How We Made 20.5% In 3 Months With Carl Icahn

The performance of the Mad Hedge Fund Trader?s Trade Alert Service is still going ballistic, reaching the heady height of 59% for the year.
I know some of your saw your faith challenged when, at one point, the stock market was looking at five consecutive down days last week. The red ink all disappeared when the November nonfarm payroll delivered shockingly positive numbers, thus delivering one of my best up days of the year.

Including both open and closed trades, 24 out of the last 26 consecutive Trade Alerts have been profitable.

The Trade Alert service of the Mad Hedge Fund Trader is now up 59.76% in 2013. November came in at a stunning +11.58%, while the December month to date record now stands at +3.68%.

The three-year return is an eye popping 114.77%, compared to a far more modest increase for the Dow Average during the same period of only 32%.
That brings my averaged annualized return up to 38.3%.

This has been the profit since my groundbreaking trade mentoring service was launched three years ago. It all is a matter of the harder I work, the luckier I get.

I took profits on my long position in Citigroup (C), which just achieved a major upside breakout, and then rolled the capital into the Financials Select Sector SPDR (XLV). I cashed in on a short position in the Treasury bond market (TLT). I?ll go back in on the next rally. I also took profits on short positions in the Japanese yen as it approached new lows for the year, then doubled up again on a subsequent rally there.

I caught the entire 10% move up in Apple (AAPL) with a major long position. Higher levels beckon. My remaining long positions in the Industrials Sector Select SPDR (XLI) are contributing daily to my P&L, thank you very much. An aggressive position in the Japanese online giant, Softbank (SFTBY), also turned profitable, playing on the Japanese economic revival.

This is how the pros do it, and you can too, if you wish.

Carving out the 2013 trades alone, 74 out of 89 have made money, a success rate of 83%. It is a track record that most big hedge funds would kill for.
My esteemed colleague, Mad Day Trader Jim Parker, has also been coining it. Since April, his own performance numbers have just come back from the auditors, revealing that he is up a staggering 279%.

The coming winter promises to deliver a harvest of new trading opportunities. The big driver will be a global synchronized recovery that promises to drive markets into the stratosphere in 2014. The Trade Alerts should be coming hot and heavy. Please join me on the gravy train. You will never get a better chance than this to make money for your personal account.

Global Trading Dispatch, my highly innovative and successful trade-mentoring program, earned a net return for readers of 40.17% in 2011 and 14.87% in 2012. The service includes my Trade Alert Service and my daily newsletter, the Diary of a Mad Hedge Fund Trader. You also get a real-time trading portfolio, an enormous trading idea database, and live biweekly strategy webinars. Upgrade to Mad Hedge Fund Trader PRO and you will also receive Jim Parker?s Mad Day Trader service.

To subscribe, please go to my website at www.madhedgefundtrader.com, find the ?Global Trading Dispatch? box on the right, and click on the lime green ?SUBSCRIBE NOW? button.

Markets were headed slightly higher on Monday morning despite a survey released that showed economists are expecting the Federal Reserve?s stimulus plan wind down in 2014. The National Association of Business Economists said that in their November survey showed that the majority of economists believe that the Fed will begin tapering their stimulus plan early next year. The survey encompassed a total of 51 economists and 62% of them believe that the Fed will begin cutting back the bond-buying program within the first three-months of 2014. Of all the economists there were 30% that believe the Fed will begin winding down in the second-quarter of 2014. Overall 90% of those surveyed believe that the Fed will wind down their program next year. The survey also showed that economists are expecting the U.S. economy to pick up steam and grow at a 2.8% annual rate next year versus the 2.1% annual rate this year.

Shares of Sysco were sky rocketing over 13% after the company announced that they will be purchasing US Foods for nearly $3.5 billion. The company will pay roughly $3 billion in common stock and $500 million in cash. They will take on $4.7 billion of US Foods debt. This totals the entire deal at $8.2 billion. When the companies combine, this will enable Sysco to increase their leverage on selling and distributing goods. They currently hold about 18% of the United States food distribution market and once the deal is done they are expected to hold a staggering 25%. The buyout deal has been approved by both of the companies boards. Sysco estimates that the entire deal will be fully completed by the third-quarter of 2014. They also expect this acquisition to immediately boost the companies profits once they adjust for costs and related expenses. Bill Delaney, Chief Executive of Sysco, said that the industry will remain competitive. ?It is a very dynamic market, there are 15,000 to 16,000 distributors out there, and more nontraditional competitors.? However with their new purchasing power, combined with innovation efforts and the cost saving capabilities the new merger will provide them with, they will do well, Delaney said.

