FREEWHEELIN’! (DIA,VOX,XLK,XLF,XLF)

FREEWHEELIN’! (DIA,VOX,XLK,XLF,XLF)   We didn’t create the world we live in, but we inherited it, and that leaves us with just two choices with which to deal with it.   On the one hand, we can opt out.  We can attempt to move away from the reality that exists and forge something new, perhaps with like-minded individuals, or alone if need be.  We may even be able to do it where we’re presently situated – there may be no reason to relocate whatsoever.   The other option is to work with what we’re given and attempt to make the best of a sorry or compromised, or even downright miserable predicament.   And so it is, too, with the financial world.   Consider –   We live at a time of unprecedented government intervention in financial markets, a phenomenon created by (among other things) a concerted, global money-printing drill that abandoned all semblance of restraint with the financial crisis of 2008/09.   Have a look – With the advent of Quantitative Easing the lid blew off, the Fed was fruitful and multiplied, and we entered a new era of falsity that continues to this day.   An Age of Lies  …

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Inaugurating the Profit Search (GOOGL,FXI,KOL,XLP,XLF)

With the New Year under way, we find ourselves with a raft of trades to report.   So pour yourself a tall mug of mead and light up a Camel… Why the goat?   Our first trade was launched in a letter called China at New Highs; Buy China! back on the 1st of June, 2015.  It was a very long dated affair that didn’t prove itself in the end.  We urged you at the time to trade the Chinese market in bullish fashion, specifically recommending you purchase the FXI January (2017) 51 CALL for $5.20 and sell the FXI June 44 PUT for $0.22, the July 44 PUT for $0.48, the August 44 PUT for $0.81, and the November 44 PUT for $1.56.  Total debit on the trade was $2.13   And when all was said and done, we owned the shares and took on quite a bit of water, as we summarized in our March 29th, 2016 letter called The Urban Banking Reversal.  See there for details.   As for today, suffice to say that we now bury the hope contained in the 51 CALLs that expired with the inauguration last Friday.   On a related matter, we…

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Commodity Resurrection (KOL,GLD,GS,XLP,XLF)

Commodity Resurrection (KOL,GLD,GS,XLP,XLF)   The process has taken a while to unfold and may require another few weeks to gather momentum, but there’s no longer any doubt.   Grab some more popcorn and licorice.  The commodity horror show is winding to a close. Before we get there, however, we have three trades to close out, with a nice, net take-home for the trio.   Let’s start with our October 11th initiative from a letter called Multiples, Expanding Multiples and the Energy Spectrum.  In that missive we recommended you buy one KOL January 12 PUT for $0.90 and sell one KOL January 12 CALL for $0.85.  Total debit on the trade was $0.05.   Unfortunately, the dang thing is not moving according to the ‘Normandy Will’ and we’re therefore forced to close it out for what may end up being a loss.  We emphasize the ‘may’, because anything can happen in a week in this market, and by Friday’s expiry we could, in fact, see a profit.   That being said, the short CALL is now trading for $1.25, and we’re forced to buy it back in case the stock moves any higher and puts us into a willy of a…

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The Finale (XLP,XLF,UUP)

Let’s review.   We’re now at the beginning of the final, stock market blowoff top, the one that will go down in history as the greatest and most spastic, bubbilicious equity buying frenzy of all time.   Forget the roaring twenties, forget the South Sea Bubble, forget Tulips and Go-Go and Nifty Fifty and the Singaporean Twin Ballerina Bubble of the mid seventeenth century – nothing will compare to what you’re about to see. Buy and hold?   Hard to tell, because we don’t know at this stage how long the rally will last.   Buy single stocks, an ETF, or an index?   Sure, if you want.  But again, the timing will be difficult here, as it’s sure to be a jerky ride to the top – something like gold in 1979-80-81 – up 20%, down 40%, up another 55%, down 35%, up 60%, etc., etc.  Hanging on to anything will challenge even the most testosterone gifted investor.   That being the case, we prefer a slightly different approach, which we’ll outline in further detail in a moment.   But first, a brief refresher.   We got to this stage in financial history on the back of a drug-induced…

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Hey, Gold Bug! Welcome to the Inferno! (GLD,TSLA,GS,XLF,FB)

It didn’t take long, that’s for sure.   Once the mighty Trump landed in the White House, it was time for Quinn the Eskimo and his merry band of goldphiles to turn-tail and run.   Apparently.   And while we may see a bounce here in the precious metals near-term, the fires of hell are only now being stoked for gold lovers – may they endure their agony gracefully.   Either that, of course, or they can sell. We had a friend several years ago who refused to heed our warning about an imminent selloff in the PMs.  He had just loaded up on silver as the metal was topping, and we warned him strenuously against the move.  Every sign and symbol associated with that metal was screaming ‘overbought’ at that hour, but this fella thought he knew better.  He piled his own life savings on top his father’s, which he was also managing, and spoke about the fortunes he was about to make.   After that, we spoke less.  He was embarrassed, and we understood.  When we did meet, he would ask our opinion, whether we thought the metal had bottomed, or if it was close to bottoming. We…

