Survival 2015: Cherry Picking The Commodities

[mepr-rule id=”988″ ifallowed=”show” description=”executive_lounge_members_only”]

A warm “WELCOME” to all new readers. Alright, that’s enough of that, lets dive right it.  It’s been a year since we sent out our last Normandy Survivalist Report, and it’s high-time we got back to you with this year’s installment.

Just to bring you up to date, though, our three trade recommendations last year produced a smash-hit fortune of a return. To sum, they look like this –

  1. The General Dynamics (NYSE:GD) trade returned an airborne, drone explosion $1800 per pair traded. Simply ecstatic.

Survival 2015 Cherry-Picking the Commodities (XLE,GLD,FNV)

  1. Our Select Sector SPDR Energy (NYSE:XLE) trade was also a smash success, expiring in June at the peak of the oil rise and in-the-money for a precise $1008.27. A number also not to be trifled with.
  1. And finally, our recommendation to short the Market Vectors Agribusiness ETF (NYSE:MOO) ended in a loss of exactly $70.

Total take on the three was anything but survival, friends. That’s what we call thriving, to the tune of $2738.27 on an initial outlay of just $413.

That’s bread and that’s butter, and that’s a whole lotta –

Sugar

Bring it Ahead a Year!

We’re still in survival mode, but this year our focus is somewhat different.

We’re going to zero in on the energy sector, to begin, because we’ve seen some dramatic moves there over the last year, in crude oil in particular. To our mind, however, the performance is now over, the bottom is in and the next moves for crude – however halting and jagged they may be – are higher.

Take a look at the following chart of the Select Sector SPDR Energy ETF (NYSE:XLE), a reasonable proxy for the largest American oil and gas concerns.

XLE

Despite the challenges posed by its moving averages, we believe the stock and sector are poised for a medium term rebound, and here’s why –

  • To begin, we had a deeply oversold RSI read back in October (red circle) that was also marked by a significant increase in trade (black box).
  • That indication turned out to be just a way station, however, on the path to lower lows – but it did mark a slowing of selling momentum, as the green lines of positive divergence against price demonstrate.
  • As of just one week ago, MACD climbed above its midway ‘waterline’, confirming a similar move by RSI two weeks prior (in blue). And that set up a full-on bullish indication for technicians.
  • We add increasing average daily volume to the mix (gold balls), as volumes have climbed from ten million shares per day in the last five months to well over 30 million.

As for those previously mentioned, pesky moving averages, we believe the stock is going to have some trouble overtaking them. Getting there may not be such a feat, but our trade has to account for the fact that any move above XLE 90 is going to be met with resistance from three longer term declining moving averages (black arrow). And that won’t be easy.

So we’re building it into the trade

We’re going to recommend readers consider the following trade idea:

Buying a CALL spread on XLE using the June expiry. Purchase the XLE 86 CALL for $1.95 and sell the XLE 90 CALL for $0.90, for a total debit of $1.05 per pair traded.

The short CALL at 90 was selected because of the decreased likelihood that we’ll get there.

Maximum loss on the trade, $1.05. Maximum gain, $2.95.

Ahoy

We’ve gotta make a trade on gold, and we’ve gotta make it now. And we haven’t any doubt you’re gonna love it.

It goes like this –

Gold, today, is a rat-trap. And as we’ll demonstrate below, any long bet on bullion at this stage appears to us to be dead in the water. Sunk. Like a galleon off the Baja Coast.

All the same, there’s money to be made there.

Let’s start with a look at the chart of the SPDR Gold Trust (NYSE:GLD), the world’s most widely watched (and traded) bullion ETF.

PNG

The technical picture is fairly clear.

Let’s start with RSI and MACD indicators, the former of which went sub-waterline at the beginning of the month (in black), the latter of which will submerge today.

That’s a strong bearish indication for technical traders like ourselves, and we believe it’ll trigger an immediate bout of selling.

But the broader picture is really no better.

  1. We have all the moving averages trending lower,
  2. Strong resistance at the long term moving average (yellow line) – against which price smacked its head and did an immediate about-face in mid-January, in the form of
  3. An island reversal formation (in blue), one of the more reliable technical indications of a change in trend,
  4. Leading to a freefall in price that will shortly test the rising trendline (in green).

