot afford to have it's efficacy effected. If for some reason a large fund were to get the trades and start firing off massive sized orders, it could effect things. As a result, it is only available for individuals.

It carries a $1700 stop per trade, no exceptions. If you try to be cute and use a smaller stop, you will under perform the results. Trust me I am the creator and have tried this and failed. If the creator can't outsmart this thing neither can you. I have also tried using technical tools to exit the trades "better" when a huge move happens. This has also failed. With a trading system you just have to follow the rules, it is simple yet hard to do because emotions or opinions get involved. The best way to trade it is  place the orders and walk away. If you have an account that is too small, or want to try and out smart this, do not sign up for this, it is not for you. The price is $60 a month, and it is pay as you go. Once the site is up you will be able to pay this via an online method. It is not going to be Pay Pal, they just charge too much.  I don't want people who are unhappy involved with this just to make that small amount of money. Trust me on this, administering to tons of people coming and going on something like this is really a pain in the ...

Feel free to call me at 760-734-6927 if you want to talk about this. For those who I have talked to you can tell I am very open, honest, and love to talk about trading. I just wanted to try and cover some points here that have come up in my chats with people about this. What I don't want is emails or calls about an individual trade, asking for my opinion on it. In a system there are no opinions, you just take the trades as they are spit out. My opinion will always be the same, neutral. I have no idea which ones are going to work out the best, I wish I did. I look at things like this constantly, and if I find something, I will incorporate it into the system. However, why bother trying to improve something that is right more than 80% of the time? How much better can it be?

Sorry to go on and one about this but hopefully this is helpful. The site will have a page completely dedicated to this once it is launched, which should be next week.

Have a great weekend 

TAKE THE UNDER

With what is at stake over this number if you are betting on the NFP number by the end of next month, take the under 8%. Even if it is really way higher, they will lie about the number. The reason, history shows nobody has been re-elected when it has been over 8%. Now that I have had to dig into the real world since the PFG theft, I can tell you the regular economy here in Southern California is absolutely awful. It will be disgraceful what they tell us this Friday and also next month, in terms of how doctored those numbers will be.

As to how this will effect the market, it is tough to say. At times a bad report can rally the market because it stokes the fire for the FED to be more active. Of course that is assuming they don't already have carpal tunnel syndrome from all the day trading they are already doing! I really don't expect a huge down move because of how active they are in controlling things now. If we get a thrust down it is a buy, if you can get there before the PPT does.

Most of the trading I have been doing has been very short term, and I have been doing very well. The markets have been kind of choppy so I have been taking profits quickly as I showed with the RB and Gold trades from Friday. It looks to me like the metals are not done going up, so they are buys. I actually think the Aussie is a buy down here somewhere as well. The energies are mixed to me I have sells in some and buys in others, so it almost becomes a straddle doing the trades.

Here is Sugar and a couple of short term trades I made there recently. The arrows on the screen show the buy, I don't know why they don't show the sell. I am having some issues with the Genesis software and it's interaction with Straits Financial, where it shows things that aren't real and doesn't show things that are. Of course as per usual whenever there is some type of problem it is my fault somehow! If I ever call a customer service department for any product ever in my life, and they admit it is their fault instead of blaming me, I will drop like a sack of potatoes! In any event, this is an example of what I was talking about in taking quick profits at the moment. 

Some of this I have to admit is just having so much smaller accounts now due to PFG, that I am trying to build them hitting singles and not home runs like I used to do. Once I build them up I will begin holding longer. You can see in the above example, there is no reason to over stay a long when you are in a down trend like this one. Regardless of my circumstances, I would not have tried to hold that one. I would have held the last short longer and carried the stop above today's high in the old days. As to why I did that long trade in the first place, well that is a company secret! It was for the record the only long I have tried there, my pattern worked nicely I think, so I will keep it.

What you can see that supported the short, is the sharp drop in my COT Synthetic index on that bounce where I got long. That told me inside selling was happening there, so I looked for a reason to get short due to that. This indicator does not always work that cleanly, it is really more of an art than a science to using it as I have stated before. I have some ideas about how to improve it but I just have not gotten to them yet. I will be reviewing this indicator in my newsletter series, so we will explore that process of working on it together.

