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July 15, 2012

I personally believe that Procter & Gamble's (PG) CEO has become 'lazy', so to speak. This is a company that has been losing market share to their competitors. Their presence in emerging markets is such that they are not leveraging their presence in those markets. Yes, they've been able to save costs. But this really isn't translating that well into higher EPS. Without strategic implementation of sales for their products, well … this means, in turn, that their presence in North American 'developed' markets is suffering. They have not effectively marketed their products in North America. And we can see all of this in the lack of growth in earnings, compared to their competitors, espeically Colgate (CL) and Johnson & Johnson (JNJ). Will their be a war with Ackman? Or will enough shareholders and other board members side with his views, and will Bob McDonald leave as the CEO? Those are the sort of issues I'll be watching over the course of the next two quarters. So it's ironic that the investing account has risen so much over a stock of a company that is in trouble.

Aileron Market Balance
Issue 37
Visit Us: NoNonsenseTrading.com Email: aileronmarketbalance@gmail.com

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.

Portfolio Review:
The investing account has risen in value in terms of the stocks price. Procter & Gamble (PG) led the way in the portfolio. Unfortunately, this companie's stock has risen due to the fact that the company itself is in trouble. And it has become public knowledge that Bill Ackman has purchased large stake in the company. Bill Ackman is an activist investor. This means that he buys a large stake in Procter & Gamble (PG) to try to actively shake things up and make the changes that some feel need to be made.

Other than this issue … I'm happy with the portfolio overall. Waste Management (WM), I want to pay careful attention to earnings for the next two quarters as well. We have a lower stock price. But I will want to average down on the stocks price when the stock's price is lower, and the company is actually earning more and more money. I will wait before averaging down. The DRIP is off on all stocks in the portfolio. So dividends received will be in the form of straight cash. As mentioned previous, I will take half of all

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dividends, and send them to the Savings Side-Pocket account, and that cash will be applied to the “Slush fund / Drawdown Kill Switch fund ”. After July 31, 2012, we send half of all dividends to the Trading Account. At least for a short while. The permanent portfolio section of this account has been built, and now will be managed on a longer term basis. I currently have a 3 point spread over normal permanent portfolio.

Micro-Forex Trading

Methodology

Creation

and

In the audio file, I once again go over the methodology of the video that I released2, and what I'm looking at. I have set alerts above and below the 50 Linear Channel Regression on the Daily Chart. Above, and I'm looking to sell. Below, I'm looking to buy. The exact entrances? That's where the pivot points come in on the daily chart.

Trading Outlook:
Note: By way of reminder, since the Model Portfolio has only $10,147.45 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 $65.35 and is considered a micro-forex account for the purposes of the model portfolio.

As well as I pointed out in the audio file, from this point forward, if the trade is 11 pips in my favor, and I feel it's stalling? I will grab 60% of the profits at that point. I'm letting far too many 'average' win of 11 pips, turn into very small wins of 1.5 pips, and very small losses. Or even larger losses. That simply can't happen, and a trader become successful. So from now on, if I see a trade go 11 pips in my favor? I may lock in more of the profits than I have been previously.

Overall Trading Thoughts
I will continue to progress to look for an edge to exploit that I mentioned in Aileron Market Balance Issue 35.5. Shorting Cocoa right now, and then as the 15th approaches, looking to short one of the markets in the Soybean complex, possibly Soybean Meal. We are continuing to add on to the trading account as time passes, now that I am back to Michigan. We will continue to attempt to do that as time passes. By this point, I would love to have a 25% year. That's a 'goal'. Let's see if I can hit that goal.

Commodity Trading Thoughts
September Cocoa (CCU12 or /CCU2 in ThinkorSwim): The market still looks good fundamentally. We've exploited this short well to date …

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Short 1 CCU2 from 2347 to 2365 on 7/5/2012 – LOSS - $187.00 (including commissions of $7.00) Short 1 CCU2 from 2355 to 2353 on 7/5/2012 – PROFIT - $13.00 (including commissions of $7.00) Short 1 CCU2 from 2349 to 2347 on 7/5/2012 – PROFIT - $13.00 (including commissions of $7.00) Short 1 CCU2 from 2307 to 2282 on 7/6/2012 – PROFIT - $243.00 (including commissions of $7.00) Short 1 CCU2 from 2324 to 2321 on 7/10/2012 –


