Our thinkers and hardhats here at the monthly Normandy roundtable have been busy contemplating and pushing our brand in new directions as this final, mother of all bull markets winds to a close.
So we have some updates for you…
As you know, our position as both investors and publishers has been consistent and clear from our founding – to provide you with the big picture and all the necessary tools you need to successfully trade markets, build and protect your wealth and survive the challenges of a potentially cataclysmic civil upheaval, if and when it should occur.
And we’ve been largely successful in all those ventures, as our monthly readership figures amply imply. We’ve been growing in trajectories we never could have imagined when we first sat down to drink a quart of the bubbly mead.
That said, we’ve also documented our increasing alarm over the strange and changing nature of the investment game these last years, as government intervention in markets has created an unprecedented and highly volatile financial Frankenstein, whose end no one, including us, can foresee.
It won’t be healthy.
Regardless of the outcome, however, we do believe there’s a silver lining here. Not all is cataclysm and catastrophe. Where one finds risk, so, too, is there opportunity, and our team meets regularly to drink discuss those opportunities in depth.
As it happens, one of those opportunities relates to trading horizons.
It’s not lost on us that traditional means of measuring value and worth have been under attack over the last several years, particularly as interest rates have remained unrelentingly accommodative, programs that pump funds willy-nilly into precariously managed financial firms have continued apace, and a parabolic expansion of the money supply by nearly every large trading nation on the planet has rendered either marginally effective or outright obsolete a great number of investing indicators that we’ve come to rely on over the years.
As this has happened, it occurred to our honchos and punch-pullers that, of necessity, we would have to tighten our trading horizons from the long preferred intermediate trend of the market to something substantially shorter. As the numbers that we normally watch began to lose their overall predictive ability, we found the near term altogether more tradeable and responsive to the types of patterns and data series that we’re used to monitoring.
With that in mind, we’re planning to gear down the one to three month (or more) trades that we generally offer, and settle in to a regimen that would focus on a nearer term range of say one to three weeks. That protocol would also necessitate our turning to just a few indices that we found best responsive to our approach and focus on them exclusively.
A Work in Progress
Now, that’s not to say we won’t offer the odd trade on a company whose stock looks to be offering profit potential that’s too good to be true. We’ll always be on the alert for those. Just as we will the many pairs trades that have stuffed our wallets with cash over the years; nothing has changed there.
We offer the above explanation as a simple ‘heads up’, because as we ply the upper layers of this stratospheric bull market blast, it will be more and more difficult to stay invested for long periods of time. There’s just too much that’s erratic on that time scale, and the normal patterns of price action and volume are proving too jagged and unpredictable.
We’ll keep you posted as the strategy develops, and, of course, we’ll urge you to keep trading and profiting with us all the way to the top.
And then all the way back down.
So long as markets are open and there’s an opportunity to maintain a brokerage account, we recommend you stay close.
And we’ll prosper together.
We’re going to tend to two open trades today that require your attention. The first is an effort that was launched on February 16th in a letter called Squeezing the Precious Metals’ Juice. There, we urged you to purchase the GLD June 118 PUT for $5.75 and sell the SLV June 15 PUT for $0.98 for a total debit of $4.77.
Today, the trade appears headed for a dead end, so we’re going to roll it out – in part, as we still believe in the underlying premise: that silver will outperform gold in the near term.
To that end, the GLD PUTs go for $4.15 and the SLVs for $0.71. Sell the former and buy back the latter for a $3.44 credit, then do it again. Buy the GLD August 115 PUT for $1.17 – and leave it at that. No SLV. No nothing.
In that manner, you reduce your initial outlay on the trade from $4.77 to $2.50.
Stay tuned. We’ll keep you posted.
Next up is our April 5th trade from a letter called 14,700% in Three Weeks. The trade we recommended there asked you to consider purchasing the SPXL October 86 CALL for $10.00 and selling the October 83 PUT for $10.10, for a total credit of $0.10.
And today, the numbers are even better.
The CALLs are selling for $10.10 and the PUTs for $7.40. Sell the former and buy back the latter, and you net a profit of $2.80, 1766% in two months on nothing laid out.
What about this week?
This week’s play is a pairs trade that matches the Dow’s best performing stock of late against its worst. It’s a rare matter, indeed, when Dow issues diverge in the manner we’re about to show you. And when little fundamental reason can be found for the split, a snap-back is inevitable.
Have a look –
It’s UnitedHealth Group (NYSE:UNH) against Nike (NYSE:NKE), and it’s plain as day to us that this gap will shortly close.
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With kind regards,
Hugh L. O’Haynew