September 3, 2012

a couple of charts in those discussions . Election Year Equities Seasonal Tendencies Source Bespoke Investment Group

Aileron Market Balance

Issue 44
Visit Us: NoNonsenseTrading.com Email: aileronmarketbalance@gmail.com Twitter: @NoNonsenseTrade
As well as the chart last week that deaggregates and differentiates between all election years, when the incumbent party wins, and when the incumbent party loses. Election Year Equities Seasonal Tendencies Source Ned Davis Research and T. Rowe Price

Each

newsletter on Sunday that will contain my thoughts for the week ahead will have an audio file that accompanies it. The audio file that is associated with this PDF will contain my detailed thoughts moving forward into the next week. This PDF file is meant to serve as a rough, general outline to the audio file that many subscribers are finding more advantageous.

Investing Outlook:
Note: As a reminder. the share purchases of the Dividend Investing 'Sister' will be extremely small. It is my intent to demonstrate how to grow the size of these positions from 2 shares, to 300 shares using the three sisters portfolio management style. The Dividend Investing 'Sister' Account will also implement the Permanent Portfolio Method beginning in 2012 with $1,120.00 of the cash dedicated towards it..

Review and Overall View on the Markets ...

As of late, we've been talking quite about about the 'seasonal' tendency in the stock market in years that there is a presidential election and we have been using

And continuing that discussion, last week we spoke about Crude Oil and the continuing spread on the C.o.T. report. We had not seen such an increasing spread between traders and commercial hedgers since earlier in 2012, at the end of February or the beginning of March. Which seemed to indicate a possibility of seeing the 'risk' of Crude Oil to begin falling off; which is a belief in the 'risk barometer' of global fear (at least, at the moment) in the marketplace. And throughout the majority of the week, Crude Oil indeed did begin to fall off

September 3, 2012
Crude Oil December Contract One Hour Chart To 10:07 AM EST on 9/3/2012 We had outlined all of the above factors, to state that for last week, we were not overly bullish on equity (stock) prices. Did I get everything right? Lower on Crude Oil? Higher on Bonds? The equity index not making new highs? Not quite. I stated that I was looking for a possible technical bump in some of the risk currencies like AUD/JPY. The support from the moving averages was substantial ... Then on top of that, there was the bond market rally that began two weeks ago. Last week, that Bond market rally only continued Current 20+ Year Treasury TLT E.T.F One Hour Chart AUD/JPY Daily Chart LAST WEEK

As well as the Daily chart showing regression channels ... Current 20+ Year Treasury TLT E.T.F - Daily Chart

But risk currencies fell throughout the week and fell some more and then Sunday night ( for those of us in the United States, Currency markets remain open on Holidays such as Labor Day), risk currencies almost completely fell apart. AUD/JPY One Hour Chart Last Week to 9/3/2012

September 3, 2012
So there was no 'bounce'. Thankfully, we stated throughout last week in the audio updates that we were not interested in adding to the AUD/JPY risk position, as the market was simply falling. It made no sense to try to 'catch a falling knife' as the saying goes. Especially since Forex markets are notorious for their ability to keep trending. So what is my conclusion this week? We find ourselves within a very strange 'tug of war' at the moment. With 'possible' stimulus talk, Gold is rallying, equities rallied, and the bonds were rallying. There is no clear direction, with the exception of risk currencies, which is again meeting heavy support in the 80 region.

Permanent Portfolio S Variation ...

Our variation of Permanent Portfolio lept higher on friday, as the portfolio numbers show, to 3.66%. Not bad for cash that was simply 'sitting there', and has required very little in the way of maintenance.

Trading Outlook:
Note: By way of reminder, since the Model Portfolio has only $9,817.83 in the Commodity Futures and Stock Trading portion of the portfolio, there will only be ' brief day trades' at this stage of the game for Commodity Futures trading in order to escape the risk of over-leveraged gap opens in the commodity futures markets. Stock trades may last more than one day. This is an attempt to demonstrate how account size relates to trading style. As I mention in my methodology series1, as the commodity 'trading sister' approaches $30,000 I will graduate the account into 'swing-trading' and demonstrate how I would go about doing this. The Forex account has $69.40 and is considered a micro-forex account for the purposes of the model portfolio.