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

2 Exact Link - http://www.youtube.com/watch? v=KOeF9foRyxU

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PROFIT - $23.00 (including commissions of $7.00)

I'm looking for a rally at this point, up to around 2255 region. Monday, I'll see if we rally up to that point. A rally up to 2244 to 2255, with two 10 minute bars of congestion in that region, and then short below the lowest low. Soybean Complex: The crop picture remains poor. This is probably one of the worst crops since I've been trading. That's generally not the sort of market you want to short. The CoT report is favorable. I may still look to short a change in the dichotomy of the focus of the market. Possibly. I'll watch the open near Monday. I won't trade the overnight markets. When the grain markets open, and that open is not too volatile. If there is a nice decent range, I might try a short on a tight spread.

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 Balance” 3 for an explanation of this system).

S&P 500 Year to Date: + 7.89 % AMB Total Portfolio Return Year to Date: + 3.428 % Last week, SHY and TLT paid dividends. To reiterate, half of those dividends were sent to the savings sidepocket account. Investing Account Balance: $4,086.94 • Return / Yield up + 0.8347 % Year to date • 4.063508 shares of PEP (DRIP off – Yield is 3.06 % )
4 shares at $63.31 on 11/15/2011 w/ $5.01 Commissions 0.032263 shares DRIP at $66.95 on 1/3/2012 0.032145 shares DRIP at $66.25 on 3/30/2012 $2.17 in Cash on 6/29/2012 – Sent $1.08 to Sav. Side-Pocket Next Dividend: Not yet announced

• 4.0676 shares of PG (DRIP off – Yield is 3.45 % )
4 shares at $61.94 on 11/28/2011 w/ $5.01 Commissions 0.32392 shares DRIP at $64.83 on 2/15/2012 0.35208 shares DRIP at $64.19 on 5/15/2012 Next Dividend: Not yet announced

• 4.035 shares of JNJ (DRIP off – Yield is 3.56 % )
4 shares at $62.31 on 11/28/2011 w/ $5.01 Commissions 0.035 shares at $65.14 on 3/13/2012 $2.46 in Cash on 6/12/2012 – Sent $1.23 to Sav. Side-Pocket Next Dividend: Not yet announced

• 8.081305 shares of WM (DRIP off – Yield is 4.39 % )
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: Not yet announced

• 11 shares of STX (DRIP off – Yield is 3.87 % )
11 shares at $24.78 on 6/29/2011 w/ $5.01 Commissions Next Dividend: Not yet announced

• Permanent Portfolio
3 Exact Link http://www.scribd.com/doc/73238645/Aileron-MarketBalance-Special-Reference-Issue-Portfolio-Management

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$1,120.00 of cash I reserved for Permanent Portfolio Purchases Return from $1082.72 = + 0.96 %
- $2 shares @ 156.12 of GLD ( $312.24 ) ( Currently $308.28 ) ( 28.20 % of P.P ) - 2 shares @ 139.58 of SPY ( $279.16 ) ( Currently $271.50 ) ( 24.84 % of P.P ) - 2 shares @ 118.17 of TLT ( $236.34) ( Currently $258.34 ) ( 23.63 % of P.P ) - 3 shares @ 84.45 of SHY ( $253.35) ( Currently $253.38 ) ( 23.18 % of P.P )

Total Trading Balance: $10,212.80 ( Return / Yield up + 5.015 % Year to Date ) Commodity Futures and Stock Balance: $10,147.45 • Return / Yield up + 4.842 % Year to Date • Next Re-Distribution Goal: $10,700.00 • Original 3% risk tolerance gives us approximately $282.54 for my drawdown tolerance – ALREADY USED • $ 276.39 available from Slush Fund I found only one short in Cocoa last week … • Short 1 CCU2 from 2324 to 2321 on 7/10/2012 –
PROFIT - $23.00 (after commissions of $7.00)

• Remaining Cash: $1,622.23 ( 39.69 % )
Percentages of that Cash -$1,222.23 of this Maneuvering Capital I reserve for Hedging and New Purchases ( 75.34 % ) -$80.00 of this Maneuvering Capital I reserve to Dollar Cost Average PEP further in the future ( 4.931 % ) DCA Price w/ no fundamental changes on PEP $60.00 -$80.00 of this cash I reserve to Dollar Cost Average PG further in the future ( 4.931 % ) DCA Price w/ no fundamental changes on PG$58.00 -$80.00 of this cash I reserve to Dollar Cost Average JNJ further in the future ( 4.931 % ) DCA Price w/ no fundamental changes on JNJ $59.00 -$80.00 of this cash I reserve to Dollar Cost Average WM further in the future ( 4.931 % ) DCA Price w/ no fundamental changes on WM $28.00 -$80.00 of this cash I reserve to Dollar Cost Average STX further in the future ( 4.931 % ) DCA Price w/ no fundamental changes on STX $15.00

