Financial Trading Lunch 15h January 2016

Friday 15th January 2016

DISCLAIMER Users are reminded that the price of shares and the dividends thereon can go down as well as up. None of the following contents should be construed as an invitation to buy or sell securities or open spread betting positions, fixed odds bets, warrants, traded options or any other financial trading product. Readers should always obtain appropriate professional advice from their stockbroker or financial advisor before entering into any transaction in securities. U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this presentation. The past performance of any trading system or methodology is not necessarily indicative of future results. Every effort has been made to ensure that the information contained herein, which has been derived from reputable sources is accurate but the accuracy or completeness of this information cannot be guaranteed. Futures, CFD, Margined Foreign Exchange trading, Warrants, Options and Spread Betting carries a high level of risk to your capital. A key risk of leveraged trading is that if a position moves against you, the customer, you can incur additional liabilities far in excess of your initial margin deposit. Only speculate with money you can afford to lose. Futures, CFD, Margined Foreign Exchange trading and Spread Betting may not be suitable for all customers, therefore ensure you fully understand the risks involved and seek independent financial advice if necessary. Past performance is not necessarily a guide to future performance. Any securities or financial products discussed are by way of example only and are not an invitation to buy or sell. Vince Stanzione, First Information and his agents may have a holding or open position on some of the financial markets and stocks discussed in this presentation. Copyright 2016 Vince Stanzione - First Information – This presentation is for your own use only, sharing or copying is strictly prohibited.

Financial Trading Lunch 15th January 2016

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DOW 10500

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MARKET RECAP How they laughed…5 years ago

4 The Obama Crash Great Buying opportunity (November 2012 – Dow 12480)

Oil $50….. (when oil was back over $115)

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Stocks have done Far Better Than most people think – but its not a straight line up

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25 years of the Dow

S&P 500

Broader market

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NASDAQ 100

Concentrated on Technology and Biotech

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Lower oil prices good news for the economy

US Household will save $2,000+ a year gasoline and heating oil

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Stock valuations not cheap but not outrageous

See October Insider Trader newsletter – Forward P/E is 15

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Still life left in this bull market

Slower growth but in a near zero interest rate world where else can you go?

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Balance sheets are in good shape

Buybacks – M&A activity

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Long term returns

Returns can be volatile short term – long term markets have always gone up

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Stocks have won over the long term

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Why are investors so bad? Why do so many investors Self-Destruct when markets have been going up?

Cash is a bad investment

Yes you need some emergency cash but over holding cash will reduce your long term returns

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Stocks protect you from Inflation

Does not include dividends – Gold would have storage costs pays no income

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Stocks more than covered inflation unlike cash…

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My 11 year results - what can be achieved

• Anyone that started with $100,000 in 2005 would now have $1.8 million

• Using simple range of strategies – low leverage - No day trading

• Mainly US stocks, ETFs – Spin offs been very profitable

• And that was through one of the worst financial crisis

£64,500 = $100,000 Taxes, costs, dividends not included

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Power of compounding and not taking out profits

Past does not equal future but an account making 30% a year can add up

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Good News you will live longer – Bad news you will be broke

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Chances are you will be living longer than you think…. 90 is

going to be fairly normal

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7 years on in Biotech

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Last 7 years boom time for Biotech

2015 down year but biotech is not over

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IHF iShares US Healthcare Providers

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The 79 million US Baby Boomers are getting older, living longer, and they want to see the doctor. Their generation is 27% bigger than the preceding group. Not to mention rising medical costs would mean they’ll have to pay more than their parents did for similar healthcare. A longer life expectancy means they’ll also require more services like surgeries, treatments and long-term therapies for their ailing hearts, broken bones, diabetes, and other privileges of aging. With 7,000 to 10,000 Baby Boomers turning 65 each day through 2030, record numbers of Americans are qualifying for Medicare. When you put it all together, providers involved in keeping the Boomers healthy could feel pretty good.

Aging Population

Good News for Pharmacies

RAD taken over by WBA

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CVS,WBA and specialise pharmaceuticals DLPO

Trade example using schwab.com buy – sell – sell to open

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Financial Trading Lunch

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Dogs of the Dow 2016

SMALL DOGS: WMT,MRK,VZ,PFE and CSCO

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Dow stocks with lowest price highest yield (10 stocks) small dogs are the 5 with the lowest price. Normally its out of favour stocks

Imperial Tobacco LSE:IMT US:ITYBY

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Up 980% (ex dividends) since 2000 – UP 26% in 2015 – Good defensive name for 2016

Imperial Tobacco P/E 14 Yield of 4.2% - After the Reynolds deal now number 3 in the USA

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I have owned it since 2000

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World’s Most Successful Company is………

Mode

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Mondelez (MDLZ) – Great Brands – Major shareholders looking to shake up – good potential – likely to be taken over merge within 2 years.

