THE POLAR VORTEX HAS SPLIT! (UNG,USO,SPY)

THE POLAR VORTEX HAS SPLIT! (UNG,USO,SPY) OH. MY. GAWD!   In a development that’s caught nearly everyone off guard, a massive high pressure system recently sundered the normally quiescent Arctic ‘polar vortex’ in two!   It’s a little known, unique weather event that, according to meteorologists, could bring MUCH WARMER TEMPERATURES TO THE AMERICAN EAST COAST AND MUCH COLDER TEMPS TO THE WEST COAST AND CONTINENTAL EUROPE! Did you get that?   In the coming weeks, the weather may change due to this disruption of the normally static low pressure cell that sits over the Arctic!   And whaddaya know, U.K. natural gas contracts have already spiked some 3.5% in anticipation of the cold blast, while the Russians, who supply a great segment of Europe with its natgas and heating oil, appear to be revelling in this ‘natural’, though odd, wintry phenomenon.   But was it all a Russian plot?!   It didn’t take long…   The inevitable conspiratorial plotlines have already begun spinning on the web and, to a lesser degree, from American and Western European officialdom.  The theorists are all wondering whether Vlad the ‘Vortex Cleaver’ Putin had a hand in this latest weather oddity.  And while we’ve…

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Metals. Now. (FCX,UUP,UNG)

Metals. Now. (FCX,UUP,UNG)   We’re going to take a broad survey of the commodities today because recent action in the ‘stuff’ class is looking bullish, and we believe we’ve identified a clever way to trade it.   But first to the background.   We start with the dollar.   As of this writing, the buck sits at its weakest level in a year and is threatening to plunge Alice-like into the nether realms if it loses but a rabbit’s hair more value.   In percentage terms, a mere 2% decline from current levels would put the dollar necrophiliacs into a rapturous frenzy of selling.   And to where she drops, nobody knows.   Have a look – This is the U.S. Dollar Index for the last three years, and as you can see, support sits but a whisker below current levels.   It goes without saying that a tumble of the sort we alluded to above would send the price of commodities blasting through space in search of an equilibrium moment.  The g-spot earthquake of buying that would ensue would simply be too much for the market to keep clothed.   The panties would fly and the ensuing screams would wake…

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China Wants Trump’s Gas! (UNG,QQQ)

China Wants Trump’s Gas! (UNG,QQQ) Two weeks ago we issued a long term bullish call on natural gas, a sector that seems to endure a new shot-kacking every time we review its chart.   The damage, as we wrote in our May 25th letter, It’s perfectly Natural, began back in 2008, when gas prices melted down alongside stocks in what’s come to be known as the Sub-Prime Mortgage Crisis.   Since that time, the United States Natural Gas Fund (NYSE:UNG), a loose proxy for NYMEX Henry Hub, front-month contracts, has been dragging its arse along the rocky bottom, bumping up here and there when the silica got a bit sharp, but basically going nowhere.   Our article proposed that a host of factors were now conspiring to put an end to the UNG hemi-rip that we’ve experienced over the last half decade, and that a significant price boost was now in the offing. Two points… if you’ll permit.   First, the dollar looks weak.   As we’ll show in the chart below, even if we get marginal selling over the next week, dollar weakness could turn into a dollar rout.  Should that occur, all commodities will experience a boost, as…

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It’s Perfectly Natural (UNG)

It’s Perfectly Natural (UNG)   We’re starting to like the look of the commodities.  They have a renewed feeling of strength, and the technical foundations that underpin many of the more popularly traded materials are also shaping up strongly.   Perhaps most importantly, though, it’s the precious metals, whose movements have historically led the broader commodity pack, and which now look as resilient as they ever have, that offer the best hope for this sorry-ass asset class that’s been in decline for the last half decade.   Below are the daily charts for the SPDR Gold Trust ETF (NYSE:GLD) and the iShares Silver Trust ETF (NYSE:SLV), reasonable proxies for their respective metals. The chart for gold is especially strong, with price just pennies from breaking above all its moving averages (circled, in red).  A series of higher highs and higher lows also bodes well for the metal (blue circles).  And RSI’s recent break above its midway waterline also speaks to a more constructive technical setup (green box).  Once MACD confirms by breaking above its waterline, we’ll have a straight-on BUY signal for those interested in getting long.   And that could be soon.   By contrast, silver isn’t as robust,…

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Royalty’s Ups and Downs (FNV.WT.A,UNG,GDXJ,NVDA)

A quick digression.   We were quite surprised that CNBC’s political reporter, John Harwood, would risk knowing what Americans really thought about the issue of Russian spies (a truth already clear to us little people) by Tweeting out the following challenge to his followers – In the eyes of the American public, Junior wanted know who was more trustworthy: Wikileaks or the intelligence community.  The above results arrived near the beginning of his campaign, but by the end, well… suffice to say that a funny thing happened on the way to the mainstream media disillusion slap-fest.   WHOOPS!   You can be sure that Mr. Harwood didn’t expect the answer he got, being himself a purveyor of a failed agenda and a life lived completely out of touch with Main Street America.   The final tally on his survey looked like this – And that was that.   We reproduce it here for you, dear reader, to make two very simple points.   First, an encouraging one: that only one in six Americans can be taken for fools.   And second, that with a sample of better than 80,000 participants, you can be fairly certain that a manifest majority of…