PFG UPDATE

The Corleone payoff shockingly was upheld, so 20 large of our money was given to that attorney that did such a great job, that one of the biggest frauds in history happened right under her nose and she did not know about it. I could only hope to be that valuable, that I failed that completely and was greased 20k for it. I really think the way this is playing out thus far the Trustee has made a decision to max out the fees of his firm and not the recovery for clients. 

DISTRIBUTION

The court did approve an "initial" distribution of 30% today, and of course those with the most money like me, are second tier meaning we have to wait a month longer than the small account holders. It just keeps getting better doesn't it? I guess at this point we know that the max loss will be 70%. I don't expect much more to be honest unless they can sue the banks and win. I think they held back a bunch already and as far as I can calculate it equates to a likely percentage of recovery the trustee gets. There is just so little disclosure it really is tough to know what is really going on. There are some things in this announcement that are bothersome to me, but I am going to keep quiet until I am sure I am understanding them correctly. We can only hope they are keeping us in the dark for good reasons and not bad. The Trustee claimed the attorney has already been helpful in recovering assets although they were not specifically detailed, so let's hope there is more that has been found that we don't know about.

Here is a link for those who want to read about this and get the best summary of the situation

http://commoditycustomercoalition.org/?p=2183

For those fellow victims, the best revenge we can get is to get back on top quickly and show these people they can't keep us down. It really does us no good at all to dwell on all of this negative stuff. I pay attention to it for obvious reasons, but I am not consumed by it. It does motivate me at a level I have not been motivated by in many years to be honest, and that is a very good thing. 

Our best course of action is to make money trading, SO LETS ROLL!

THE BEST CRIMINALS ARE THOSE WHO CONCEAL THE CRIMES BEST OR.....

Here is a picture above of a crime scene followed by a picture of a criminal.

The question is, which is a worse deed? Is it the constant meddling of the PPT in every down day in the stock index futures? Is it one of the most notorious criminals in the history of the financial services business, being protected by a corrupt president, blatantly stealing money from clients with impunity?

I am not quite sure. I suppose in the first case they would argue they are protecting the public interest by making sure the markets stay stable. On some level there is merit to that argument as much as I don't like these constant interventions. I just think markets should be allowed to trade freely, and that a company like Bank of America should not be able to go for months without a single losing trade in their prop trading. ( are they really that good or might they have someone whispering in their ear at convenient times? ) It is also beyond shocking that in the face of being caught absolutely red handed stealing customer money, in a direct violation of the law, that Corzine is being protected by his cronies.

Both of these instances are par for the course in the F You I won and will do as I please administration. There are countless examples of things like this. The real question is, what do we do about all of this? Since we know with a pretty good probability, that any significant down days are going to have an attempt to lift them at the close, why not just devise a trading system to ride along?

I have been trying to do this and it is somewhat challenging. Just buying down days at certain times has not yielded good results, basically a coin flip yields the same thing. What this leads me to is that these guys are being more crafty than I thought about how and when they launch these buy programs. I knew it would not be so easy as to just say buy every day if we are down for the day at X time.

Here are some of those results:

This is buying around noon every day at the 3 bar high on a 5 minute chart, and exiting at the close. Obviously this is no good.

I was really surprised to see this result, it is from 2010 forward and it is the E Mini S&P. The next result is buying on a limit starting at noon, at the lowest low of the last 3 bars. This result also is no good.

Here we get a lot more trades, but a lousy result all the same. There are many other ways of looking at this, and I will keep touching on this subject as I research it. Readers know I am not a big fan of trading really short term intra-day charts, so this is not a top priority for me. However, I know there is something here and I am going to find it. Right or wrong, yesterday showed us once again, there is a powerful force out there that is saving these down days one after another. It is our job to figure it out and take advantage of it. We have certainly seen no evidence to suggest, that public officials even remotely consider what the electorate thinks about anything they do.

We are at the time of the year where we should see some type of dip in the stock market, but the daily chart is becoming a chop fest.

The above chart shows a market clearly not following the rules at all. The seasonal has been dead wrong here for a while now. Usually when this type of thing happens, I just ignore the seasonal until price comes back in sync with it. As a result, I do not expect a decline to occur just because the seasonal says it should. I do however, see a market here that is on the verge of rolling over. Often these types of looks just break back out on the high side, but if this were to break down and close below this little ledge here, we may have a bit more of a down move that will follow it. I don't have any signals in either direction today in this market, so I have no orders working in the ES currently.

