“Bobbi-Jean, You Take That Mask Off Now!” (IYT,XPO,DIA)

“Bobbi-Jean, You Take That Mask Off Now!” (IYT,XPO,DIA)   It always struck us as interesting that this whole FBI/Dept. of Justice/Russian meddling story began with something the G-men call ‘unmasking’, a process whereby American citizens’ identities and affairs are exposed during a broad intelligence sweep that targets foreign nationals.   Normally these people and their privacy would be protected.  Unless, of course, permission is granted from a higher authority to reveal their names.   Unmasking. There are also periods during which all the masks come off.  And if we’re fortunate, this could be one of them.  Call it the midnight hour, the post-ball tolling of the bell, the point at which the pumpkin truth is reinstated and all the poor and unadulterated dirty laundry is revealed for what it is.   Wouldn’t that be nice?   Too Many Secrets   We’ve a hunch that pretty much all of Washington’s official secrecy exists only for the benefit of those who actually stamp ‘secret’ on the files.  But it doesn’t have to be.  In fact, we’d all greatly benefit from a dose of daylight in our public affairs.   That said, the markets, too, would benefit from a good whack of truth,…

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China Needs to Chill (FXI,DIA,QQQ,SPY)

China Needs to Chill (FXI,DIA,QQQ,SPY)   We’ve put ‘war’ on the backburner for a stretch of time now – what with the winter olympics and the market falling out of bed and shootings in Florida. But it may be time to return to the military theme now, as, apparently, the powers-that-be have not lost sight of looming martial conflicts for even a minute. Potentially the biggest news comes from the Chinese-North Korean border, where the world’s largest military has just deployed an additional 300,000 soldiers in preparation for a potential war.   The Chinese themselves have little interest in warring with the North Koreans, but every reason to want to control the territory after a potential conflict with the United States.   It’s noteworthy to point out that this has happened before. During the actual fighting between the North and South in the early 50’s, the Chinese deployed some two million soldiers along the same border to deal with the perceived American threat.   Times change, of course, and the Chinese military is far more advanced than it was 70 years ago, but it appears attitudes have remained steadfastly entrenched.   A Sprint to the Mountains   Many believe the…

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The Bigger Picture (SPY,FNV,DIA,UUP,DBC)

The Bigger Picture (SPY,FNV,DIA,UUP,DBC)   For some time now, we’ve been kicking up a big to-do about how the current market has lost all sense of the fundamental and is being driven exclusively by sentiment and cash flows.   And there’s no gainsaying that as we approach the final innings of history’s greatest ever bull market, we’ll see ever more money making chase after equities as they swerve higher and lower, as volatility ratchets up like Norse stretch rack and indecision in the bond market creates powerful cash surges between equities and fixed income.   That said, we want to reassure you that we still believe the major indexes’ best days lie ahead – but it won’t be nearly as smooth a ride getting there as we’ve seen over the last year. We’re going to take a look at several discrete items now to acquaint you with our market thesis going forward.  But before we do, let’s first summarize the broad forces now at play in the system.   Push and Pull   The foremost driver of today’s capital markets remains the massive liquidity infusion of the last decade courtesy global central banks.  This single factor has set the underpinnings…

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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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That’s Some Horse! (DIA,AAPL,UUP,IYT)

That’s Some Horse! (DIA,AAPL,UUP,IYT)   There are stats and there are stats.  And, of course, when the market is in the middle of a panic breakdown, all the facts fit to print are lugged out of the analyst valise in order to convince you of what’s to come. And here at Normandy, we’re really no different.  Regardless of how little we trust the mainstream, fundamental approach to investing in this era of absolute government intervention, we have to rely on something.  Coin-flipping went out at least a century ago in the stock buying game.   As we’ve stated repeatedly, the contest is now being played on the sentiment front – in large part – while flows of funds, sector rotation and some basic technical analysis still offer clues to market direction.   The larger picture will continue to be dominated by the size and degree of intervention by the Fed and Treasury, and while we’re always watching those two do-gooders like a chickenhawk, much of what they do is simply not transparent and the rest grinds its way through the system very slowly.   So it’s to the stats we’re forced to return for our commentary.   And we start…

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Phoenix Envy (SPY)

