The Snowball Manifesto (XLE,AAPL,TSLA)
Here at Normandy we believe that the dichotomy purported to exist between the so-called ‘Globalists’ and those who consider themselves part of the “Liberty Movement’, is a false one.
Yes, there are those – from both the right and left of the political spectrum – who believe that economic and political power should be concentrated in the hands of a few elite superiors. We call them ‘Globalists’. And their motto is ‘Trust your leaders’.
Then there are those who believe that power should be decentralized to the greatest degree possible, even at the expense of many long-established, well-run Washington-based entities that serve the common weal and boast a proven record of success. These are the ‘Liberty’ contingent, for whom the individual represents the greatest possible value, and the collective, except in rare instances, must take a back seat.
But we at Normandy reject the polarizing nature of the dichotomy, and the acrimony and ill-will it creates.
For we are neither Libertine nor Globalist.
No, rather, we consider ourselves proud Snowballists. And we stand firmly and unrepentant on our icy foundations, ready to strike hard with freshly fallen, moist packing snow at all who disagree with us.
The Snowballist doctrine is lengthy, but we’ll boil it down to just a few cold kernels today.
It goes like this –
- If you want to survive financially, and
- See your children thrive and prosper as they mature into adulthood, and
- Wish to live to a ripe old age in robust health and happiness, and
- Value the role of good neighbors and friends,
then you haven’t a snowball’s chance in hell of getting there unless you adopt the Four Gs investment strategy that we regularly espouse on these pages, and to which we now return for a trade.
As usual, we have a number of open initiatives to report on before we get down to business, so buckle up and put on your balaclavas – things could get chicken-skin chilly!
We start with a number of letters that centered around an initiative with Apple options. The letters spanned a nine month period and included four separate recommendations (2/07, 2/28, 3/07 and 5/23), the net results of which are as follows –- Content protected for Normandy Executive Lounge, Wall Street Elite, Executive Lounge members only]
All of which translates into the following:
With Apple now trading at $159.88, we’re in a losing position on the short of exactly $2488. And we want to get rid of that.
So we’re taking the following action –- Content protected for Normandy Executive Lounge, Wall Street Elite, Executive Lounge members only]
Should that happen, our profit would be a delightful $679 (2779-2100 [155-134]).
But should AAPL shares continue to rise, we will stem our losses by closing out the trade via the acquisition of a long CALL. We’re therefore buying the AAPL January 19th (2018) 165 CALL for $6.30.
If, after rising above that level by this January’s expiry, our position is closed out, we would still have to buy back our short 155 PUTs, and would make a final P&L tally on the trade at that time.
But either way, we appear now to have all our bases covered, and, we hope, to have put an end to this fruity tomfoolery.
We’ll, of course, keep a sharp eye on our new positions, as well as our two short PUT trades that come to term in November.
Our next trade was launched on the fourth of July in a letter called Buy me a Gift!
There, we recommended a bearish trade on Tesla Motors, and, simply put, it didn’t panned out.
Specifically, we urged you to consider the purchase of a TSLA September 15th 280 PUT for $5.80 and the concurrent sale of three (3) TSLA September 15th 245 PUTs for $2.00 each. Total credit on the trade was $0.20.
And that’s where it ended. All options expired worthless last Friday, and we come away with 100% profit – our original, measly $0.20.
So be it.
And Now For a New One
As we alluded above, there’s some cold days a’coming, and we want to help you prepare the homestead with all the firewood, butter, bourbon and beef you’ll need to get you through them.
And that means taking another long look at our Four Gs investment approach, which includes Guns, Gold, Gas and Grub (a catchy little alliterative phrase that we were unhappy to learn was recently ripped off by some bloated savage in order to make a name for himself).
Today, we focus on the energy portion of the survival equation – Gas.
Below is a weekly chart of the Energy Select Sector SPDR ETF (NYSE:XLE) for the last four years. What’s most significant is the reverse head and shoulders bottom currently in the making.
Have a look –
Clearly, we have a bottoming process in place (in blue), though it’s far from complete. But that doesn’t bother us. If we’re right, we’re early, and we stand to profit extraordinarily from the completion of the pattern.
The upside count for the H&S reversal would bring XLE to rest north of $111 by the time the buying is done.
And that would be dandy for the pocketbook – if we play our cards right.
Volume, we should add, is supportive of the formation; there’s now a clear accumulation taking place (in red). RSI and MACD are also moving in the right direction, though, again, it’s too premature to start screaming righteously. RSI is close to surfacing, but MACD is still six to eight weeks away from confirming (in green).
But again, that’s all right. We have a strong conviction that XLE will move fast and furious once the move begins gathering momentum.
So we’re going to play it with some very long-dated options.
And it goes like this.- Content protected for Normandy Executive Lounge, Wall Street Elite, Executive Lounge members only]
With kind regards,
Hugh L. O’Haynew