In fast food news, shares of McDonald?s (MCD) were dropping after the company announced weaker-than-expected sales in November. The company said that worldwide sales at restaurants open at least 13 months were up 0.5%, which missed the 0.6% analysts were expecting. In the United States, same-restaurant sales were down 0.8%, which missed the 0.3% gain analysts had been expecting. This was partially attributed to an increase in competition and weaker customer traffic, the company said. Shares were falling over a percentage point on Monday.

That?s all for the day.
All the best,
Jack Aubrey, Oakshire Financial

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After steadily returning an average of 18% a year for the past decade, gold is headed for its first annual loss since 2000. All told, gold prices have fallen over $450 an ounce since January -- a 27% decline in just under 12 months.



In part, the gold market is suffering thanks to the economic recovery. Since gold is usually seen as a "safe haven" investment, an improving economy puts downward pressure on gold prices. Other headwinds include low inflation rates... surging equity values... and an overwhelmingly bearish sentiment facing commodities altogether.

Before I go any further though, I want to note that it's never a bad idea to devote at least a small portion of your portfolio to precious metals. Since these assets are generally insulated from rising price levels, metals like gold are a good way to hedge against inflation risk.

But gold bullion is not the subject of today's essay. Instead of touting the monetary benefits of the world's oldest currency, I want to tell you about one of the most overlooked (and misunderstood) areas of the gold market...

I'm talking about gold stocks.

"Gold stocks" is a financial synonym for gold mining companies -- the guys who get paid to physically pull the yellow metal out of the ground. Since miners earn their paychecks by selling the gold they produce, gold stocks have historically moved in tandem with gold prices.

Will the wealth effect from financial asset and home price appreciate finally assert itself this coming year? Bank of America Merrill Lynch economists give us four reasons why that might be happening:

We see four reasons to expect healthier consumer spending.

First, the worst of the tax shock is over. Both payroll and upper-income tax rates rose at the start of
this year, and we think the negative impact on spending growth should be fading.

Second, consumers have made considerable progress in cleaning up their
balance sheets, reducing debt burdens and accumulating wealth. Households
have gained $16.1 trillion in financial wealth and $3.0 trillion in housing wealth
since their respective troughs (Chart 2).

Third, firing has continued to decline as seen by the drop in jobless claims, although some of this may reflect people
exhausting their benefits. This supports current income but also helps
expectations about future income growth.

Finally, as the labor market tightens, wage growth will improve, although that is more likely in 2015 than in 2014. The
consumer still faces challenges, but we think the tides have turned.

?Tis the season. Ben Carlson at A Wealth of Common Sense ranks Abnormal Returns: Winning Strategies from the Frontlines of the Investment Blogosphere as one of the ?best books I?ve read in 2013.?

Quote of the day

smithy Salmon, ?Art is not an investment in the way that the S&P 500 is, and all direct comparisons of the two have a way of invidiously changing the way we look at and think about art in general.? (Reuters)

Chart of the day

My friend Larry McDonald is out with a year-end piece at Forbes that looks at a very interesting phenomenon we often see each December ? once the tax-selling pressure abates from losing stocks in one calendar year, they can often go on to become the following year?s grand slams?

Yet those who bought fear at the end of 2012 were handsomely rewarded. From mid-August 2012 to the end of December, shares of Best Buy were off some 43%, while First Solar FSLR shares were torched, off 33% from their March 2012 highs heading into year end. The most pain was felt in Hewlett Packard HPQ, which collapsed over 60% from February 16th to December 26th 2012, off 30% in the 4th quarter alone. These 3 stocks were up on average 90% in the first half of 2013. We say ?buy fear.?

What about 2011? The ugliest sector, no one wanted to own in the 4th quarter of 2011 was the financials. The space was off nearly 25% in 2011, 17% in the 2nd half of the year. Bank of America alone was off 32% from Sept 1st through year end. Over the next 12 months, investors fell back in love with the financials, up 27% on the year, BAC surged 100%.

