The World is Falling Apart! (XHB)

Stand aside! Gang way! Look out below! Timberrrrr!   The decibel level toward the end of last week got so shrill that we had to throw on the headphones and cool out to some chug-a-luggin’ Johnny Cash tunes just to get some perspective.   Heaven help us – you’d think the very planet was living out its last days!     But as Johnny says, I keep my eyes wide open all the time…   In fact, while all the major averages and a few headline stocks were putting straws to the gravy, a few select sectors were actually performing well. And not just the usual suspects, like the utilities. This, for illustration sake, is the Dow Jones Utility Average for the last six months, matched against the Industrials (DJIA) for the same period.     The utilities, of course, are the investment refuge of widows and orphans – a good, safe place to park funds and collect income regardless of the market weather. Or, at least, that’s the role they’ve played historically.   But in a world of increasing fanaticism and natural disasters, where power plants and pipelines and refineries have become ‘military’ targets, and explosions and meltdowns kill and maim thousands and pollute…

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A Midsummer Gold Rant (GLD)

You’ll have to forgive us, but once in a while we come across an investment ‘study’ that’s so full of trumped-up asininity that we’re forced to break our silence and speak out.   And that’s what we’re doing today.   The foolishness under scrutiny comes courtesy of a man whose credentials are otherwise solid and should therefore know better. But then again, isn’t it always the so-called experts who end up letting us down.   The Flooded Bookstore   I remember working in a used bookstore back in my college days when a fellow came in looking for an odd title that had to do with engineering air ducts in submarines, or some such. It turns out the man himself was an engineer and quite renowned, if his story was to be trusted.   In any event, we were having plumbing problems in the store at that hour, and as our discussion of sub-oceanic water pressures proceeded and the search for his book through various channels ensued, a shouting match between the store’s owner (a man with a very short temper) and the plumber, who turned out to be a gent exceedingly proud, grew in volume.   It continued apace…

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Overreactions and Oil (USO) Prices

Does it look like war? Sure smells like it. We’ll see how things shape up in the days and weeks ahead, but we have to warn readers that any kind of unexpected conflagration or a raising of the stakes in the Middle East or Ukraine could send an unwanted spook through the financial system. There’s an anxiousness in the air on Wall Street today that makes the market ripe for an overreaction. Stay tuned. In the meantime – until we see the whites of their eyes – we’re sticking with our story – This market is a bull market. It’s a liquidity driven market. It cares increasingly little for economics or corporate earnings, and As time wears on, we expect to see a winnowing in the number of issues that benefit from the growing inflow into equities. Now let’s look at some specifics. We’ve commented over the last few weeks on how dearly the market wants to see oil price stability before it begins to trek higher again. We’ve also stated that we believe that longed-for stability is at hand. Indeed, a look at the chart of the United States Oil Fund ETF (NYSE:USO) shows that we are in the midst…

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The Reality of Stock Celebrities and Apple’s (AAPL) Move

Once in a while, the mainstream media comes along with an article that’s so astounding in its clarity and incisiveness that we’re simply left dumbstruck. Generally, we don’t expect a great deal from them. And it’s true, they’re often more reliable as contrarian indicators of what’s ‘in’ and ‘out’ in the investment world. What they parrot about is often on the verge of falling off a cliff – and what they roundly ridicule is about ready to soar. And that’s precisely what we saw earlier this week, when a fellow named Chuck Jaffe over at MarketWatch, an extraordinarily popular financial website, spoke an “absolute truth” about the Dow Jones Industrial Average… without even realizing it. We place “absolute truth” in quotation marks because Mr. Jaffe, as a purveyor of well-washed information to the unwashed masses, can be relied upon to provide the truth via irony. Not his own verbal, intended irony, however – rather what’s termed ‘dramatic irony’, as we’ll attempt to describe below. We reproduce a brief selection of the daffy one’s article here, with the hope that you’ll place today’s lesson very near your heart. The article addresses Apple Inc. (NASDAQ:AAPL) replacing AT&T (NYSE:T) on the Dow. And what his words revealed is a…

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Get up, Slug-a-Bed! (GS, DJIA, GLD)

Enough of your dilly-dallying, you old lie-about. Get up and make something of yourself. It’s time to get rich! Rich, I say! What do I have to do? Easy. Just put your money into the stock market and watch. That’s right. We’re now approaching the final phase of what we’re certain will be the greatest blow-off top in stock history, and if you’re in it, you win it. If not, you have absolutely no way of generating the type of profits we’re expecting – not housing, not commodities, not even gold will give you the kind of gravy you’ll get from investments in the highest grade, most popular, indexed stocks you can find. And we stress the word ‘popular’. Why? Because earnings are no longer an important determinant of stock prices. Didn’t you know? We live in a new world, friends. Call it ‘post-reality’. The days of tough fundamental standards and investigative number crunching are fading. In today’s investment milieu, money-flows rule. You chase the tide, ride it awhile and jump off. And you don’t worry your pretty little mug about whether the latest quarter’s profit release is in line with analysts’ expectations. The End of Bonds   “But what…

