Y’wanna Buy the PetroYuan!? (FXI,USO,MSFT,FB,XLK)

Y’wanna Buy the PetroYuan!? (FXI,USO,MSFT,FB,XLK) If we’re on the cusp of a new bull market in commodities, as we here at The Modern Bull believe, then the winners and losers will be clear cut and big. But when it comes to measuring the impact of rising energy, metals and foodstuffs prices, it’s very hard to determine how China will be affected. The reasons for this are manifold, and not least because that country is among the least transparent when it comes to all things economic – and, of course, because free markets don’t operate there as they do in many other parts of the developed world. China is among the world’s largest producers of farm produce – much of which ends up supplying domestic demand, though a great deal, too, is exported. At the same time, it’s the globe’s biggest importer of oil and gas, as well as many metals. So what’s the net effect on a country like China when, say, oil prices jack up sharply, as they have in the past few months? To put it in its most general terms, China’s markets and wealth are very closely correlated to global commodity prices, something that cannot be said…

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Oh, To Be Young Again… (MSFT)

Oh, To Be Young Again… (MSFT) It’s a truth seldom questioned that the young have it best. After all, they’ve yet to suffer life’s slings, the challenges of marriage and child rearing, the uncertainties of earning a livelihood and the timely – and untimely – passing of family and friends. And yet there are times when even youth lose hope – when even twenty-somethings consider the prospect of building a life and realizing their dreams to be onerous and grave, and not as Shakespeare once put it – Could it be that today we are witnessing the passage of such an age, when the young are mournful, and the aged more stout? A look at the following chart from Deutsche Bank Research offers some shocking data. Is it possible that for the first time – possibly ever – the young possess less spirit than their parents? Have a look – True, we’re talking about consumer confidence here, but that generally spills over into other areas of life, no? Put plainly, this is the first time that reliable data are showing those over 55 possessing greater optimism for the future than those under 35. Remarkable. Just this month. First time ever….

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System Signals Silver Sale (SLV,GLD,XAU,TSLA,GM,MSFT)

There are all sorts of trading systems out there.   Some old-timers swear by the Graham and Dodd fundamental model, that tells you to buy them when P/E ratios and dividend yields are sparkling and dump them once the ratios are no longer competitive.   Others will tell you that’s balderdash, and only technical analysis can produce for you winning trades over the long haul.   There are those who swear by cycle analysis, point and Figure charting and Elliott wave theory.  Some adhere exclusively to Dow Theory. And still more go in for Gann triangles and Fibonacci retracements.  And believe it or not, some have even made consistent money trading the interplanetary orbitals of financial astrology!   Here at Normandy we’ve examined them all at one stage or another, and we’re here to tell you that absolutely no system has all the answers – and certainly none is foolproof.  But we can also tell you from experience (and the academic literature is fully behind us on this) that the single best method of making money in the trading arena is by using a trend following system. It doesn’t sound too exotic, and it’s not likely to make you the…

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Trading Basics (TSLA,MSFT,OLN)

We’ve had several readers contact us over the years to ask how it is we stick so fiercely to the same set of technical tools to obtain our read of the markets.  And the answer is simple.   Our reliance on a set of four moving averages, volume, RSI and MACD have everything to do with the fact that, after almost twenty-five years of toying and testing every possible indicator available, these ones actually work consistently. Now, that’s not to say that other tools won’t work, or that we don’t occasionally rummage through the technical toolbox to confirm what the above named indicators are telling us.  No, no.   Indeed, we look to a variety of metrics to help us gauge market direction, including price patterns, sentiment numbers, Fibonacci counts, Japanese candle formations and a host of other market internals.  But from the standpoint of pure technical analysis, the above four indicators are, for us, 90% of the show.   And this is how we use them –   RSI and MACD   These two indicators work in tandem, with RSI leading and MACD confirming.  Once RSI crosses above (or below) its midway ‘waterline’, we have a bullish (or bearish)…

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Don’t Miss the Boat (MSFT,TSLA,GLD,FB,FXI)

With the biggest turnaround in the stock market in 80 years now upon us, the greatest danger facing investors is no longer being invested in equities – it’s rather missing out on what could BE a profoundly successful investing year.   That’s right, despite Wall Street’s worst start to a year ever, the major indexes have now sprung back into the black for 2016, and that has folks looking over their shoulders, wondering if it behooves them to do like their neighbors and colleagues and get back into the investment saddle. We just can’t go out anymore…   Now, whether the turnaround is due to the latest round of earnings, which were far better than expected, or the latest fed-meddling, or because folks are genuinely getting used to the Donald’s hair, is immaterial to us.   We prefer to look at the scoreboard.   And the bottom line is – we got too deeply oversold.   Chase the Market – Without Losing Your Head   The greatest profits are made from market-following systems, and we do our best to give you that here at Normandy.  We don’t find it necessary to spot the turns precisely – because there’s no need.  Our…

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Insiders Buying (FAS,BAC,MSFT,QQQ)

