Condition Bear Market
S&P Target 940
Hedge XLE 9.96% Closed
Hedge XLF -1.98%

Position Date Return Days Call
BKI 5/31/2011 2.54% 126 Hold
CFI 6/22/2011 -3.88% 104 Hold
SE 6/27/2011 -6.76% 99 Hold
AWR 7/5/2011 -3.64% 45 Closed
CLH 7/6/2011 -7.47% 90 Hold
GCI 7/14/2011 -27.92% 82 Hold
AGO 8/5/2011 -15.49% 60 Hold
DISH 8/10/2011 12.09% 55 Hold
GTAT 9/8/2011 -34.52% 26 Hold
CSGS 10/3/2011 -0.40% 1 Buy

Mousetrap Return -8.55%
S&P Return -10.42%
Hedged Return -1.36%

Mousetrap Annualized -45.36%
S&P Annualized -55.33%
Hedge Annualized -7.23%

Annualized Advantage 9.97%
Hedged Advantage 48.10%

We are still in stage 2 of the 5 necessary sector rotations to complete a bear market. We have not yet had a successful rally, and we have certainly not seen the final capitulation.

What we HAVE seen is a continuing pattern of stops being broken for both long and short traders. Every time a reasonable support or resistance level is identifiable, it is subsequently broken.

The widening volatility will cause all but the most sophisticated timing mechanisms to lose money in BOTH directions. Lacking such sophistication, I remain hedged.

Fortunately, the hedged positions are operating as designed, and I am maintaining an advantage within the target range of S&P + 30%.

CSGS remains in the buy position, with an XLF short hedge.

Tim