8/3/2019 Naked Swan Trading__FEB-3-2012__DOW March 2012 Futures

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DOW March 2012 Futureshigh risk of breakdown, limited upsideBy EFREM HOFFMAN

A consolidation breakdown with volume below the 12482 level for the DOW March 2012

Futures would likely kick off or confirm imminent panic selling thereafter for an initial 7 day

interval. More orderly selling can occur beyond this interval, as part of wave 1 of the 4800

to 5700 point sell off expected to commence in 2012, and to especially hit the economyhard in 2013, through up to May 2014. Our strategy consists of loading up on 2 to 3 year 

LEAPS with an 80 delta or higher as a stock replacement or ETF like strategy.

Cascade of simultaneous selling on 4 significant time-horizons; initially 1000 to 1400 points

lower before Feb 10th; but a wave of selling on smaller frames will seed the longer term

sell-side structure with confirmation on a break below 12579, and especially below 12535.

We are on high alert for a potential breakdown as early as overnight or preferably sometime

as early as the window of 6:00AM on Jan 25th to somewhere near/slightly after 9:00AM on

Jan 27th.

We will fade all rallies by shorting inside-the-risk-box, all the way up to the levels of 12632

to 12728. This market has at least 2 orders of magnitude more risk than 2007 and 2008combined. Zero valuations, and at best 2000 to 3700 is in the cards. 5500 if they really

crank the printing press, but then ultimately into 2021 we would get to near zero. Better to

get it over with and start a new bull market after a 10-15+ year consolidation at minimum

off of the 2000 o 5500 level.

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MARKETRESEARCH

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NAKED SWAN TRADINBy Efrem Homan

© 2012 Naked Swan Trading

8/3/2019 Naked Swan Trading__FEB-3-2012__DOW March 2012 Futures

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The upside is limited. If we pass Feb 10th, and specially the end of March and still nosignificant downside action, then we can reevaluate specific time-line, but given little upsid

from here, and large downside risk before near term, there is more reason to be short now The main risks to short positions for brief periods are that France and/or Italy offer someshort term upside surprise; but even in this scenario, US stock market action, particularly othe DOW recently points to extreme weakness and strong intra/inter-day divergences amothe DOW, S&P 500 and NADAQ, and the EURO Aussie Currencies – This portends sharplower prices; and with a stronger bias toward Black Swan Risk than White Swan (the mirroimage and positive cousin of the infamous Black Swan) gains. As this is an action-packednews week, market developments can either send us crashing down or jumping into nearbresistance — at best only finding the markets back at a failed high, for another imminentattempt at the downside scenario. Stay tuned for Volatility Fireworks ahead.

Under these conditions, Volatility (VIX Index under ETF symbol, $VXX ) looks very cheap,

not just for potential near term downside action, but for the very bearish scenario the VolatAtlas sees for 2013 into May 2014.

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MARKETRESEARCH

    3

    F   e    b   r   u   a   r   y ,

    2    0    1    2

NAKED SWAN TRADINBy Efrem Homan

© 2012 Naked Swan Trading