Mousetrap 8/7/2011

[Timothy Clontz]

Position Date Return Days Call
BKI 5/31/2011 -5.59% 70 Hold
CFI 6/22/2011 -2.44% 48 Hold
SE 6/27/2011 -12.55% 43 Hold
AWR 7/5/2011 -10.96% 35 Hold
CLH 7/6/2011 -9.35% 34 Hold
GCI 7/14/2011 -26.08% 26 Hold
AGO 8/5/2011 -16.54% 4 Buy



Mousetrap Return -11.93%
S&P Return -13.65%

Mousetrap Annualized -117.32%
S&P Annualized -134.27%

Annualized Advantage 16.96%

The market is outside the limits of any fundamental or technical analysis, and is into that bizarre world realm of a deflationary spiral. Every sector, every stock, is up for grabs.

In 23 years the Vix has never spiked more than three standard deviations from its previous low. It is now three standard deviations above the previous low. It holds now, or it goes beyond anything on record.

I normally don’t mention timing, but on my two timing models we’ve budged from 5-10% into a bear to 15-20% in the past week. One of my models is targeting 700 on the S&P.

All of that could change tomorrow – because there IS a cure for deflation, and “helicopter” Ben Bernanke knows what it is.

European central banks are discussing intervention. Bernanke’s FOMC is tomorrow. If he pulls out QE3 we’ll still have a bear, but the markets will calm into a more normal bear. If he rules QE3 out, 2008 will look like a picnic.

I note that on my “Mousetrap” model everything got slammed today. The annualized return rate for the S&P is at the obviously unsustainable -134.27%, and my own model is at -117.32%. It’s still “outperforming” but in an evil looking glass kind of way.

If you’re a market timer, XLE (energy) is still the sector ETF to short.

Tim

***NOTE: The model is not yet fully populated, and therefore the "Sell" listed for CLH was premature. Apologies for the confusion. I've changed it to "Hold" accordingly.