Value-Dividend Portfolio Rotation

As everyone knows, I've been selling off stocks in the longer term value-dividend portfolio, and looking for new, undervalued stocks that I believe have room to grow, and that pay me a dividend. At the moment, the value-dividend portfolio has within it Financial Insurance: Aflac (AFL) Services: Waste Management (WM) Health Care: Medtronic (MDT) I am continuing my research. In an effort to allow you to 'look over my shoulder', I have attached to this email an image of the spreadsheet that I keep track of data as I research these companies. In the audio file, I will explain how I examine all of those numbers. Johnson Controls (JCI): This is a company I am investigating further, and continuing to research. But the spreadsheet does not tell the entire story. It never can. But at the moment, Johnson Controls (JCI) has a bit of a cash flow problem. So I am continuing to research as to whether or not they can and are correcting this problem. Kennametal Inc. (KMT): I am also investigating this company futher for a possible investment purchase.

Overall Trading Thoughts

I will continue the process of my investment research, and if I find a company worth investigating further, I will continue to create the Value-Dividend Investing 'Quick-Note's to send to subscribers. At this time, there are no trades for the larger account outlined ...

Micro-Forex Trading

Methodology

Creation

and

Carry Trading: As I mentioned in the email update, will add to the Carry trade by adding 3 to AUD/JPY at 80.34(0) and 2 to NZD/JPY at 62.55(5). If we collapse below 80.03(5) on AUD/JPY I would cancel that order, and if we collapse below 62.35(5) on NZD/JPY, I would cancel that order.

1 Exact Link http://nononsensetrading.com/methodology.html

September 3, 2012

Summary of the A.M.B. Model Portfolio

Note: In the beginning of this hypothetical portfolio, the share purchases of the Dividend Investing 'Sister' will be extremely small. It is my intent to demonstrate how to grow the size of these positions from 2 shares, to 300 shares using the three sisters portfolio management style. It is also understood that readers of this newsletter have a firm understanding of my 'three sisters' portfolio management system (See the Special Reference issue of Aileron Market Balance2 for an explanation of this system).

( 29.26 % of P.P ) - 2 shares @ 139.58 of SPY ( $279.16 ) ( Currently $282.32 ) ( 25.16 % of P.P ) - 2 shares @ 118.17 of TLT ( $236.34) ( Currently $255.44 ) ( 22.76 % of P.P ) - 3 shares @ 84.45 of SHY ( $253.35) ( Currently $253.53 ) ( 22.59 % of P.P )

Remaining Cash: $2,273.36 ( 54.21 % )

Percentages of that Cash -$2,045.36 of this Remaining Cash I reserve for Hedging and New Purchases ( 89.97 % ) -$63.00 ( 2.771 % ) of this Remaining Cash I reserve to Dollar Cost WM further in the future DCA Price w/ no fundamental changes on WM $28.00 -$85.00 ( 3.739 % ) of this Remaining Cash I reserve to Dollar Cost AFL further in the future DCA Price w/ no fundamental changes on AFL $40 to $38 region -$80.00 ( 3.519 % ) of this Remaining Cash I reserve to Dollar Cost MDT further in the future DCA Price w/ no fundamental changes on MDT $37 to $35 region

S&P 500 Year to Date: + 11.85 % AMB Total Portfolio Return Year to Date: + 2.138 % Investing Account Balance: $4,193.58 4 Positions have been sold YTD for profit on each ... 0.71 % Capital redistributed to other accounts year to date Last Week - $1.98 Dividend from AFL Last Week - $3.52 Dividend from STX Last Week Bought 6 MDT at $40.94 Return / Yield up + 4.087 % year to date Return / Yield up + 4.839 % since inception 8.081305 shares of WM (DRIP off Current Yield is 4.11 % Yield on Cost is 4.38 % )
8 shares at $32.39 on 12/22/2011 w/ $5.01 Commissions 0.081305 shares DRIP at $34.93 on 3/23/2012 $2.86 in Cash on 6/22/2012 Sent $1.43 to Sav. Side-Pocket Next Dividend: September 21, 2012 Ex-Dividend Date: September 5, 2012

$ 286.80 ( 6.839 % of this account ) available from Slush Fund Dividend Investing Sister Year to Date

6 shares of AFL (DRIP off Current Yield is 2.86 % - Yield on Cost is 2.93 % )
6 shares at $45.05 on 8/6/2012 w/ $5.00 Commissions $1.98 in Cash on 9/1/2012 Keeping full amount in Account Next Dividend: Not Yet Announced

6 shares of MDT (DRIP off Current Yield is 2.56 % Yield on Cost is 2.54 % )
6 shares at $40.94 on 8/29/2012 w/ $5.00 Commissions Next Dividend: October 26, 2012 Ex-Dividend Date: October 3, 2012