GLD 114 looks very probable.

After that, it’s anybody’s guess. But were not optimistic. We believe there’s additional downside, and the general investing milieu also supports us.

Strongman

A strong U.S. Dollar continues to play havoc with all the commodities. And unless we get some real, sustained weakness with the buck, it’s hard to imagine gold making a U-turn.

Real interest rates are also rising, though inflation worries are fairly muted. And both of these conditions will also deter investors from digging into gold.

And that’s the rub. Because gold will not move until investment demand picks up again a la 2009/2010. It was investment demand, pure and simple, that pushed the precious metals to their 2011 highs and it will be investor demand that takes it there again.

But as of today there are simply not enough catalysts.

So what do we do?

Gold may be a survivalist essential, but right now survival necessitates us playing it as follows –

We’re going to match gold, the commodity, against the finest of all the gold digging corporations out there, Franco Nevada (NYSE:FNV).

Simply put, FNV will gain ground almost regardless of what the metal does, so we’re going to go long/short, betting on FNV outperforming GLD.

We therefore recommend readers consider the following trade idea:

Buy the FNV July 50 CALL for $6.00 and sell the GLD June 30th 115 CALL for $5.10, for a total debit of $0.90 on the trade.

Only the strong survive, friends.

Many happy returns,

Matt McAbby

[/mepr-rule]

[mepr-rule id=”203″ ifallowed=”show” description=”wall_street_elite_members_only”]

A warm “WELCOME” to all new readers. Alright, that’s enough of that, lets dive right it.  It’s been a year since we sent out our last Normandy Survivalist Report, and it’s high-time we got back to you with this year’s installment.

Just to bring you up to date, though, our three trade recommendations last year produced a smash-hit fortune of a return. To sum, they look like this –

  1. The General Dynamics (NYSE:GD) trade returned an airborne, drone explosion $1800 per pair traded. Simply ecstatic.

Survival 2015 Cherry-Picking the Commodities (XLE,GLD,FNV)

  1. Our Select Sector SPDR Energy (NYSE:XLE) trade was also a smash success, expiring in June at the peak of the oil rise and in-the-money for a precise $1008.27. A number also not to be trifled with.
  1. And finally, our recommendation to short the Market Vectors Agribusiness ETF (NYSE:MOO) ended in a loss of exactly $70.

Total take on the three was anything but survival, friends. That’s what we call thriving, to the tune of $2738.27 on an initial outlay of just $413.

That’s bread and that’s butter, and that’s a whole lotta –

Sugar

Bring it Ahead a Year!

We’re still in survival mode, but this year our focus is somewhat different.

We’re going to zero in on the energy sector, to begin, because we’ve seen some dramatic moves there over the last year, in crude oil in particular. To our mind, however, the performance is now over, the bottom is in and the next moves for crude – however halting and jagged they may be – are higher.

Take a look at the following chart of the Select Sector SPDR Energy ETF (NYSE:XLE), a reasonable proxy for the largest American oil and gas concerns.

XLE

Despite the challenges posed by its moving averages, we believe the stock and sector are poised for a medium term rebound, and here’s why –

  • To begin, we had a deeply oversold RSI read back in October (red circle) that was also marked by a significant increase in trade (black box).
  • That indication turned out to be just a way station, however, on the path to lower lows – but it did mark a slowing of selling momentum, as the green lines of positive divergence against price demonstrate.
  • As of just one week ago, MACD climbed above its midway ‘waterline’, confirming a similar move by RSI two weeks prior (in blue). And that set up a full-on bullish indication for technicians.
  • We add increasing average daily volume to the mix (gold balls), as volumes have climbed from ten million shares per day in the last five months to well over 30 million.

As for those previously mentioned, pesky moving averages, we believe the stock is going to have some trouble overtaking them. Getting there may not be such a feat, but our trade has to account for the fact that any move above XLE 90 is going to be met with resistance from three longer term declining moving averages (black arrow). And that won’t be easy.

