May 2012 Month-End Trading Report

Dear Investor,

We hope this newsletter finds you well. As you know our monthly commentaries are now being moved to quarterly periods, however we will still report brief news and our monthly performances for those of you following along. May was one of the craziest month’s we have witnessed in a while.

The GUBUSD and EURUSD pairs had a continuous slide without any retracements/corrections at any of the major levels for most of the month of May.  People on the sell side who trailed this movement cashed in massive profits last month. Unfortunately, those caught on the buy side such as ourselves had to eat some losses or carry the floating drawdown’s into this month. Fortunes are made and lost on those massive moves.

These pair’s one-directional movement is rare and not a common occurrence. The previous such fall/rise occurred in 2008 and 2010. GBUSD alone dropped over 1000 pips during May – a perfect downward ramp.  Because of this we cut losses on McLaren, and carried open drawdown on PFX and VFX over into June, as many of you have seen. Recoveries should be strong now as the price action stabilizes after forming a bottom and gets a correction to at least one of the Fib levels. 

Next week could be a volatile one, and we are approaching with care. June 17^th – June 20^th will be the new Greek election which could bring a new government which may disagree with everything in place thus far with the ECB. Markets are shaky and unstable already in anticipation. It's no wonder why, according to the Greek daily paper Kathimerini, over $225 million per day is fleeing the Greek banking system, as Greeks are withdrawing all cash from their accounts. We have heard estimates as high as 700 million per day being withdrawn. Greece has been one of the major causes of EURUSD movement and panic selling for over 1 year now. Our stance is as it has always been.. get SOMETHING over with! Fix it or leave, let’s just not keep this dragging on much longer.

Our results for the month of May 2012 are as follows:

May 2012
Strategy	Return
PFX	-0.70%
MFX	-12.20%
VFX	+11.99%
Average	-0.3%

The rest of June will be used to bail PFX and VFX out of the current drawdowns and we are hoping for a break even month or slightly in the black. Should you have any questions or concerns please feel free to contact us at any time. We would like to wish you all a great weekend ahead!

Warm Regards,

The CayoFlow Team