The Changing of the Guard (TYL,FB,FXI)

It was a pleasant, sunny day back in September that we issued you, our dear readers, a challenge for year’s end.

 

The letter was called A Challenge to the People, and in it we asked to know where y’all saw things ending up – everything from the S&P 500 to oil to the dollar to the World Series. For whatever you had the prognosticating acumen, we challenged you to step forth.

 

And we, too, offered closing projections for 2015 at that time.

 

Here’s how we made out.

Trump

The Final Tally: from Hugh L. O’Haynew –

Investment Icon/Show-Biz Impresario/Financial Wunderkind

DJIA

At the time, everything had just fallen slap-ass lower, so there was little hope of a blockbuster move occurring here, but we thought things would end better. We wrote: “Look for the Dow to break again above 18,000, but not by much.” That’s for sure. The old gal got as high as 17,970 in early November (damn close!), but trailed off since then to finish the year at 17,425. GRADE: B

 

Gold

In September we hadn’t much hope for the metal, commenting that “Precious metals are the tundra of the investment world today – barren, cold and uninviting. That should continue. GLD at $95 by New Year’s Day.” Again, we read the direction properly, just not the magnitude of the move. GLD fell as low as $100.23 just two weeks ago, but closed the year at $101.46. GRADE: B+

 

Silver

“Likewise for the silly little sister,” we wrote, “with less chilly results. Silver at $12.85.” Silver came frighteningly close to our downside projection, plumbing as low as $13.04 before regaining a few cents to close at $13.19. GRADE: A

 

Facebook

We’ve long since spoken of the de-coupling we expected between the broad market, on one hand, and her poster-children on the other. Grand dame of the western world’s last bull market, Facebook, was predicted to “lead the forces of bull-whackedness higher and strike $108 as the clock strikes twelve.” But she didn’t make it. Despite reaching as high as $110.65 back in early November, FB shares pulled back to end the year at $104.66. GRADE: A

Zuckerberg

Oil

Oil gave us a rough go – as it has nearly everyone who’s tried to make money from it these last six months. But we were honest about our difficulties, saying, “Oil’s a tough call, and the truth is we have very little sense of what might happen. Oil at $50 when Auld Lang Syne is sung.” That’s where the goop was sitting when we wrote. And today? Oil ended the year far lower than we imagined, at $37.10. GRADE: D

 

Dollar

“Dollar’s a buy,” we said. “Look at DXY 100 going into the New Year.” And DXY did run over 100 back at the beginning of December, but pulled back to close at 98.11 by year end. GRADE: A

 

Presidential Hopefuls

Our last best guess of the year was, admittedly, a bit whimsical, though for the time being we’re sticking to the script. Regarding who would emerge as front-runners for the 2016 Democratic and Republican nominations, we suggested the following – “Irrelevant. Barack Obama will be the President of the United States going into 2017 and beyond. You heard it here first. We’ll explain shortly. Stay tuned.”

 

We wrote a follow-up explanation of our thinking the following week, but, of course, the jury is still out. What we failed completely to foresee, however, was the star-studded rise of Donald Trump, a phenomenon that appears to have caught absolutely everyone by surprise, except maybe the man himself.

 

And there you have it, friends. As an overall grade, we offer ourselves a friendly A-/B+, and certainly if not for the debacle of our oil call, we’d happily call it a precocious summa-cum-doobie.

 

Five Trades to Report and Act on

 

The end of the year brought us high marks in the profit column as well. We’re going to run down a positive string for you now.

Army

First trade on the block comes from our letter of November 24th called Go Suck on a Fish! It was in that masterfully titled piece that we recommended you sell three FXI December 31st 40 CALLs for $0.36 each, for a credit of $1.08. There was enough downside momentum at the time and a lid of resistance at the $40 level to justify the action, so we went for it.

 

And what happened?

 

The CALLs expired worthless, offering us full take on the trade – 100%.

 

Batter up!

 

On December 8th we suggested a trade on Facebook (NASDAQ:FB), the puppet of tsars and fascists, going long the FB January 110 CALL for $2.19, while selling the FB December 31st 100 PUT for $0.88. Total debit on the trade was $1.31.

 

And when the bells of New Year’s came tolling, FB was well above the $100 level, so the short PUT expired worthless. We’re now waiting to see where FB will land come expiry.

 

Have a look at her chart –

FB technical

There’s still hope for FB shares, despite yesterday’s nose dive. In fact, the day’s action from a Japanese candle perspective was magnificent, indicating that a bottom for the last two month’s slide is now at an end with the textbook ‘hammer’ candle that appeared (in red).

 

This was textbook stuff, friends: the day opened high, fell dramatically, then closed higher than the open. A reversal pattern down to the last detail.

 

We also saw good volume on the day and nothing from either RSI or MACD to indicate more selling in the days ahead.

 

All told, this is good news for both FB fans and the broader market, as well.

 

Hold on.

 

We still have time… and faith.

 

Wrap it up, bro!

 

Finally, we’re going to look at our December 24th initiative on Tyler Tech (NYSE:TYL). The letter was called Chilled by the Weather; Warmed by Hope, and therein we urged you to take three separate actions regarding your open TYL trade from September (opened in Writing Conspiracy Premiums).

 

First up, we told you to place a stop buy order at TYL 181 for the existing short sale. That level was triggered last week, so we got kicked out of our short, sustaining a bruising loss of $1270.

 

That said, our March 170 PUT gave us $800 in premiums, and our bullish ratio spread another $110. So our loss on paper is just $360 and there’s still time before expiry on both initiatives.

 

We’ll come through this fine.

 

Leave it alone. Hang on. Take no action.

 

And have a very happy 2016.

 

With kind regards,

 

Hugh L. O’Haynew

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