Spun off from Kraft and Philip Morris

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Defensive name – Coffee – Chocolate - Snacks

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The "spin-out" company takes assets, intellectual property, technology, and/or existing products from the parent organization. Shareholders of the parent company receive equivalent shares in the new company in order to compensate for the loss of equity in the original stocks; thus, at the moment of spin-off, the ownership of the original and spun-off companies are identical. However, shareholders may then buy and sell stocks from either company independently; this potentially makes investment in the companies more attractive, as potential share purchasers can invest in only the portion of the business they think will have the most growth. It can also open up Takeover offers for just one of the parts. Example Fortune Brands – Spins off BEAM and Fortune Brands Home Security. Beam is taken over by Suntory for $83.50. We paid $57 and left with FBHS at zero cost currently $46 (Bill Ackman set that deal up) Currently BAX & BAXLT – EBAY -PYPL

Spin Offs – Spin Outs I have made millions over the years from FREE shares received out of spin offs

Spin off idea – Alcoa (AA) 50% upside

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See December 2015 Newsletter for full details – looking at 12 month hold 50% upside

Match Group (NAS:MTCH) 38

Match Group, Inc. provides dating products. It operates a portfolio of approximately 45 brands, including Match, OkCupid, Tinder, PlentyOfFish, Meetic, Twoo, OurTime, and FriendScout24. The company offers its dating products through its Websites and applications in 38 languages approximately in 190 countries. It also provides various test preparation, academic tutoring, and college counseling services. Match Group, Inc. is a subsidiary of IAC/InterActiveCorp.

Recently floated still majority owned by IACI – good growth potential at reasonable valuation

Gilead Sciences (GILD) up 350% in 3 years but still good value

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Gilead Sciences, Inc., a biopharmaceutical company, discovers, develops, and commercializes medicines in areas of unmet medical need in North America, South America, Europe, and the Asia-Pacific. The company's products include Stribild, Complera/Eviplera, Atripla, Truvada, Viread, Emtriva, Tybost, and Vitekta for the treatment of human immunodeficiency virus (HIV) infection in adults; and Harvoni, Sovaldi, Viread, and Hepsera products for the treatment of liver disease.

Forward P/E 9 annual income of 15 billion US$

Slowing down but still good potential 15 to 20% upside in 2016

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10 ideas from Barrons 41

10 ideas from Barrons 42

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The 3 important Ms

Successful trading is based on 3 Ms

Multi Strategy Approach

Trend – 100% lists – 21/6,

150/16 system 377/100 system

Seasonality –Sell In May – St

Patricks Day trade – Santa

Rally

Sentiment – Spread betting

clients – FX retail –Year end survey -

Contra Value – Special

Situations – Splits- Spins –

Dow Dogs

Financial Trading Lunch

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All can be traded from one account

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Work Horse Or Race Horse?

• A race horse may seem exciting but overall you are far better off sticking with a work horse – 80% of spread betting clients choose the race horse

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Where do we make the most money?

We are not in this business for excitement – you want excitement take up an extreme sport!

Not following a system opens up emotions

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Most buy on Euphoria and sell on Despair

My 3 core systems

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More active good for

smaller cap stocks faster

moving shares-

markets

21/6 Short

Term

VIDYA DAILY

Good all round

system balanced between

amount of signals and reacting to the moves

150/16 Medium

Term

SMA DAILY

Longer term system, catches

trends and still exits on

major

reversals

377/100 Long

Term

SMA DAILY

What happens if I miss the cross? What is the tolerance?

Simple to operate all have entry – exit rules – can be used in up or down markets – works on all liquid markets

Using the VIDYA for shorter term trades

• VIDYA is the short form of Variable Index dynamic Average. It was developed by Tushar Chande and first presented in 1992 in his article in the journal Technical Analysis of Stocks and Commodities (PDF on site)

• VIDYA is a combination of Adaptive Moving Average and Exponential Moving Average. It gives weight to recent data based on volatility of the data series, more the volatility more the weight to recent data

• VIDYA effectively compensates for trading (frequent price fluctuations in a short period) and trending (a consistent direction of price over a longer period) times. During trading times short-term averages give many false signals, while long-term averages give late signals in trending times. With the smoothing constant as well as volatility index in its formula VIDYA adjusts its sensitivity in trading as well as trending time

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• Don’t worry about the total ins and outs or the formula – Sharescope has programed it in.

