What Silver (SLV) And Oil’s Rebound Means For Global Trade

In today’s letter we offer some updated thoughts on the commodities. We’ll start with the precious metals, whose charts are starting to look surprisingly strong. For a Change… The best of them all, without question, is silver, which some four years back led gold to its bull market high, and could very well turn higher now after putting in a bottom. Nothing’s for certain, of course, and we have lingering doubts about whether the bottom is actually in, but we have to acknowledge what we see. And that is – silver is starting to look good. Take a peek – This is the daily chart of the iShares Silver Trust (NYSE:SLV), a good proxy for the metal and, with over $100 million dollars turning over in the stock every day, an equally good place to check for mainstreet investor interest in the metal. And what’s the chart tell us? In the first place, SLV’s climb above both her short term and 137 day moving averages some two weeks ago is an indication that we’re now headed for additional gains (red circle). The next immediate line of resistance is the 274 day moving average, seen in orange on the chart, a…

Read More

A Treasury Bond (TLT) Longshot Trade

We dedicated the better portion of this week’s Wall Street Elite letter to the basics of trend-watching and the best options to play on the long side.  The TLT trade we’ve come up with today precisely fits the mold as we laid it out in yesterday’s article. We concluded in that article that it was superior to select a security that was in the midst of a bull market but was about to undergo an intermediate term retracement. For a number of reasons (that we won’t repeat here), we suggested that the best returns came from buying PUTs on that security, and for those interested we recommend you look here to get all the details. But before we get into the specifics of this TLT research and trade idea, we have two trades to report from last month’s options expiry that somehow got overlooked. Pens at the ready! We’ll start with a trade we opened on the 25th of November in a letter called It’s All up to You – and the Trades You Make. At the time, we bet on a pairing that pitted the SPDR S&P Homebuilders ETF (NYSE:XHB) against the Global X Social Media ETF (NASDAQ:SOCL), buying PUTs on the former…

Read More

Leverage The Coming Pop and the Russell 1000

The recent burst to new highs on the major indexes – including the long awaited ALL-TIME breakout for the NASDAQ (which we’ll likely get today or tomorrow) – has been predicated on two important developments. The first is USD consolidation. Everyone was getting wobbly in the knee looking at the American greenback grow like a time lapse photo of an Oregon redwood. “When will it stop,” they shouted! “How can our exports compete!? If the buck keeps rising, corporate America will be dashed on the rocks! Thrown to the wolves! Crushed by Big Foot!” And like a child who yells loud enough for long enough, they got exactly what they wished for. The dollar backed off, as you can see on the chart below – But the dollar’s rise is not likely over. As the chart also shows, the action on the buck got a little too heated at the beginning of the month, rising too far too fast to be sustainable. What we’re seeing now is simply profit taking, a healthy return to trend that offers everyone a much needed breather before the next leg higher begins. Seeking Stability The second factor that goosed the indexes higher was perceived oil price…

Read More

Can Oil (USO) Overcome The Dollar?

Everyone’s talking about the US Dollar and Oil (NYSE:USO).  First, the greenback is subject to our musings. As you know, lots of people are asking a lot of questions about the USD. Will it ever stop appreciating? Will it soon correct? What’s behind the recent rise? Can Asia survive a strong USD? Could it derail the bull market? When is the time to flee dollar-denominated investments? A recent survey by Bank of America/Merrill Lynch of its best clients showed that by far the biggest concern of the company’s high net worth cohort was the strong U.S. buck. So we ask – Is there anything to this? Have a look at action on the Euro/Dollar since New Year’s – Impressive, no? Of course, much of the greenback’s gains against the Euro have come as the Greek predicament drew headlines, and the European Central Bank decided to go Full Monty with its own brand of Quantitative Easing (QE). The result was vast sums of European loot searching for a haven, and finding it in good ole’ US of A. But the truth is this – USO and the American greenback is but a side show in the great carnival that marks our times….

Read More

The Impending Gold (GDX) Consolidation – How do we play it?

There are a few things you can count on as GDX plumbs new depths, the bugs bug-out, and, in an extraordinarily marginal business environment, the corporate gold movers look for new ways to maintain profitability. One of those things to look for is additional forward selling. There’s little wisdom from a corporate point of view in holding on to your bullion store while the metals are sinking. Look for the majors to continue adding to their hedge books. What’s that mean for GDX? The result will be a whole lot of downward pressure on silver and gold going forward, in the same way that it has for the last three years. While the commercials essentially shorted their future production in the hope of squeezing every last buck out of their operations as possible, little investors followed suit, and gold lost 40% of its value. But now it’s a bit different, because with the price of gold approaching its drop dead extraction cost, there’s little left to be squeezed from productivity initiatives and only pocket change to be seized from selling more ore further out the futures curve. As the gold price reaches the cost of production, it simply means more…

Read More

The Disconnect Between Markets and Economics (DIA)