Phoenix Envy (SPY)   The market will move in the direction the majority least expect, for a duration that no one can predict, reversing precisely at a time that the greatest number are blindsided.   Or as a wise investor once wrote, “The market’s raison d’etre is to reach as deeply as possible into the pockets of average investors and empty them.” It’s for that reason that professional investors developed tools to protect themselves.   And one of those is the ‘moving average’.   Here at Normandy, we use a proprietary selection of moving averages that have often raised eyebrows, but we use them for a simple reason: they work.   After settling on them some fifteen years ago, we’ve employed them unstintingly to read market direction, and we believe they’ve made an outsized contribution to our industry beating track record over the years. We want to offer a word now on moving averages in general, 1) because we regularly get inquiries regarding our own, odd quartet of MAs and 2) because of late, they’ve once again proven themselves righteously accurate.   So…   The bottom line on MA’s is this…   Like so much in technical analysis, once a…

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Jimmy! We’re Stuck in a Market Maelstrom! (GDX,DIA)

Jimmy! We’re Stuck in a Market Maelstrom! (GDX,DIA)   That’s the way bookie fumbles, folks.   You enter the casino either as an oddsmaker or a bettor, and it doesn’t matter which – in both roles you run an equal risk of exiting a loser.   And that’s the lesson of the last week in equity markets, too, a period that witnessed volatility jump from near record low levels to VIX 50 yesterday!  A 1600 point drop on the Dow also made history.   Yet the masses still don’t understand the nature of the beast.   If sentiment levels are any guide – and they should be, because that’s the only thing that’s truly guiding markets these days – we’re still in for a wham-doggy selling event in the weeks ahead, one that could make Monday’s six percent intraday decline look like a drugged out monkey on a 70’s sitcom. The total decline from the top registers at slightly more than 10%, qualifying as a ‘correction’ for those who like to define these things by the numbers.  But while many believe there’s more to come, the market’s follow through on Tuesday provides near term hope for the bulls.   Why?…

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The Wisdom of Solomon (TLT)

The Wisdom of Solomon (TLT)   You’ve been listening to the car rattle and shake for some time now, but it still moves OK, and everyone tells you what a fine looking beast she is and how she’s reliable and all, so you let it go.   But the noise is bothering the wife a little too much to maintain peace in the castle, so in lieu of letting her fears fester and risk an outright coup, you take her to the shop.   The car, that is.   You shimmy on down to the local industrial zone, and, as usual, Sonny is all smiles and handshakes, the black under his fingernails a tad worrisome as he takes the old Edsel for a spin to check out the damage.   And whaddaya know, it’s not much of a thing at all.  Streering fluid’s low and there may be a bit of a leak from the pipe leading therefrom, but when all is said and done, it’s only a half day shot and 180 bucks, and you’re back on the road a’smilin’.   Phew!   Modern Day Financial Proverbs   We offer the foregoing as a perfectly relevant allegory for the…

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Let’s Talk Dollars (UUP,DBC,DIA)

Let’s Talk Dollars (UUP,DBC,DIA)   We’ll open today with a look at the dollar and a few comments that the White House has been making in relation thereto.   And we start like this –   Steve Mnuchin, the President’s Treasury Secretary was in Davos this week to laugh at the world’s poor and confabulate over how to keep things humming without too much acting out on the part of the hoi polloi.   And in the midst of it all he offered the following on the sinking American dollar – And that immediately sent the buck-sellers directly into action.  The Dollar Index tanked, adding shame to the already existing scorn, and creating a picture that looked like this – We’re going to take a minute now to unpack the above dollar chart before we get back to the White House and Dr. Mnuchin and examine where things are headed for the markets in the weeks ahead.   We begin with the oversold RSI read that occurred last week (in green).  After a steep decline and a break of long term support at 91 (in red), the dollar bounced slightly but has declined to deeper lows since then – likely…

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Getting Carried Away (SPY,IEF,PFE)

Getting Carried Away (SPY,IEF,PFE)   There’s a concept in statistics that’s regularly applied to markets called ‘mean reversion’.  It’s a rather simple idea, that anytime numbers get too far stretched from their long-term historical norms – either too high or too low – they eventually snap back.   And it has proven itself long enough to be relied upon by market analysts for at least a half century.  Simply put – a market is in danger of a whiplash reversal when it strays too far from its mean.  Forewarned is forearmed. The only problem with the concept is that no one can know what any security’s ultimate breaking point is.   That is, how long will buyers continue accumulating in the face of what’s obviously a clownsuit of a market with a diamond studded price tag?   Good question.   And how long will they continue to sell after it’s clear to all that stocks are available for mere pennies on the dollar?   And the truth is no one knows.   Human psychology is the intangible here.  The ability of an otherwise rational individual to be swept up with the prospect of becoming filthy rotten rich overnight is not…

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