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2017 – It’s All Good (UNG,GDXJ)

Does it get any better?   Sure, we may see a short-lived selling wave now that this election nonsense is behind us – a chance for the bigshots to take some profits before year end and try to buy back in at cheaper prices in the New Year.   But it’s still good.   How so?   First, and most importantly, we’ve now begun the final wave up for the bull market that began in 1980, or, if you prefer, in 1932 – there’s no longer any question about it.  The ultimate rocket-shot higher before Kondratieff’s winter finally descends upon us like a Siberian tiger, is here. And the signs are everywhere –   Consider first that the nudnicks over at Gallup, ever questioning people about everything from boxers or briefs to religious affiliations and views on alien invasions, have just recorded their highest ever economic confidence reading – in the history of the survey!   What?  Now!?   You got it.  Now.   Take a look – And in case you thought it was just a flash in the pan, consider a recent CNBC poll whose results mirror those above – The CNBC website accounts for it thus:  …

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Put on Your Parkas, Gang! (UNG, DIA, DXY)

Hang on, brothers. The pace is picking up. And because of that, we’re reminding you of a couple of ironclad laws of investing to help see you through the journey. Back on October 23rd we wrote a letter called The Slide is Complete, in which we argued that a Dow Theory ‘Buy’ signal was imminent and markets would steam ahead as soon as an official confirmation was registered. And it didn’t take long. Sure enough, since the Dow bottomed last month at 15,850, the index climbed a whopping 12%, registering an all-time closing high on Tuesday of this week at 17,735. The NASDAQ is up almost 15%, and bullish sentiment, according to the American Association of Individual Investors (AAII), has also gone stratospheric. And it’s that last item that scares us. Because sentiment is destiny. And even if we get higher than normal bullish numbers going forward (due to the massive liquidity in the system), we also have to be wary of a snap-back selloff. In fact, as this final, greatest of all bull markets lurches toward its ultimate peak, we should expect just that – wild swings in sentiment that correspond with increasingly erratic ziggedy-zag action on the charts….

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Disaster Strikes the Hunter! (SLV, UNG, USO)

Gotta lead off today with a number of trades that have either closed with October’s options expiry or that we have to consider closing immediately. So without delay… We start with a trade opened back on June 24th in a letter called Pumping Oil and Gas. There, we urged you consider a long position on natural gas and extreme caution with respect to oil. As it turns out, our latter insight was dead on. Crude oil peaked precisely as we went to press and summarily tumbled by over 20% to its recent lows at roughly $79. Not so for gas. Natural Gas, as represented by the U.S. Natural Gas ETF (NYSE:UNG) backed off mightily, contrary to what we expected. The trade we initiated at the time therefore ended up losing money. Here are the numbers – We expected a bounce from the stock, so we bought a CALL and sold a PUT for a total credit of $0.03 on the trade. The short PUT was the October 22 strike and Friday’s expiry saw UNG at $20.22. That means we bought UNG for $22 and today it’s going for $19.72. Our loss today therefore stands at $225 (228-3), and as much…

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Iconoclastic Fury! (UNG, GDX)

You don’t read McAbby because he’s some kind of millennial wuss. You don’t read him because he hands you a line and makes you feel good about yourself, or because he holds your hand through a losing trade that you believe will eventually turn around and deliver some long-dreamed-of payday that will likely never come. McAbby is no feel-good newsletter writer who flatters and connives and wedges open a place in your weak hearts and soft minds the better to manipulate you and sell you some bag of toys. Oh, please, friends. Enough. We pride ourselves at Bourbon and Bayonets on being the wildest, off-the-wall financial and market commentary on the net – that’s still committed to revealing the truth as ugly and disheartening as it first appears to be. Our motto at B&B is – 99% Truth is 100% Lies   And we strive daily to live that truth, wherever it may lead us. We therefore begin today’s missive with a brief but trustworthy discussion of the Market Vectors Gold Miners ETF (NYSE:GDX), one of the goldphile cult’s most popular ersatz gods. For some reason that stems from the bitter misery of these all-too-bilious souls, GDX still represents the…

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Short Term/Long Term on Europe (EWG, USO, UNG, GLD)

Sometimes we put on a trade that takes us months, if not a year or more to cash in on. And sometimes it happens immediately. We usually aim to be open and shut anywhere between one to three months from initiating, but as with life itself, there are always surprises. And so it is this week, as we plan to cash in on two trades that we initiated in just the last fortnight. Or, to be more precise, one and a half trades. Great hair. Let us explain. Trade #1 Two weeks ago in a letter called Strangling the Energy Market we urged you to sell strangles on both the United States Oil Fund ETF (NYSE:USO) and the United States Natural Gas Fund ETF (NYSE:UNG). We felt both stocks were due for a brief slide sideways and that the premium collected on the trade would be ours after a relatively short duration. And what happened? We saw both commodities drop immediately – and more than we anticipated. And that means that the short CALLs on both trades have lost a tremendous amount of value. Numbers, Huey! Give us the Numbers! You’re so crass. Here they are. We sold the October…

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