Permanent Portfolio $1,120.00 of cash I reserved for Permanent Portfolio Purchases Return from $1082.72 = + 3.66 % from 4/23/12
- 2 shares @ 156.12 of GLD ( $312.24 ) ( Currently $328.44 ) 2 Exact Link http://www.scribd.com/doc/73238645/Aileron-MarketBalance-Special-Reference-Issue-Portfolio-Management

Total Trading Balance: $9,887.21 ( Return / Yield up + 1.538 % Year to Date ) Commodity Futures and Stock Balance: $9,817.83 Return / Yield up + 1.578 % Year to Date Next Re-Distribution Goal: $10,700.00 Original 3% risk tolerance gives us approximately $282.54 for my drawdown

September 3, 2012
tolerance ALREADY USED $ 286.80 available from Slush Fund There were no trades last week, as I was concentrating on the investing account and research ... Futures and Stock 'Sister' Account Year to Date Micro-Forex Balance: $69.40 Received $3.87 to the Micro-Forex Account from the profit of STX Capital up + 3.398 % Return / Yield - 3.745 % Year to Date $ 286.80 available from Slush Fund There were no Forex trades last week

CARRY TRADE POSTIONS AUD/JPY current mark at 81.937(1) 4 Units of AUD/JPY at 83.35(3) on 8/16/2012 3 Units of AUD/JPY at 81.95(0) on 8/23/2012 NZD/JPY current mark at 63.841(7) 4 NZD/JPY at 63.81(3) on 8/23/2012 INTEREST ADDED LAST WEEK: $0.0056

Micro Forex Account Year to Date As there were no trades in this account last week, the Money Management Statistics remains ...

As well as the Capital Graph for the Forex Account in Phase 3

September 3, 2012
Since there were no Micro-Forex trades, the money management stats remain the same Savings Side-Pocket Account Balance: $1,822.71 Received $1.30 to the Savings-Side-Pocket from Interest Payment on 8/31/2012 Capital is - 10.14 % Year to Date. Yield Return on Capital + 1.028 % Added $1.30 of Interest to the Slush fund / Drawdown Kill Switch fund bringing total to $286.80 ($218.34 owed to this Fund) $1,010.29 for a Base Savings
Percentages of that Cash: $814.29 of this cash reserved for Long Term Variable Capital PP - ( 80.60 % ) $120.00 of this cash reserved for CD Ladder creation ( 11.88 % ) - One $10.00 One Year CD purchased on 11/21/2011 at 0.60% - One $10.00 One Year CD Purchase on 12/21/2011 at 0.50% - One $10.00 One Year CD Purchase on 1/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 2/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 3/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 4/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 5/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 6/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 7/21/2012 at 0.50% - One $10.00 One Year CD Purchase on 8/21/2012 at 0.50% $20.00 of this cash reserved for the first side-pocket purchase ( 1.98 % ) $20.00 of this cash I reserve for the second sidepocket purchase ( 1.98 % ) $36.00 of this cash I reserve for the hedging account ( 3.563 % )

$505.14 for Emergency Savings Getting Paid Fund: $20.48

September 3, 2012
Total Portfolio Balance: $15,903.50 - Total AMB November Inception to Date Return: + 6.023 % Return / Yield up + 2.138 % year to date) S&P 500 Year to Date: + 11.85 %

If you have any questions regarding my personal outlook, or any other comments, please feel free to contact us at aileronmarketbalance@gmail.com. Our twitter account is @NoNonsenseTrade. I will say that if you have questions about your own trading and you want to ask for my input? Please include your most recent money management performance statistics in any email correspondence.
Until next time, stay safe trade well, and remember that loving other people doesn't cost a dime.
Note: I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. The above statements should not be construed as an investment or trading recommendation. Aileron Market Balance is a newsletter that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this newsletter; as larger accounts may require a different strategy as the ones presented here. Any trades or investments that I discuss within this newsletter are simply my own thoughts regarding my own investing and trading outlook. I discuss which trades I take and do not take on the No Nonsense Trading Forums, as well as the Ventrilo Voice Server. Remember that entering any market is an individual decision. This newsletter simply contains my trading and investing thoughts for the next week. I personally only enter any market after watching and reading the tape and I trade using money management principles3. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 16 years of experience in trading and investing in these markets. The Model Portfolio accounts are hypothetical accounts,with all of the inherent problems therein, which are used within this newsletter in an attempt to track the results of this newsletter, and is run for the education of other traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this newsletter are believed to be public domain. Any charts that are displayed using the ThinkorSwim platform, and other pictures were obtained through Wikipedia's public domain policy.

Exact Link - http://nononsensetrading.com/MoneyManagement.html