For the time being anyone wanting to sign up for the Bond Service can send me money through Pay Pal, just sent it to me as an individual. There are a few people that have done this. I have a snag with Pay Pal getting the links into the web site. I will have this resolved soon, but it could take a couple of weeks. Regulations! If there is anyone reading who has extensive experience with Pay Pal please contact me at mktwzrd1@gmail.com.

Here are the results from last months trading with the service, we are off to a good start:

Good Trading

AT THE MARGIN

I want everyone to look at this very closely. This is a standard bell curve and it plots normal distributions of data within measureable ranges. Just basic statistics 101 here for a few minutes. What this graph does is plot distributions of numbers in a fashion that shows that most of the action occurs in a bell shape type of form. This tells us that when we trade, most of the action will be ho hum, in normal type ranges. We see this every day in the see saw action of most markets. Occasionally, we get a really extreme move that takes us out to the edges of this graph. Gold on Friday would be an example of that. There was a really interesting approach to trading this curve that was developed many years ago called Market Profile. What that theory did was print X's when prices traded at certain levels on a left axis, kind of turning this bell curve and rotating it 90 degrees.

The basic theory was then when price traded at an extreme just a time or two then came back into the middle, you were to fade the next move it made to the extreme. Whereas when you were trading in the middle of the Bell, price was very comfortable trading in that range, and you did not need to be in a  hurry to make a trade since the probabilities were it would stay there. This is why I called this post trading on the margin. In this theory you are trading for the most part, at the margin where price rarely went, and likely would not stay there.

I think too many people are trying to craft approaches to trading or to life, trying to pick those magic rare points at the margin. For example trying to pick highs and lows is trading at the margin. When the Gold and Silver markets made there highs earlier this year, I would wager that for every person who shorted those highs and made a killing, there were thousands who got smoked trying to pick them. I do constantly research ideas for doing this type of thing and without any exception, when I find one that seems to work pretty well, the draw downs in it are massive, and beyond the risk level I want to trade with. It is so easy to visually see in the graph above, that what we are doing when we attempt this, is trying to pick the occasions that happen so rarely. We are much better off working with larger data sets, and trying to find ways of maneuvering in the middle of things. The majority of money is made in the middle of moves, not at the beginning or the end of them.

It is a rare person who can buy for example a V bottom, time it just right, then hold that position for months or years. There are those who can do it, but it is really tough to do. Most often you enter a period where you are initially right, then get a big profit, then inevitably, the first test comes along of the low point, and you see your open profit getting eaten away. The mind set becomes you don't want to let this big win become a loss, a mind set I agree with in this case, so then you start messing around with stop loss orders in the wrong places. Often they get picked off just to see the market take off again without you. This has happened to me and also many other traders I know. My solution is either I take the money quicker when I chase trades like that, or I just don't do them in the first place.

I do talk about turning points a lot here, but rarely do I try and catch a high or low tick.

I had a really nice chat on the phone over the weekend with someone new to reading my blog here, who lives in Europe. He is very concerned about the safety of money in banks and brokerage accounts, a concern I share. I am about as sure about something as I can be when I say that more customer thefts of Segregated money are going to happen, and are probably happening now and have not yet been discovered. Here is why I am so sure of this.

If you look at the system as a whole, you see that in the equities firms, co-mingling of funds is legal and goes on every day. The firms are allowed to use your money. I think some people do not realize this. That is why the segregation requirement in futures was supposed to make them more safe. However, there is one big reason why this does not make it so. FCM's are responsible for making sure margin calls are met with individual accounts. We know there are so many people that do dumb things with money, and the commodities industry has more than it's share. They take insane leverage and risk, and blow up their accounts. In the instances where they can not meet a margin call, the FCM has to make up the difference, with their own money. As a result, there already is some FCM money in the Segregated accounts, and they adjust that amount over time. In other words they are already taking money out or putting money into the Seg account right now as a common practice.

