Call it Investor INTELligence (INTC, CAE)

With the close of 2014, we wrote a letter called A New Year’s War Wish, in which we extolled the killing ability virtues of a Canadian aerospace and defense company’s technology. The company is called CAE Inc. and it also trades on New York under a very creative ticker – CAE. In that letter, we wrote that war was good for arms makers and that CAE was poised for a very sharp breakout, of which we wanted to take advantage. And what happened? Take a look at her chart for the last six months – Technically, we see a pop that should carry the stock much higher in the coming months. We’ve broken above all-time highs set (in Canadian Dollars) roughly a year ago (red circle). We have both the daily and weekly RSI and MACD indicators trending above their respective ‘waterlines’ (daily, in blue), a full-on bullish development. And both daily and weekly moving averages are trending higher and are on the cusp of unfurling (weekly is not shown). All told, a promising picture. So why are we bailing out? Well, for starters, a gain of over 10% in just four trading sessions is likely unsustainable and might generate…

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Battling the Enemy Within (IYT, DIA)

I remember a job interview I had some twenty-five years ago. Can’t remember the name of the firm I was speaking with, but it was directly after college – one of those large-scale recruiting affairs with endless rows off booths and too much coffee in the bloodstream. In any event, the interviewer, a young lady not so far out of college herself, asked me what I thought then was a very odd question. The thing threw me for a complete loop. I wasn’t sure if she had already decided I wasn’t appropriate for the position and just wanted to scare me off, or if she was after something legitimate. I distinctly remember burbling something incoherent and using the word ‘visceral’ in my response amid a great deal of sweating and fidgeting and internal panic. The question was simply – who are your enemies? It’s a question I can answer today with little discomfort, and that’s essentially the difference between a fifty year-old and a recent college grad. But then it left me in tatters. Not so long ago, I saw a gent interviewed on the telly – university professor or some such – who said he didn’t think a man…

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Hunting Elephant Profits (GLD, DBC)

Papa always told us, it takes a long time to get to know someone – a very long time. And unless you’ve either worked with him or gone through a crisis with him, chances are decades may pass before you see his true colors. And so it is… Commodities are falling – copper just fell to a new multi-year low – oil, well we all know the story there. And it seems we’ve seen enough… Look here – The weekly chart of copper shows the metal in the midst of a near-four year slide, with lower highs and lower lows being set with increasing rapidity. And perhaps worst of all for copper-hopers is her RSI read, circled in blue, still trending a good distance from the deeply oversold 20 level, the point at which we’d expect technicians to begin placing buy orders in a meaningful way. We note, too, that even after falling most recently from $3.34 to $2.68 since late July – a plunge of some 20% – copper has still yet to set an oversold read on the daily RSI. And that too speaks to more losses ahead. Could it be we’ve come to the end of our…

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‘Houston – We have a Situation…’ (DIA)

As time wears on you, you get to noticing things that completely escaped you when you were younger. For example, it struck us recently that there are folks who tell you that they’re “good drivers.” That means they drive fast. There are others who tell you that they’re “safe drivers”. That means they drive slow. And it struck us, too, that in the options trading game, one wants to be neither too fast nor too slow, but always at the ready to close one’s trade at le temps juste – the appropriate time. He who’s in a rush to make vast wads of cash will inevitably be either too slow or too fast to shut down. Whereas he who is involved solely in the trade itself, and is not distracted by any larger goals he may have for himself and his family, or by the television set or by his dreams of yachting with the Windsors in Fiji, or any other considerations – he alone will succeed in that particular trade. And we gotta play them as they’re given to us – While we’re on the topic of successful trading, there’s an aspect of the business that’s generally given short…

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A New Year’s War Wish? (CAE, TSLA)

We ran down a lot of trades last week in our pre-Christmas bonanza. But there was one we neglected to report, and that was our November 11th initiative with Tesla Motors (NASDAQ:TSLA), a company that swings like a chimp and gives us wily investors one helluva bag o’bananas. The letter was called Go Make a Name for Yourself, and in it we offered a complex concatenation of purchases and sales of different strikes and expiries using TSLA options, all underpinned by an unerring grand prophetic understanding of the wishes and desires of both man and beast. The trade went thus – 1. Purchase the TSLA January 280 CALL for $3.60 and the January 200 PUT for $3.30 2. Sell the November 28th 280 CALL for $0.18 and the November 28th 200 PUT for $0.44, and 3. Sell the December 26th 190 PUT for $1.03 and the December 26th 290 CALL for $0.78. Total debit for the trade was $4.47. And what happened? Well, a week later in a missive called The Truth about Supply and Demand, we closed out the long January CALL and PUT (#1) for $6.90. The November options expired worthless (#2), and we bought back the December…