Can you truly buy fear at this time of year and hold through 2014? If so, your top sector candidates are the gold miners, down an astounding 53% on the year. But ? Larry says to check out how the bond market is treating the paper of any disparaged equity you?re thinking of buying first.

Source:

The appeal of clean energy stocks is evident. Billions of dollars are at stake as the world tries to wean itself off fossil fuels.

There can be little doubt that clean energy will account for at least 20% to 30% of our total energy picture a few decades from now. But the road is bound to be bumpy. The sudden plunge in solar stocks in 2011 and 2012 -- not to mention their remarkable rebound this year -- highlights just how risky these clean energy stocks can be. Indeed, many investors have concluded that they just can't stomach that degree of risk.

But there is a better way: a focus on companies that already derive significant revenue streams in support of clean energy projects. These stable firms don't own breakthrough technologies, but they are helping the industry pioneers to scale up their production. And in light of the long-term future for clean energy, these firms face robust growth potential.

My favorite pick in this group: Spain's Abengoa (Nasdaq: ABGB), which derives more than $10 billion in annual sales by helping construct clean energy power plants, water desalination systems, biofuel production facilities and highly efficient energy transmission networks.

I am a firm believer in using both technical analysis and fundamental research as stock picking tools. Many investors mistakenly specialize in one discipline or the other rather than a mixture of the two.

Market technicians are often guilty of reaching the conclusion that all the fundamental information is already inherent in the price of a security, therefore researching fundamentals is redundant. At the same time, hard-core fundamentalists believe that technical analysis only charts the past and thus cannot help with projecting the future.

I have found both of these sentiments to be correct and to be wrong at the same time. All the fundamental information about a stock is inherent in its price. However, studying price alone will not increase your odds of making a winning trade.

Knowing fundamentals while ignoring the technical picture may provide a reason for the stock movement, but does not confirm that price will move in any specific direction. Focusing solely on the technical picture will tell you what has happened and what may happen. But there are no guarantees or statistical tests that have uniformly proven much of traditional technical analysis works to provide an edge.

So what's an investor to do?

The answer is to use both fundamentals and technical analysis to choose stocks. If both disciplines agree on a particular stock, that stock becomes a strong candidate to add to your portfolio or to short. When there is disagreement, a short-term trade often presents itself.

Today's trade is an example of a classic case of fundamentals and technical analysis disagreeing.

The stock is Camtek (Nasdaq: CAMT), an Israeli designer, developer and manufacturer of automatic optical inspection (AOI) systems. AOI systems are computer-driven systems that inspect electronic components for defects at the manufacturing level. The company also makes products for the printed circuit board industry.

Additionally, it is in the advanced stages of developing a digital 3-D printing system called the GreenJet System. This printer is intended to be used for the disposition of solder mask on circuit boards. The first commercial sales of this product are slated to take place sometime in 2014.

Camtek, which has a market cap of about $150 million, posted solid results for the third quarter with revenue of $21.7 million and operating cash flow of $3.1 million. It ended the quarter with a cash position of $20.3 million.

Shares soared higher late last month on rumors that the company was launching the 3-D printer system. It turns out the company will only be testing the system with a client at the start of 2014. Profits are only expected should the testing produce positive results, and then not until the tail end of 2014.

While there is certainly nothing wrong with the known fundamental health of Camtek, the technical picture paints a clear short selling opportunity.

Last week we were down four days straight on the S&P 500 going into the Friday non-farm payrolls report and the bears were finally feeling some breathing room. The jobs report print sucked all that oxygen out of the room as stocks erased just about the entire drawdown in eleven seconds after getting the number from BLS.

Here?s my friend Dynamic Hedge:

Jobs and Taper
The employment report surprised by adding 203,000 jobs dropping the unemployment rate to a recovery low 7.0%. The report could not have thread the needle more perfectly. It was high enough to produce a sentiment boosting headline and low enough to stave off an undiscounted December taper. And we wonder why people love conspiracies.
?and the chart (S&P 500 futures) ? as juicy a conspiracy theory as you?re gonna see:

Greetings from the great white north. I am a BIG fan of yours and have rejoined your Trade Alert Service for another year. You have friends around the world you have yet to meet. Enclosed is a token of my appreciation. Thanks a 100 trillion!

Bob
Vancouver, Canada