The most shocking part about this to me is the clause that states that in a circumstance where someone blows up and the FCM cannot cover the loss, that loss is shared equally amongst all the other segregated account holders who had nothing to do with it. As a result you can see that even as things stand right now, and an FCM is behaving them selves with regard to segregated money, there still is risk for us. If they happen to let some rogue operator do a trade that should not be done, we could all get clobbered. When you see these huge moves in markets like the Grains, this is where something like this could happen. I think there is only one example in history of this happening, and I  think the damage per account was very small, but that risk is there. When you couple that with knowing that already funds are co-mingled on some level as I just described, you get a different picture than what many people think is a very safe place for money. There are some real issues that need to be addressed in this industry. I am fairly sure the regulators will do nothing about this other than BS us and run the clock for a couple of years until another PFG happens. One will happen.

What we can do is be more diligent. Generally speaking companies that are doing fine do not collapse overnight. Study the ratings services where your money is and make sure the company is not in any financial difficulty. I took my money out of Knight the second that story hit about them. My wire request hit their office within 15 minutes of reading the story on the web. I recently took my money out of Tradestation and moved it to TDAmeritrade. I did that based on a very low financial rating from Rapid Ratings on their parent company. For all I know they will be fine, but the rating on them was lower than PFG's was when they went down, and about where MF Globals was. TDAmeritrade has a pretty good rating in these same services as does Straits Financial, where I have my other account. If these ratings drop, I will move the money instantly. Had I been doing this with PFG I would have saved myself. I am having some learning curve issues with TOS platform, but I like the safety so I am trying to get comfortable with it. I think the Platform is good, but it is so different from what I am used to.

The other thing you can do is try and stay clear of places where large firms or hedgers have their accounts. It is those places where the risk of one large loss that trickles down via a Obama share the wealth skit comes into play. You can find this out by asking IB's if the FCM's they are using have large hedgers there, these guys know that answer. We are trading at the margin if we have our money at places that either have bad ratings or large hedgers trading there. 

If you have a bigger fear of widespread financial collapse, that is another matter. However, it is the ultimate at the margin thought. I do agree this fear is based on some reality, but I cannot live my life in fear of something like this. I have a fair amount of cash stashed in a place nobody knows about, and I have four 180 lb dogs and a bunch of guns and martial arts abilities, to defend against someone trying to take it away. That is enough for me to feel like I have some back stop. I live my life now without any fear of that. The one thing I always try and do when these extreme scenarios get put forth by very bright people with sound reasoning, is to try and visualize what would happen if the predictions they are making prove correct.

If we have massive bank failures and runaway hyperinflation, here is what the doomsayers are missing. This would result in some percentage lets say 20% of the world's population dying. Why? If the governments are all insolvent, the states and banks are as well, how would anyone be able to eat? People would starve to death, or kill each other trying to survive. This is just not a scenario that I can visualize in my mind as having any chance of happening. As a result, I just do not worry about it or pay attention to those who are predicting it. They have a good front end marketing story, but the whole scenario to me just falls apart. Also, who would want gold in that situation? People would want food and water.

In the midst of all this blind fear, there is a very simple solution to all of this. Let those who have bad businesses fail. If this is a bank, a government, a country, so be it. Watching Germany get into trouble now because they have to bail out all of the bankrupt on paper countries in the EU is just stupid. If I were them I would say no yesterday to any more money going out the door. If Spain and Greece are insolvent, let them go bankrupt. There are good and bad cycles in life, we are in a bad one now, there is a good one around the corner again even though it may not seem like it. It never does at the depth of down cycles.

In summary today, don't trade at the margin and don't trust brokerages at the margin. Times are tough now but they will not be this way forever. Take it upon yourself to look responsibly after your money and take the steps I recommended above to do so. Once you have done this, focus on trading and making money and tune out the noise. I am flat right now and don't see any trades at the moment for Tuesday.

WEB SITE UPDATE: I am working on the web site and I am close to the content aspect of it being done. However, having to register the new business and all that stuff takes a little time. If you wish to subscribe to the Bond Service and are waiting for Pay Pal, you can send money to me in Pay Pal now. I have someone who already has done that. I know there a few people who have been waiting for this option and it is available now. I will have it directly in the site once it goes up but that could be a couple of weeks the way it looks now. Pay Pal won't let me have a link to a business account without seeing business license stuff etc, and when I do it as an individual, they won't allow a link in a web site to me.