There’s a concept we’ve spoken of several times over the last few years that bears a little more discussion, and that’s exactly what we’re damn well gonna give it. Listen up. Markets and Economies There exists the possibility for markets to rise while an economy is contracting. Or they can fall while an economy is expanding. It’s a notion that’s counter-intuitive, though it’s really nothing new – Both scenarios have happened in the past, and will certainly repeat sometime in the future. How does it happen? Very simply, there’s a natural lag-time between a market’s apprehension of an economic turn. That is, at major turning points between bull and bear markets, equities start to lose their collective ability to discount the future price of stocks. The numbers simply become muddy. Corporate profits are in some cases expanding, in other cases contracting. Meanwhile, the economic markers are equally foggy, with some series climbing and others dropping. Often months, or years, will pass with a bull or bear market inertially gliding along its path before the forces of truth finally subjugate it. New Realities Today, we face a brand new reality in this regard. How so? We believe that we’re shortly going…

Read More

Apples Fall and Cars go Vroom! (AAPL, TSLA)

We find it noteworthy that former Fed chief Alan Greenspan saw fit to open his ample jowl last week and opine on the current state of finance and economics by saying – “…we really cannot exit this without some significant market event… By that I interpret it being either a stock market crash or a prolonged recession, which would then engender another round of monetary reflation by the Fed. The end has to come at some point… If you look at a chart of the U.S. dollar index it has gone nearly parabolic in the last few months… In any market that is so one sided, that is accelerating so rapidly, that trend will end… it will most likely end in a fairly violent fashion.” There you have it, brothers and sisters, by no less an authority than the 20 year Grand PooBah of the Loyal Order of Water Buffaloes – a man who did precious little during his tenure to check the excesses of the system, though he claims to be a gold believer and a ‘hard money’ enthusiast. What in the world makes a man pipe up post-facto to declare that those who merely followed in his footsteps…

Read More

Academic Trading Strategies (XLE, USO, XLF, FXU)

Did you ever wonder what university professors really do? Here’s an article that explains what most of these clowns are really up to. You’re not going to believe it. When they’re not writing treatises on “15th Century Sock Weaving Techniques of the Women of Argonne”, well-paid academicians are busy quantifying the likelihood of the world ending in this manner or that. You don’t believe me? Click here. Here’s a brief quote from the article for those who don’t have the time – “This is a scientific assessment about the possibility of oblivion, certainly, but even more it is a call for action based on the assumption that humanity is able to rise to challenges and turn them into opportunities.” Sorry to say it, but the academic world is now either so lost in the minutiae of the mundane and unimportant, or so arrogant as to imagine that the quantification of a conclusion that’s anything but a certainty is within their grasp. Hopeless   Leave it to the so-called ‘scholars’ at Oxford University’s pretentiously named ‘Global Challenges Foundation’ along with fellow quacks from their ‘Future of Humanity Institute’ to find new and creative ways to draw attention to themselves and secure…

Read More

Trading Truth for Pravda (USO, RSX)

Had a friend in high school who delighted in conjuring up all sorts of labels for body parts that were as yet unnamed and announcing to the lunchroom in pseudo-scientific fashion his latest ‘findings’. He was a twisted fellow, to be sure, but we were mesmerized by his devotion to the discipline and equally titillated and amused with his diagrams and descriptions of just why things moved or smelled or appeared they way they did, the evolutionary function of each and, at times, in his more prophetic moments, the divine purpose and design behind that particular morsel of human flesh. Thus was born the ‘groove’, the ‘seam’, the ‘mandrake aureolis’ and the ‘braying aperture’. Chicken Skin   And you ask, what’s the purpose of such nonsense, O’Haynew? This is an investment newsletter, not National Lampoon. It’s supposed to be hard-nosed and direct. What are you up to? Faith, friends. There’s method to his madness. Janine! Immortalized!   We bring the above as a parable, to illustrate what many have already seen to be true, what others are just waking up to and what the vast mass will likely never apprehend. And that is, that we live increasingly in a world…

Read More

Underground and Behind the Scenes (XLF, FXU, DIA)

Things just aren’t as they seem. Consider the following – 1. Is there really a bull market underway? Many believe it to be the case. But is it possible that rising stocks are really the product of a carefully engineered government effort to drug the masses – to hoodwink them into thinking that all is peachy, nothing’s amiss, and that we’re all just groovin’ – so don’t make waves. 2. And is there really a burgeoning conflict in the Middle East? It appears so – replete with head choppers and body snatchers and suicide bombers and slingshots. But could it be that it’s actually a well-hatched plot to sequester the world’s gold reserves and funnel them to some subterranean hideout in the middle of the Arabian Desert? 3. Is the Ukraine/Russia border war is the result of a spontaneous ethnic Russian desire to return to their Muscovite roots? So it seems. Or are we again witnessing a low grade, western-inspired battle whose goal is to carve out a sharper divide between opposing Slavic cultures – those who lean more toward their Western roots vs. those who adhere to what was once termed a ‘Slavophile’ orientation. And all this, of course,…

Read More

Powered by WishList Member - Membership Software
GET YOUR FREE SPECIAL REPORT:
"THE SEVEN DEADLY SECRETS OF CHINA"

GET YOUR FREE SPECIAL REPORT:

"THE SEVEN DEADLY SECRETS OF CHINA"

Enter your e-mail address to claim your FREE Special Report “The Seven Deadly Secrets of China”

You have Successfully Subscribed!