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VIDYA 21 and 6 days 51

Short term system Buy/Long • 21 day VIDYA and 6 day VIDYA crosses

• 20 day high low channels – Dochian Channels as stops

VIDYA smoother than SMA

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Short term system Sell/Short • 21 day VIDYA and 6 day VIDYA crosses

• 20 day high low channels – Dochian Channels as stops

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Videos on how to add arrows, VIDYA, Darvas boxes, Scripts – videos on tardeonmarkets.com, updates,

Financial Trading Day Tools password: qe22015

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Seasonality is a guide not a guarantee. Seasonal system bought 15th October – now in until at least mid April 2016

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Poor start to year but we are still in seasonally strong period – 2016 election year

The numbers do not lie

Source: United-Icap

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Monthly returns 57

Sell in May and go away 58

But we can do better…..

• My studies discovered that the best days on average are October 16 for the entry into the market for its favorable seasonal period, and April 20 for the exit from the market’s favorable season.

• But it would be flawed to think that a fixed date is the best system - the market does not begin a rally on the same day each year, or begin to decline from a top on the same day each year

Vince Stanzione

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Delaying the entry or Exit

• Using MACD as confirmation

• One of the rare times I use an indicator. MACD can be added in sharescope or on various websites.

• The idea is that if a rally is underway when the October 16 calendar date for seasonal entry arrives, as indicated by the MACD indicator, we will enter at that time. However, if the MACD indicator is on a sell signal when the October 16 calendar date arrives, indicating a market decline is underway, it would not make sense to enter before that decline ends, even though the best average calendar entry date has arrived. Instead, our Seasonal Timing Strategy simply waits to enter until MACD gives its next buy signal, indicating that the decline has ended.

Vince Stanzione

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Dow Jones with MACD so if 20th April comes and MACD is still on buy you carry on holding. If 16th October comes and MACD is on sell you

stay out until it gives a buy

Slight Variation: use 21/6 SMA (Simple Moving Average) instead

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U.S. Interest rates Yes interest rates are going up but nothing drastic

Rates moving up but not back to 14% - Cycle could peak at 2.5 to 3%

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How to profit and protect yourself from the next major meltdown

No one can call a market crash but you can see clues

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Overall more money has been lost by amateur traders trying to profit from a crash than they have ever made

When everyone is calling for something then its not going to happen

A trading system like 377/100 or 150/16 will spot trend changes as it did in 2007-2008

If you want to bet short overall you will make more money in individual shares

Spread betting clients have lost millions over the years being short – they would have been better off with a traded option.

Short term trading

• In 30 years of doing this – what I know for certain:

• 1. Retail customers are normally wrong over time so good contra indicators

• 2. When they are right they take profits too soon

• 3. They overleverage and have to be right instantly and get stopped out

Using the crowd as a contra Indicator

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Client sentiment

As at 23rd October 2015

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Overall retail clients are wrong – This works best on the 10 markets most losing trades trade. Remember a stock I have mentioned in an update will have an effect on the sentiment

10 markets this works best on Dax, Wall Street, FTSE100,S&P EUR/USD, GBP/USD, GBP/EUR, EUR/JPY, OIL, GOLD

Extremes can be good contra indicators

http://money.cnn.com/data/fear-and-greed/

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"Excuse my language, but when everyone vomits and never wants to see another stock, I am the guy cleaning up the mess. "

Using Margin Loans 67

Boost returns with a loan secured against your stock

You only pay when using it. Keep some buffer if your portfolio falls they will ask for more cash (margin call) or you have to sell stock. Most brokers offer margin loans (its profitable for them) Use margin wisely.

2016 A Year Of Pick & Mix

It’s not about the Market or S&P500

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2015 - S&P 500 was flat but look under the surface – individual stocks long and short AMZN up 100%

We make money from Stocks not from the market

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First Trust DJ Internet Index (FDN) up 23% in 2015

Top holdings in ETF

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Aerospace & Defence (ITA) 71

Opportunities 2016 – Small cap US stocks

and sectors

Vince Stanzione 2016

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The big dogs takeover the small – expect more mergers, takeovers and PE (private Equity) deals We had a string of deal in 2014 & 2015 Why? Big caps have large cash balances Financing is fairly easy to obtain and interest rates are low. Small caps are more news and story driven so its less important what the S&P500 does.

Small caps – high risk but big moves 2015 dominated by biotech

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Putting it all together

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I am happy to do nothing

“One of the best rules anybody can learn about investing is to do nothing,

absolutely nothing, unless there is something to do. Most people always have to be playing; they always have to be doing something.”

Jim Rogers

Vince Stanzione Financial Trading Lunch

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Forget the doom and gloom end of the world headlines, also forget about the good old days nostalgia, you live in the now and future. There are an abundance of opportunities to make money in a world-wide market

A one person business can achieve amazing results with nothing but a laptop from anywhere

“A pessimist is one who makes difficulties of his opportunities and an optimist is one who makes opportunities of his difficulties.” Harry Truman

vince@finbets.com

Friday 15th January 2016