Precious Metals’ Bear in ICU (SLV,EPI)

Precious Metals’ Bear in ICU (SLV,EPI)   We want to turn to a discussion of commodities today, because the action there is starting to shape up in increasingly clear fashion.   And we’ll start our investigation with a brief look at the dollar, from which so much of the commodities complex takes its cue.   The dollar, remember, puts downward pressure on commodities’ prices as it rises, and upward when it falls.  That’s because the vast majority of the world’s metals, minerals and foodstuffs are traded in U.S. dollars, making them more or less expensive as the dollar fluctuates.   Have a look here – This is the Dollar Index for the last six months, and as you can see, it has been weakening of late.  In fact, at the bottom of the chart it becomes apparent that the momentum behind the dollar’s rise last fall was already weakening going into December.  Both RSI and MACD indicators began diverging lower from price at that time (black lines), giving us a clear indication that the top would be soon in coming.   Since then, a clear top formed at New Year’s, and the decline thereafter has been significant.   Could it…

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From Trump Tower to the Seeonee Jungle (EPI,AAPL)

The so-called ‘Trump Rally’, that daily confuses the wizards of Wall Street because it doesn’t want to roll over and die, had an equally confusing, initial effect on Emerging Markets traders.   Those markets, and particularly the big four BRIC countries, responded by taking it square on the chin for the first month after the election.  Their currencies, too, struggled in the wake of the the torpor and hysteria that prevailed in those first heady weeks of the transition.   After everyone calmed down, of course, the EMs quickly jumped on the bandwagon and have been streaming skyward ever since. Apparently, the confusion lay in conflicting understandings of the Trump team’s economic policies, and whether they, indeed, had a realistic chance of passage through Congress.  A subsequent softening of positions on trade played a role, too.  What began as a clear, strident anti free-trade agenda during the campaign may, in the end, not be legislated in its entirety so quickly, if at all.  And that, too, spurred hope among Emerging Market investors that it was safe to dive back in.   And now?   At this point, we’ve passed some major hurdles, including a number of important technical ones, and…

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Go Suck on a Fish! (TYL,FXI,TSLA,QQQ,EPI,KSS,FAS,TD,IYF,RSX)

Oh, my! Is that any way to talk?   Life, as you know, is not a bowl of cherries. You can’t have your entertainment and your fine foods and your night on the town every day – no, sir. There are times when the drudgery of life takes precedence over its more inspiring moments, and suck as it may, there’s simply no getting around it.   We relate the foregoing because today’s letter is going to be a slight departure from the norm, composed as it is of a simple listing of former trades and their results or advice to close or otherwise repair them.   We apologize in advance for the tedium, and we’ll do our best to keep it lively. The truth is we had a great number of intestinal changes here at Normandy over the last three months and the recovery has taken us a tad longer than expected. That’s why this week we’re playing catch-up, and why we’ve had to curb some of the laugh-out-loud antics.   So bear with us.   Here we go…   Our first trade was opened on the 23rd of February. We urged you at the time to buy the deep-in-the-money…

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Kohl’s (KSS), India (EPI) – How To Read The Stock Charts

We’re going to attempt something of a lesson in stock-picking today using two moves that couldn’t be any more different and whose respective charts over the last six months have been completely at odds with each other. The goal is to show that at any given moment the market will offer us a variety of ways to make money, and, indeed, this week we’re going to try to make a bit’o’the green using two distinctly different strategies. But first, here’s a short backgrounder to help you better understand our thinking on both initiatives. We start with a discussion of the American greenback. USD The buck has been extraordinarily strong for coming on nine months, and that’s taken a toll on U.S. exporters. That said, a strong USD has also had a constructive effect on American financial assets, as the rising buck has made it doubly attractive to own equities here, particularly in domestically oriented companies with strong growth trajectories. Here’s the USD for the last two years – Though companies doing business overseas have suffered from weaker export numbers – and from the reduced value of their repatriated earnings – a number of domestically oriented businesses have fared much better, as we’ll show you…

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Walking through the Trade (GLD, EPI, TBT, AAPL, GDXJ)

Let’s run down a few trades before we dig into the main course. And we’ll start with this – A long, long time ago, way back in October of 2013, we bet on the long bond falling. We bought the TBT January 80 CALL for $11.00 and sold the January 110 CALL for $4.75 and everything expired out of the money. Loss of $6.25 on the trade. On September 8th we got India in the blood and bought the January 24 EPI CALL for $0.90 while selling the January 21 EPI PUT for $0.30. And we didn’t give it enough time. India is now breaking higher, but we took a loss. We’re out sixty bucks and looking for an auspicious moment to reinstate the trade. On November 10th we express doubt on Gold’s rebound. We sell five GLD December 122 CALLs for $0.48 each, for a total credit of $2.40, and buy one GLD January 106 PUT for $1.43. Total credit on the trade is $0.97 and that’s what we get. All options expire OTM. Profit of $97 per round traded. Finally, on the 24th of November we pair Apple (NASDAQ:AAPL) against the junior gold sector, for no other reason…

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Hunting with the Indians (DJIA, EPI)

This is the time of year that speaks most directly to the need for renewal and regeneration. Yes, in most parts of the country fall is beginning (winter in some locales!) and the leaves are turning, so for many the feeling may be more one of nostalgia and conservation than revolution. But we hold to the doctrine that everything must be renewed regularly, so any retrenching and holding on to past notions and habits is, in our eyes, a recipe for stagnation, rather than a proper conservativism. And where do we find the mood for change most starkly exhibited today? Quite clearly, it’s in the run-up to this November’s elections, where the possibility of a Republican takeover of the Senate is looming as a distinct possibility. For those who hold by the status quo, or who would prefer to see the Democrats up their gains in government, if course, this stands as a disaster in the waiting. But for much of Wall Street and many investors beyond the NYSE trading floor, the sounds of elephants on the march will likely be greeted with an equally thunderous applause. Why? Because the common belief is that Republicans are good for business and…

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Don’t be a ‘Hoper’ (EPI, GLD)

High school football coach used to yell at us something fierce for not being in on every tackle. “Don’t be a hoper,” he’d yell. “Don’t just stand there hoping someone else gets it done, Ruminov! You get in there yourself – you be the one! Cement head.” Never had to convince me, though. I always took pleasure in running over would-be fame seekers. Even fancied myself the second coming of mean smilin’ Jack Lambert of the Pittsburgh Steelers. Had an entire scrapbook of pictures devoted to the man that I surreptitiously tore out of Sports Illustrated back issues at the local library. Now that we’re older, though, we see that selfsame tendency in our chosen field of investment education, where ‘hope’ is everywhere, is patently not a virtue, and where the price of failed objectivity is nothing less than a disaster that leads to anger, depression and in severe cases, a whole lot worse. And nowhere is this phenomenon more evident than in the gold market, where a full 99% of investors are of the emotional, believing type – ‘hopers’, as it were, whose objectivity was long since thrown to the dogs. Only the wishful, would-it-were-so fantasy world of the…

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