Futures and Stock 'Sister' Account Year to Date

• $ 276.39 ( 6.763 % of this account ) available from Slush Fund Dividend Investing Sister Year to Date

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My current money management stats after the trades last week …

• Short 70 AUD/JPY @ 81.22(3) on 7/11/2012 Exit
70 @ 81.44(2) – LOSS – 21.9 Pips - $0.1934

• Long 70 USD/CAD @ 1.0186(5) on 7/11/2012 Exit
70 @ 1.0188(2) – PROFIT – 1.7 Pips - $0.0117

• Short 70 AUD/JPY @ 81.41(0) on 7/11/2012 Exit
42 on 7/11/2012 @ 81.17(6) – PROFIT – 23.4 Pips - $0.1241 Exit 28 on 7/11/2012 @ 81.38(1) – PROFIT – 2.9 Pips - $0.0102

• Short 70 AUD/JPY @ 81.68(1) on 7/11/2012 Exit
70 @ 81.66(8) – PROFIT – 1.3 Pips - $0.0114

• Long 70 USD/JPY @ 79.34(3) on 7/12/2012 Exit
70 @ 79.35(7) – PROFIT – 1.4 Pips - $0.0123

• Short 70 EUR/USD @ 1.2199(3) on 7/12/2012
Exit 70 @ 1.2196(3) – PROFIT – 3 Pips - $0.0210

• Long 70 USD/CAD @ 1.0164(5) on 7/13/2012 Exit
70 @ 1.0162(4) – LOSS – 2.1 Pips - $0.0145

• Short 70 GBP/USD @ 1.5569(2) on 7/13/2012
Exit 42 on 7/13/2012 @ 1.5564(5) – PROFIT – 4.7 Pips - $0.0197 Exit 28 on 7/13/2012 @ 1.5564(9) – PROFIT – 4.3 Pips - $0.0120 PIPS FOR PREVIOUS WEEKS OF 7/9/2012 to 7/13/2012: 44 PIPS GAINED

Micro Forex Account Year to Date Micro-Forex Balance: $65.35 • • • • Return / Yield -4.177 % Year to Date Phase 2 Return: 0.18 % Phase 3 Return: -0.551 % $ 276.39 available from Slush Fund

I had a few Micro-Forex trades last week ...

• Short 70 AUD/USD @ 1.0223(0) on 7/10/2012
Exit 42 on 7/10/2012 @ 1.0201(5) – PROFIT – 21.5 Pips -$0.0903 Exit 28 on 7/10/2012 @ 1.0220(5) – PROFIT – 2.5 Pips - $0.0070

And the Micro-Forex money management stats ….

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Savings Side-Pocket Account Balance: $1,804.62 Half of TLT and SHY dividends were transferred to this account ... • Capital is -11.05 % Year to Date. Yield Return on Capital + 0.6695% • $276.39 for a Slush fund / Drawdown Kill Switch fund ($228.75 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 $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 % )

There are a few things that stand out to me from the change in money management numbers from last week. One … my intra-trade drawdown has decreased. This tells me that I am getting my trades correct, and correct right out of the gate with very little drawdown on the trade. Two …. my accurate rate has increased. This confirms my earlier statement: I'm getting trades correct, and correct right out of the gate. My risk reward ratio has decreased a bit with smaller wins that I had last week. I think I know what's happening here. I have to get better with my 'shredding', as I mentioned in the audio file. As follows is the 'capital graph' since this recent reboot … AMB – Micro-Forex Capital Graph

• • •

• $505.14 for Emergency Savings • Getting Paid Fund: $12.80

Total Portfolio Balance: $16,104.36 - Total AMB Inception to Date Return: + 7.362 % Return / Yield up + 3.428 % year to date) S&P 500 Year to Date: + 7.89 %

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If you have any questions regarding my personal outlook, or any other comments, please feel free to contact me at aileronmarketbalance@gmail.com. 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 principles4. 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.

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

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