This document was drafted by Peter J. Stolarski in association with Joseph Rovito for the benefit of Branch 22 Capital Partners

Disclaimer: This document was drafted on April 30th, 2015 for market research purposes only. Branch 22 Capital Partners is not responsible for any trading decisions made based on this document. Branch 22 Capital Partners reserves the right to edit this document as deemed necessary.

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BRANCH 22 CAPITAL PARTNERS

MARKET ANALYSIS Q1

Table of Contents

Section 1: Technical Analysis Page 3

Section 2: Negative Investor Credit Page 6

Section 3: Duration of Current Wave Page 7

Section 4: Triggers and Signs Page 9

Section 5: Duration and Magnitude of the Bearish Wave Page 9

Section 6: Hedging Page 10

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Section 1: Technical Analysis *Note that all indicators besides Renko-based indicators are analyzed on a 1 month scale. All technical analysis has been performed on ^GSPC.

Basic Candlestick Chart Analysis:

RSI: The RSI is currently wavering between 70 and 80. This is almost precisely the same level that the market wavered between prior to the recessions of 2000 and 2008.

MACD: The MACD has reached levels higher than prior to the 2008 crisis and is may reach the same level as prior to the 2000 crisis. The MACD moving averages are signaling imminent retracement.

StochRSI: The StochRSI has broken below its lower trendline and is signaling imminent downwards movement.

Volatility: Volatility is currently at an all-time low and finishing a downwards movement along its upper trendline. Volatility levels are similar to those prior to the crisis of 2008.

Basic Renko Chart Analysis:

RSI: The RSI is higher than prior to the financial crisis of 2008 and almost as high as it was during the Dotcom bubble.

MACD: The MACD moving averages are higher than prior to the crisis of 2008 and reaching levels similar to those attained during the peak of the Dotcom bubble. The MACD waves have just finished a double top.

StochRSI: The StochRSI has reached past pre-crisis levels and is long overdue for a downwards correction.

Visualizations of these basic analyses are presented on the following page.

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Candlestick Chart:

Renko Chart:

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Volatility:

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Section 2: Negative Investor Credit

When adjusted for inflation, negative investor credit is currently higher than 2000 and 2008. Negative investor credit rating has historically increased the magnitude of the crisis. A visual representation is provided below.

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Section 3: Duration of the Current Wave

Topping:

Based on previous historical market highs, the market should experience a period of “topping”. Topping is a period in which the market flattens at the end of the wave and makes a double top, an extremely bearish sign.

Duration of Topping:

The average duration of topping, based on the past 6 market highs is 6.1 months. Based on the last high and the stagnation seen since, the market is now in month 3.

Volume-based Analysis: On the 1 day scale, the price is currently advancing along the lower trendline and is gearing up for an attempt to make a higher high. Given the high volume, the resistance level is likely to hold. If the upper resistance level holds, the market will correct.

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Moving Average Cross:

Moving averages are scheduled to cross by November, 2015 if the market continues to stagnate. This death cross will be the final signal before an imminent collapse. Historically, during the past 5 MA crosses, the market significantly changed trends.

A visualization of the moving average cross is provided below.

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Section 4: Triggers and Signs

Triggers:

-Weak economic data from Q2 may trigger market meltdown. -Massive defaults on college loans may cause meltdown if paired with another significant event. -Droughts in California will have a significant impact on the U.S. economy if it continues throughout the summer months. -Weak foreign economic data may pull down the U.S. economy and trigger a meltdown if significant enough or paired with another significant event. -Healthcare bubble may trigger correction when paired with another significant event.

Signs:

-Slowing economy which characterizes technical topping -The removal of capital from the U.S. economy by institutional investors -Rumors on the street -Low commodity prices -Over-stretched technical indicators

Section 5: Duration and Magnitude of the Bearish Wave

Duration:

Market corrections are significantly shorter than upwards waves. The average market correction time during a crisis is 15.6 months. When weighted for the duration of the bullish wave and volume, the predicted correction time is 16.4 months.

Magnitude:

S&P 500: -25.71% NASDAQ: -42.3% Dow Jones: -23.21%

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Section 6: Hedging

Depending on your experience and bias, things may seem relatively bleak at the moment. However, there are plenty of ways to hedge for losses and even profit massively from the falling market.

Shorting ETFs

S&P 500 -SH (1x leverage) -SDS (2x leverage) -VXX (3x leverage)

Gold

-GLD (1x leverage) -UGLD (3x leverage)

Bitcoin

Bitcoin is an interesting way to hedge and is only recommended for the experienced, risk-tolerant trader. The writer of this document possesses numerous years of experience with Bitcoin and believes that he understands the mentality of Bitcoin traders well. With a market collapse, those interested in Bitcoin will begin to buy en masse. Given the current inflation-adjusted technical state of Bitcoin, it possesses the potential to soar by over 300% if market forces align correctly.

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