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Was That the Santa Claus Rally?! (TSLA, SPX, DJIA)

Hope everyone’s enjoying the holiday season and that we’re all venturing toward peace, prosperity and fulfillment in the New Year. Wild times, eh? Not only was this week’s GDP report the best in a decade, but the Dow closed above 18,000 for the first time in history, gas prices are down for three-months straight (to just two bucks a gallon), gold has fallen back to its bear market low (almost) and the dollar is setting new highs as we speak. What the hell kinda world is this!?   Our sentiments exactly. But we don’t judge. Just the facts, ma’am. And the facts are now telling us that everyone’s on holiday. Essentially, that means nothing’s happening in the market that can be relied upon to continue in another ten days time, when we’re all back to the grind, recovered from our hangovers (and Visa bills!) and again pushing the wheel of pain. Push, Arnold, push!   That being said, there are a few secrets that can be revealed to you at this ‘down-time’ of the year that should bring you a little cheer – secrets, by the way, that you won’t hear anywhere else. And they go like this – Come-uppance…

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Southbound Markets (DJIA, TYX, TSLA, WMT)

For the past few weeks we’ve been warning about a rollover top in the making in the stock market, and it appears that something’s now afoot. We don’t want to jump into alarm mode, of course – it’s too early for that. And it’s more than likely there won’t be any need for alarm bells at all. But a pullback of some brief duration and modest scope certainly looks to be upon us. Not to worry, by the way. When the time comes for panic, we’ll present you with a shrieking fit the likes of which you’ve never seen before. Know, too, that we’ve hedged ourselves against such an event. All three regular Normandy publications have offered some variety of bearish moneymaking initiatives over the last month, just as the ‘creeping interim rollover top’ – as we once designated it – began to reveal itself. Have a look now at two charts. The first is the Dow Jones Industrials for the last six months – We Call a Top   It’s clear from the action of the last few days that our prognosis of an interim top was correct. Remember, on November 20th in Put on Your Parkas, Gang, we…

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Chinese Market Riddle – Solved! (FXI, DJIA)

Riddle me this: “Is it a lie…? Or is it just the stock market?” We offer a carrot slathered with Dijon mustard to anyone who correctly discerns what the above brainteaser is referring to. And for those who haven’t a clue, we offer a second best – two celery sticks basted in lamb-gurney and a bucket of ice. Turn to the cooking channel if you’re still in the dark. Yichh!   Some basics: The answer to the above riddle requires a minute’s explanation, and it goes like this – Bull markets occur when there’s 1) an abundance of cash in the system that’s… 2) ready to be funneled into stocks. Simple and true. And bull markets stop rising when the money that’s available to the system either: 1) runs out or 2) is no longer willing to be funneled to said stock purchases. And where are we now?   Today, we’re at a stage when the money is available – indeed, historically there has never been a time when so much liquidity was parked in the system awaiting its order to go a’shopping. And as to the funneling – folks are actually starting to stream back into the market after…

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A Walrus Thanksgiving (DXY, FXI, DJIA)

“The time has come,” the Walrus said, “To talk of many things: Of shoes–and ships–and sealing-wax– Of cabbages–and kings…” Lewis Carroll “I am the Walrus Goo-goo-ga-joob…” Lennon/McCartney Enjoy yer bird, gang! We’re monitoring two separate trends in the market as the turkey gets served this year. The first is the action on the dollar. And the second is what appears to be a creeping interim rollover top in the making. Wanna make something of it?   The dollar has been getting tremendous inflows of late – just like we said it would – and mostly a result of the relative uselessness of the rest of the world’s currencies. The CFTC’s latest data show a growth in net bullish dollar longs to unprecedented levels – a full, fat $48 billion is now betting on continued U.S. economic growth. This is also the first time since the bull market began in March, 2009 that the dollar has seen net long positions against all eight of its currency peers. Why? Consider – a Japanese recession, possible Eurozone deflation and an ongoing Chinese slowdown, and why in the world wouldn’t you go long the buck. Itchy Trigger finger…   The way things are going,…

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The Slide is Complete (GLD, SLV, DJIA, DJTA)

The indexes are rising and the fears remain. And that combination bodes well for further market gains. It’s when we stop fretting about Ebola and Isis and Putin, and weak economic data from Japan and China and the Eurozone, and a too-strong dollar and an end to QE and what will be after the mid-term elections… that’s when we’ll start to worry. As of today, however, those items form the necessary smokescreen for a continued rise in equities. Which is not to say they aren’t genuinely worrisome items in and of themselves. No and no. We’re just pointing it out so you’ll see how the game works. That is, when the front page lacks a story of the Dow nearing or hitting new highs, when it’s dominated by all these other issues, the bull lives. The Gold Bug: Failed Hopes   On the other side of the coin, of course, is the demise of those asset classes that get hammered by the opportunity cost of owning equities. And for this we have to look no further than the commodity sector in general, and gold in particular. Gold, in fact, will be only one of the losers in a rising equity…

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