The world is on the edge. The market senses it. The political class makes hay of it. The news media luxuriates in it. And the average guy on the street just stares into the headlights, frozen, unsure when impact will occur.   One would think that the reaction here in the U.S. of A. would be one of outright panic. After all, we are the world’s leading consumers of news and politics, the ones who imbibe daily wars in the Middle East, the dreaded actions of the Fed (and other central banks), the rancor of an elbows-only political rush to become president. We hear it and see it and breathe it daily, non-stop, and whaddaya know…?   We’re unmoved.   Is it because we’re so damned distracted by our gadgets and our own race for more stuff and more action and more get-it-on? Have we lost contact with the real world, grown numb to the ominous realities, financial, military and human that press all about us? Some of us may have the luxury of dwelling gated communities and living lives where nothing dire or unsavory comes into view, but most of us are out there with the masses and see…

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Call a Freakin’ Doctor! (NFLX,FB,TYL,MSFT)

Just a few reminders…   Back in the fall of 2008, when the indexes were almost at their bear market lows, and the situation looked as dire as it’s ever been, we saw an unprecedented government intervention and knew immediately that the markets would be buoyed and eventually lifted to new highs.   We repeated our claim numerous times in the months that followed, and those who heeded the call when the market was off nearly 50% from its peak are today sitting in the lap of luxury, not owing a penny in debt, howling like the pack of mother-stuffing money badgers that they are!   And today, we’ve come full circle.   We’re now witnessing a growing crisis of confidence in the market, but this time it’s with the ability of those same government interventionists to maintain the upward trajectory of the market. With the S&P 500 now off some 10% from its all-time highs, and other sectors even more, the question on everyone’s lips is whether we’re in for a repeat of the 2008/09 bounce, or that’s it, kaputski, sorry Charlie, g’bye.   The Rise of the Bears   Oh, the bears have their arguments, to be sure….

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Microsoft Jumps – Sell Microsoft! (MSFT,QQQ)

Anyone paying attention to markets last week certainly saw the incredible action on Microsoft stock (NASDAQ:MSFT). It was Friday, the company had just announced a noteworthy earnings beat ($0.62 instead of the expected $0.52), and the stock never looked back. It gapped higher at the open and closed up $4.53 on the day (10.45%), for one of the company’s best sessions ever. Revenues, too, beat estimates, coming in at $21.73 billion for the quarter, versus an expected $21.06 billion. Take a look – The jump can be attributed to a number of factors, among which a re-focus toward cloud software sales, which have been doubling for the last seven quarters straight, may be the most significant. But is there any more juice left in Microsoft stock? Is it a buy? That’s the question on everyone’s lips. In our opinion, no. The technicals on the stock look promising for the longer term, but for the next six weeks, we’d place a bright red ‘avoid’ on this puppy. Why? First up, RSI just pierced above the overbought 80 level (green box). That’s the first time that’s happened since late last summer, when the stock abruptly sold off some 10%. Second, we see a…

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New home sales up, Ford (NYSE:F) reports drop in profits and Microsoft (MSFT) announces strong quarter

Markets were headed slightly higher on Friday after it was reported that new home sales in the U.S. hit a six-year high in September. The Commerce Department announced that home sales were up 0.2% to a seasonally adjusted rate of 467,000 units. A reading of this level has not been recorded since July 2008. They also reported that August’s data was downwardly revised to show 466,000 units from the previously reported 504,000 units. Despite the large gain, the reading still missed analysts’ expectations of 470,000 units. New home sales have an 8% affect on the overall housing market. When compared with sales from last year, September’s reading was up 17%. Gennadiy Goldberg, an economist at TD Securities, said, “We expect the housing market recovery to remain relatively gradual over the coming months.” Shares of Ford Motor Co. (NYSE:F) were sinking after the company announced a drop in profits. They reported a 34% decline in profits and a decline in revenue. Ford said that that revenue came in 3% lower to $34.9 billion. The drop was largely attributed to the planned shut down of an F-150 plant. They also added that there was a decline of 3% in wholesale volumes and…

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Buy the Chinese Chicken Dealer (YUM, INTC, MSFT, QQQ, XHB, IBB)

We’ve got a great deal to report this week, so buckle up and get ready to roll. We’ll start with a trade that we’re not so pleased with. It was set on June 16th in a letter called Homage to the Aged, a letter that attempted to convince you that the old-line tech stocks were where it’s at, and that concentrating on these issues over the short term would pay off handsomely. And as it turns out, we were right – even though the trade didn’t work out. As fellow Normandy analyst Matt McAbby pointed out last Thursday, it’s the big names that have thrived on the NASDAQ Composite, while the greater number of her components have actually declined. Look here – [care of Bourbon & Bayonets] Whereas companies like Cisco (NASDAQ:CSCO), Intel (NASDAQ:INTC), Microsoft (NASDAQ:MSFT) and Oracle (NASDAQ:ORCL) have all risen nicely from the time of our call, a full 47% of the index’s remaining components didn’t. They’re all at least 20% below their mid-summer highs, as the chart shows, putting them on a level that, per definition, defines them as being in the grip of the bear. But all that notwithstanding, we played a pairs trade on this…

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