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Bleeding Heart Greed (XLF,UNH,NKE,LMT)

What’s lost in the daily news cycle is something far more precious than just the latest polling numbers or the markets last jot and tittle.   In fact, it’s not just the news (which has an abnormally tight strangle-hold on our attention) but all of modern life that militates against the most important and meaningful part of our existence – our relationship with those around us.   In order to make a living, ‘get ahead’, ‘keep up with the Schultzs and generally be considered one of the in crowd, we do any number of ridiculous things to our loved ones and friends, some of which have drastic consequences.   Take, for instance, our penchant to farm out our children to day care – from as young as six months old!  And after that, to turn them over to preschools at age three, junior kindergartens at four, after school ‘enrichment’ programs as soon as they’re able, summer camps and whatever the hell else we can sign them up for in order to keep them out of our hair while we earn that extra buck to pay for the illegal who’s cleaning our house and let us vacation in Nauru over Xmas…

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Academic Trading Strategies (XLE, USO, XLF, FXU)

Did you ever wonder what university professors really do? Here’s an article that explains what most of these clowns are really up to. You’re not going to believe it. When they’re not writing treatises on “15th Century Sock Weaving Techniques of the Women of Argonne”, well-paid academicians are busy quantifying the likelihood of the world ending in this manner or that. You don’t believe me? Click here. Here’s a brief quote from the article for those who don’t have the time – “This is a scientific assessment about the possibility of oblivion, certainly, but even more it is a call for action based on the assumption that humanity is able to rise to challenges and turn them into opportunities.” Sorry to say it, but the academic world is now either so lost in the minutiae of the mundane and unimportant, or so arrogant as to imagine that the quantification of a conclusion that’s anything but a certainty is within their grasp. Hopeless   Leave it to the so-called ‘scholars’ at Oxford University’s pretentiously named ‘Global Challenges Foundation’ along with fellow quacks from their ‘Future of Humanity Institute’ to find new and creative ways to draw attention to themselves and secure…

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Underground and Behind the Scenes (XLF, FXU, DIA)

Things just aren’t as they seem. Consider the following – 1. Is there really a bull market underway? Many believe it to be the case. But is it possible that rising stocks are really the product of a carefully engineered government effort to drug the masses – to hoodwink them into thinking that all is peachy, nothing’s amiss, and that we’re all just groovin’ – so don’t make waves. 2. And is there really a burgeoning conflict in the Middle East? It appears so – replete with head choppers and body snatchers and suicide bombers and slingshots. But could it be that it’s actually a well-hatched plot to sequester the world’s gold reserves and funnel them to some subterranean hideout in the middle of the Arabian Desert? 3. Is the Ukraine/Russia border war is the result of a spontaneous ethnic Russian desire to return to their Muscovite roots? So it seems. Or are we again witnessing a low grade, western-inspired battle whose goal is to carve out a sharper divide between opposing Slavic cultures – those who lean more toward their Western roots vs. those who adhere to what was once termed a ‘Slavophile’ orientation. And all this, of course,…

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Where Will Oil Lead Us? (PWF, USO, SPY, SOCL, XLF)

We have to take a time out and ask ourselves some sharp questions at this point, because the action in the crude pits is beginning to resemble what we saw at mid-year, 2008, when oil slid like a bursting, jam-filled donut down Chris Christie’s gullet at the 4th annual New Jersey Obesity Awareness gala. In fact, it was just two weeks ago that fellow Normandy scribbler Matt McAbby discussed the importance of the precipitous decline in crude in his letter called A Crude (But not Vulgar) Pairs Trade, wherein he also put together the following chart that matched the action on the equity market with that for oil during the 2008/2009 market meltdown. We borrow it now with his blessing for your perusal – As Matt made clear, the steep slide in oil (in blue, at top), represented by the U.S. Oil Fund ETF (NYSE:USO), was a clear harbinger of the death spiral in the S&P 500 that followed later in the year. Moreover, oil’s bottom in February of 2009 also came a month before stocks hit their lows and began to turn up (above volume peak, in black). And our question today is, whether recent technical weakness in crude…

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The Next Wave Higher (XLF, SPY)

We’ve spoken a number of times in the past about the advantages and use of technical analysis in the study of markets. And we’ve also discussed the limitations that we currently face using those same tools as we attempt to navigate what we believe is an unprecedented market reality – one of global super-hyper-liquidity. [click on image to listen] Truth is, we’re not so sure the term ‘super-hyper-liquidity’ genuinely captures the essence of the existing and potential number of dollars (and Euros and Pounds and Yen and Renminbi, etc.) that are floating about the world’s financial system. We might have to add another ‘super-duper’ or ‘mega-colossal’ to actually do the idea justice. Have a look here – This is a chart you’ve no doubt seen many times before. It’s the U.S. money supply charted for the last 100 years, and it gives a reasonable graphic depiction of what we’re trying to convey. Let every liar, swindler and cheat now step up and tell you that it’s all business as usual and that we’re not facing something qualitatively different than we have in the past. In a ninety-year timespan, the money supply grew at a relatively even pace, and then, in…

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