So we’re building it into the trade

We’re going to recommend readers consider the following trade idea:

Buying a CALL spread on XLE using the June expiry. Purchase the XLE 86 CALL for $1.95 and sell the XLE 90 CALL for $0.90, for a total debit of $1.05 per pair traded.

The short CALL at 90 was selected because of the decreased likelihood that we’ll get there.

Maximum loss on the trade, $1.05. Maximum gain, $2.95.

Ahoy

We’ve gotta make a trade on gold, and we’ve gotta make it now. And we haven’t any doubt you’re gonna love it.

It goes like this –

Gold, today, is a rat-trap. And as we’ll demonstrate below, any long bet on bullion at this stage appears to us to be dead in the water. Sunk. Like a galleon off the Baja Coast.

All the same, there’s money to be made there.

Let’s start with a look at the chart of the SPDR Gold Trust (NYSE:GLD), the world’s most widely watched (and traded) bullion ETF.

PNG

The technical picture is fairly clear.

Let’s start with RSI and MACD indicators, the former of which went sub-waterline at the beginning of the month (in black), the latter of which will submerge today.

That’s a strong bearish indication for technical traders like ourselves, and we believe it’ll trigger an immediate bout of selling.

But the broader picture is really no better.

  1. We have all the moving averages trending lower,
  2. Strong resistance at the long term moving average (yellow line) – against which price smacked its head and did an immediate about-face in mid-January, in the form of
  3. An island reversal formation (in blue), one of the more reliable technical indications of a change in trend,
  4. Leading to a freefall in price that will shortly test the rising trendline (in green).

GLD 114 looks very probable.

After that, it’s anybody’s guess. But were not optimistic. We believe there’s additional downside, and the general investing milieu also supports us.

Strongman

A strong U.S. Dollar continues to play havoc with all the commodities. And unless we get some real, sustained weakness with the buck, it’s hard to imagine gold making a U-turn.

Real interest rates are also rising, though inflation worries are fairly muted. And both of these conditions will also deter investors from digging into gold.

And that’s the rub. Because gold will not move until investment demand picks up again a la 2009/2010. It was investment demand, pure and simple, that pushed the precious metals to their 2011 highs and it will be investor demand that takes it there again.

But as of today there are simply not enough catalysts.

So what do we do?

Gold may be a survivalist essential, but right now survival necessitates us playing it as follows –

We’re going to match gold, the commodity, against the finest of all the gold digging corporations out there, Franco Nevada (NYSE:FNV).

Simply put, FNV will gain ground almost regardless of what the metal does, so we’re going to go long/short, betting on FNV outperforming GLD.

We therefore recommend readers consider the following trade idea:

Buy the FNV July 50 CALL for $6.00 and sell the GLD June 30th 115 CALL for $5.10, for a total debit of $0.90 on the trade.

Only the strong survive, friends.

Many happy returns,

Matt McAbby

[/mepr-rule]

[mepr-rule id=”204″ ifallowed=”show” description=“options_trader_elite_members_only”]

A warm “WELCOME” to all new readers. Alright, that’s enough of that, lets dive right it.  It’s been a year since we sent out our last Normandy Survivalist Report, and it’s high-time we got back to you with this year’s installment.

Just to bring you up to date, though, our three trade recommendations last year produced a smash-hit fortune of a return. To sum, they look like this –

  1. The General Dynamics (NYSE:GD) trade returned an airborne, drone explosion $1800 per pair traded. Simply ecstatic.

Survival 2015 Cherry-Picking the Commodities (XLE,GLD,FNV)

  1. Our Select Sector SPDR Energy (NYSE:XLE) trade was also a smash success, expiring in June at the peak of the oil rise and in-the-money for a precise $1008.27. A number also not to be trifled with.
  1. And finally, our recommendation to short the Market Vectors Agribusiness ETF (NYSE:MOO) ended in a loss of exactly $70.

Total take on the three was anything but survival, friends. That’s what we call thriving, to the tune of $2738.27 on an initial outlay of just $413.

That’s bread and that’s butter, and that’s a whole lotta –

Sugar

Bring it Ahead a Year!

We’re still in survival mode, but this year our focus is somewhat different.

