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Year End Review

1/3/2016

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January will begin my fourth year of trading. I have learned a lot in my time trading markets.
2015 was a non-linear whippy year but I am proud to say that I got the thesis right in January. Despite the nonsensical short-squeezes,constant Federal Reserve/PPT intervention, overnight ramps & intraday prop jobs, I stuck to my guns and held my own to end the year with a profit!
Some important developments I have been noting & tracking all year include:

The BDI Crashing to Fresh All Time Lows

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You can see that shipping rates actually got a pretty big bounce in the summer but unfortunately that was merely a dead cat bounce as the prior February lows in the Baltic Dry Index were breached in December as global trade slows.

Deflation (US Dollars Outperforming US Equities)

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My magic ratio of the USD:WLSH (US Dollar : Equities) Clearly Shows a Deflationary Trend.

Emerging Markets Getting Destroyed 

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Getting hit on both ends with weakness in commodities as well as strength in the USD, Emerging Markets began selling off pretty hard in 2015.

Breadbox Rotation

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Agricultural Commodities never quite took off like I had envisioned but don't sleep on the strength in the softs. I will certainly keep my eye on Cocoa, Sugar, & Coffee as well as the entire complex throughout 2016. My thesis was that equities would probably need to seriously sell off before the softs catch a real bid so it will be interesting to see how it plays out in 2016.

Shorts

I talked about some prime short candidates this year including:
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With the worlds largest derivatives book and a chart that is teetering on the abyss I believe that Deutsche Bank will remain an excellent short candidate in 2016.
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YELP still seems an obvious candidate with a chart heading south as the market continues to give this stock a bad review.
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GoPro was one of my greatest victories to date and although I did not ride it the entire way down. The destruction of GoPro from momentum hero into Dead Cat in 2015 was truly breathtaking to watch!

The Roadmap 

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Use this chart to guide you as we watch the big picture unfold before us through time... Strength in Dollar, Weakness in Bonds, Horror in Junk Bonds, Downside pressure in commodities & the inevitable Bear Market in equities. These are trends that are just beginning...
My Primary strategy remains Long: Dollar, Yen & Soft Commodities.  Short: Equities, Bonds, & Industrial Commodities. 
Cheers to a profitable 2016!
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    R. J. Sullivan IV

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