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Santa’s Good to the Elite (XOM)

We set a lot of trades here at Options Trader Elite. Roughly once a week – and sometimes more – we set a trade that’s the envy of the newsletter world, both in terms of its return and its sheer entertainment value. There, there, Rachel… take your Zoloft, my love. As it turns out, we very often set trades with December expiries. Not exactly sure why, but it just happens to work out that way. And so it was with last Friday’s options expiry, that we now have a bevy of initiatives that either closed down, or that we feel it’s now appropriate to take off the table. And so, without further delay, we ask Rudolf to run them down for you now. We start with a trade that was launched May 6th in a letter called Rising Rates Returning wherein we claimed the top was in for bonds, the whole market was about to turn lower and everyone should be out of fixed income product for a good long while. As it turns out, we were wrong. The top of the bond market is going to be a longer, more drawn out affair than we originally anticipated, and so…

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I only Eat what I Kill (GDX, XLY, SPY)

Worked for a short time with a Mergers and Acquisitions guy who labored tirelessly to put together his deals. He was a solo operator who had maybe 60 or 70 different projects on the go at any given time, and if he succeeded in matching buyers and sellers at least once a year he was beside-himself elated. He was a patient man. He was dogged in seeking out new matches, meeting new people, racing across continents to package together all the details and as sure as you’re reading this – failing… again and again. But he also knew that was part of the game. Like every good salesman, the rule of 99 strikeouts for every home run was for him a mantra. It was a numbers game, as all salespeople can tell you. It requires patience, patience and more patience. Every rejection is just another step closer to victory. And money. One morning the old fella sat me down in his office and amid complaints that his wife didn’t understand him (she wanted him to get a ‘real’ job) and his in-laws were tired of lending him cash and his credit cards were all tapped out, and he offered me…

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Rotating East (BIDU, FXI)

Rolling towards the end of the year always inspires confidence, hope and beneficence, and here at Normandy we’re no different. We’re grateful for the trading success we’ve had over the last twelve months. For those who’ve been with us, you know that Options Trader Elite has racked up a bounty of success over that period, and we’re humbled, too, by the growing number of subscribers who are joining our ranks, profiting from our rantings and giggling at our antics. For that, we thank you all. Without getting too carried away, however, we also recognize that there are always two sides to a trade, and that some have been less fortunate than we in 2014. To that end, we bid those of you who’ve been ‘cold’ nothing but success in the coming year, and pray that it doesn’t come at our expense! So, too, in the wide world of trading…   The investment seesaw is ever rocking… What the pros on Wall Street call ‘sector rotation’ is, in fact, just a fancy term for chasing a neglected group of stocks. And in a bull market it’s a certainty that every few months the limelight grows dim on the latest stock-buying fad,…

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Short Term Profits on an Oil Bounce (XLY, SPY, XOM, USO)

We have an open trade that requires your attention. And depending on what kind of personality you have, it could go in two entirely different directions. It was a trade we opened in mid-August in a letter called The Outperformance Game. There, we spoke about the lack of excitement in the consumer discretionary sector; a corner of the market that generally fares well when consumers are confident and the economy is humming without worry. At that time it wasn’t the case, but we suspected the situation would change, and the discretionaries, as represented by the Select Sector SPDR Consumer Discretionary ETF (NYSE:XLY), would outperform the S&P 500. The trade consisted of a long XLY CALL purchased with funds garnered from a short SPY CALL ( the SPDR S&P 500 ETF). And what happened?   We bought the XLY December 69 CALLs for $1.33 and sold the SPY December 205 CALLs for $1.44, pocketing a credit of $0.11 per pair traded. And today the XLY’s are trading for $2.30, while the SPY’s are fetching $2.55. Take a look at XLY’s chart – The technicals show a tremendous run-up to new highs posted last Friday (in red), and a sharp decline on…

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It’s All up to You – and the Trades You Make (RSX, XHB, SOCL)

Know it well, friends – no one can do you damage of any size or scope like you can do to yourself. That’s the first and last word on trading and on life. Looking for a reason why you’re broke or sad or lonely or angry or feel cheated or depressed or otherwise negative about something or someone? We say take a look in the mirror. Because 999 times out of a thousand… If not for your failure to act or your failure to refrain from acting, you wouldn’t be in the mess you’re now in. So why not 1000 times out of a 1000?   The reason we qualify the matter is because there is such a thing as evil in this world. And where it strikes, it makes victims of perfectly healthy, happy individuals. And we have to allow that in one case out of 1,000 the victimhood was unearned, uninvited, and indeed struck from out of the blue and was without apparent cause. [We purposefully use the term ‘apparent’ because to do otherwise would open a theological quandary that’s unthinkable. But more on that another time.] Take Responsibility   In the world or investments and trading, where…

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