We’re going to zero in on the energy sector, to begin, because we’ve seen some dramatic moves there over the last year, in crude oil in particular. To our mind, however, the performance is now over, the bottom is in and the next moves for crude – however halting and jagged they may be – are higher.

Take a look at the following chart of the Select Sector SPDR Energy ETF (NYSE:XLE), a reasonable proxy for the largest American oil and gas concerns.

XLE

Despite the challenges posed by its moving averages, we believe the stock and sector are poised for a medium term rebound, and here’s why –

  • To begin, we had a deeply oversold RSI read back in October (red circle) that was also marked by a significant increase in trade (black box).
  • That indication turned out to be just a way station, however, on the path to lower lows – but it did mark a slowing of selling momentum, as the green lines of positive divergence against price demonstrate.
  • As of just one week ago, MACD climbed above its midway ‘waterline’, confirming a similar move by RSI two weeks prior (in blue). And that set up a full-on bullish indication for technicians.
  • We add increasing average daily volume to the mix (gold balls), as volumes have climbed from ten million shares per day in the last five months to well over 30 million.

As for those previously mentioned, pesky moving averages, we believe the stock is going to have some trouble overtaking them. Getting there may not be such a feat, but our trade has to account for the fact that any move above XLE 90 is going to be met with resistance from three longer term declining moving averages (black arrow). And that won’t be easy.

So we’re building it into the trade

We’re going to recommend readers consider the following trade idea:

Buying a CALL spread on XLE using the June expiry. Purchase the XLE 86 CALL for $1.95 and sell the XLE 90 CALL for $0.90, for a total debit of $1.05 per pair traded.

The short CALL at 90 was selected because of the decreased likelihood that we’ll get there.

Maximum loss on the trade, $1.05. Maximum gain, $2.95.

Ahoy

We’ve gotta make a trade on gold, and we’ve gotta make it now. And we haven’t any doubt you’re gonna love it.

It goes like this –

Gold, today, is a rat-trap. And as we’ll demonstrate below, any long bet on bullion at this stage appears to us to be dead in the water. Sunk. Like a galleon off the Baja Coast.

All the same, there’s money to be made there.

Let’s start with a look at the chart of the SPDR Gold Trust (NYSE:GLD), the world’s most widely watched (and traded) bullion ETF.

PNG

The technical picture is fairly clear.

Let’s start with RSI and MACD indicators, the former of which went sub-waterline at the beginning of the month (in black), the latter of which will submerge today.

That’s a strong bearish indication for technical traders like ourselves, and we believe it’ll trigger an immediate bout of selling.

But the broader picture is really no better.

  1. We have all the moving averages trending lower,
  2. Strong resistance at the long term moving average (yellow line) – against which price smacked its head and did an immediate about-face in mid-January, in the form of
  3. An island reversal formation (in blue), one of the more reliable technical indications of a change in trend,
  4. Leading to a freefall in price that will shortly test the rising trendline (in green).

GLD 114 looks very probable.

After that, it’s anybody’s guess. But were not optimistic. We believe there’s additional downside, and the general investing milieu also supports us.

Strongman

A strong U.S. Dollar continues to play havoc with all the commodities. And unless we get some real, sustained weakness with the buck, it’s hard to imagine gold making a U-turn.

Real interest rates are also rising, though inflation worries are fairly muted. And both of these conditions will also deter investors from digging into gold.

And that’s the rub. Because gold will not move until investment demand picks up again a la 2009/2010. It was investment demand, pure and simple, that pushed the precious metals to their 2011 highs and it will be investor demand that takes it there again.

But as of today there are simply not enough catalysts.

So what do we do?

Gold may be a survivalist essential, but right now survival necessitates us playing it as follows –

We’re going to match gold, the commodity, against the finest of all the gold digging corporations out there, Franco Nevada (NYSE:FNV).

Simply put, FNV will gain ground almost regardless of what the metal does, so we’re going to go long/short, betting on FNV outperforming GLD.

We therefore recommend readers consider the following trade idea:

Buy the FNV July 50 CALL for $6.00 and sell the GLD June 30th 115 CALL for $5.10, for a total debit of $0.90 on the trade.

Only the strong survive, friends.

Many happy returns,

Matt McAbby

[/mepr-rule]

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