Dexter’s Walking Shoes (Freeport McMoRan)

We’re going to lead off today with an event that we’ve been anticipating for well over a month. It’s the breakout of shares of Freeport McMoRan (NYSE:FCX) from a torturously long sideways slide that we’ve discussed several times over the last few weeks.   The chart pattern from which the breakout occurred is called a ‘rectangle’, for obvious reasons, and it looks like this –     This is exciting for us, because a two months long coil in the stock has created what we believe is now an explosive situation that will almost assuredly resolve itself in massive upside profits.   A look at the rest of technicals offers additional reassurance.   First, we now have a solid base on which to rely; that is, the stock should hold strongly on any retreat to the $12 level, give or take, the upper edge of the rectangle.   Second, price is now trending above three of her four most important moving averages, and no resistance appears until the long term moving average (in yellow) at the $14 level, another 8% above the current price. Beyond that, we’ve got nothing but blue skies.   Third, RSI and MACD are both above…

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Vexation, Gloom, Anguish! (FCX)

Saturnine?   Dyspeptic?   Depressed?   Maybe it’s without cause. Alright, let’s talk about the obvious.   The Brexit vote made everyone jump on the sell button, and it could be we’ll see more of the same as the week gets going.   With that in mind, let’s examine a few key features of the decision and have a look at some charts before we move ahead on the trade front.   Three Points   Number One – the market has been in a state of zombie-like anticipation for at least a quarter now, waiting for a chicken-little, sky-is-falling event to sell off, and the Brexit results obviously provided them with that reason.  Heading into the vote, sentiment on all fronts was already as bearish as it gets.  For at least a month now, we’ve produced charts that demonstrated that despondency.   With the open on Monday, there’s going to be some follow-through selling that adds to that pessimism, pulling sentiment to likely its worst levels in a decade.   And from a contrarian perspective, that’s significant.  Sentiment readings are most meaningful at the extremes, and if we’re indeed presented with an all-out millennial cataclysm of despair by, say, mid-week,…

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Copper Top Battery (FCX)

It’s a difficult thing – reality.   Tough to identify.  And tough to digest.   In some fields, it makes little difference; one can ignore reality for years, decades, even centuries in some cases, before the truth finally makes its appearance.  Then the jig is up.  Take the former Soviet Union, for example, or the contemporary, foolhardy Venezuelan effort to copy it. All the while, though, before the eventual reckoning arrives, myriads of souls are set adrift, lost in the invention of men – in the lie.  And while some may make great names for themselves from it, and though fortunes may be won or lost along the way, many, too, will lose everything.   Our World of Deceit   We see it today across a variety of venues, in the food that we eat, the alcohol and cigarettes and drugs that we consume, the morbid – even sordid – images that we watch at theaters and on our home computers, and no less in the ideals that we hold dear.  We see it in those that we choose as models to emulate and in all the energy we invest in things vain and fleeting.  And if we’re honest, we…

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Robbing with Copper (FCX,DIA,IWM,USO)

We’re not the dragon slayers we once used to be.   Or thought we were…   We still get the odd piece of correspondence that congratulates us for decapitating some carpetbagger or snake oil purveyor on Wall Street, but on the whole, our life has taken a quieter turn, and though age has something to do with it, it’s more likely a matter of changing temperament than anything else.   And that means we’re not as apt to write the hit pieces we once did.  Knowing how to write doesn’t mean you know how to think.  And even though we generally like to show we can do both, it wasn’t always the case.   One Last Swing   Today, however, we believe there should be a smear laid on a fella they call Shawn Langlois (surely of lapsed Acadian lineage), a writer for the Marketwatch group of copycats.   Shawnee seems to have a penchant for writing ‘hits’ as well – political hits, even though he works for an ostensibly finance related outfit.  Oh, well.  It’s all politics these days, we suppose. In any event, of all the silly and errant things that have slipped from this youngster’s pen, none…

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Rolling up the Holiday Gains (SPXL,TNA,SPY,FCX)

We’re going to open today with a look back at three trades that now require some attention.   So, without any further delay…   We start with a trade opened on the 2nd of June in a letter called Truth vs Reality: Cage Match to the Death. There we laid out our ‘philosophy’ of what we expect to transpire as the market comes to a peak – a moment that has drawn nearer much faster than we anticipated and proven us ever more correct than we could have hoped for.   Then, we wrote as follows (forgive the lengthy quotation) –   We contend that as the market peaks, it will do so on narrowing breadth, as nearly all bull markets do. But more than that, we’re convinced that the coupling of 1) an unprecedented and ever-increasing global liquidity with 2) access to instruments that permit immediate and easy entry into the blue chip sector (like index mutual funds, ETFs and stock futures) will keep the indexes climbing long after the underlying economic fundamentals and corporate growth numbers support any such advance. Those companies that are currently index components – particularly of the biggest and most widely followed indexes –…

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The Sachs of a McMorAno (FCX,GS)

    We have to open with a quick shout-out to long time reader and avid backtalker Jesper, who recently took issue with fellow scribbler Hugh L. O’Haynew’s assertion that we here at Normandy were fibbing (the language was far more scurrilous than that – shame, Jesper!) when we said we’d long recommended the purchase of U.K. Sovereigns.   Now, Jesper assured us that he was still amorous and loving of the crew here at Normandy, but, alas, Hugh’s a sensitive chap, and doesn’t take well to name calling. He asked me for a few spare Zoloft tabs and a hit of Ritalin – to which I gladly obliged – and then told me to set the record straight.   Here goes…   Now, Jesper, dear friend, you should know that a trip downstairs to the holy catacombs beneath the mansion that houses Normandy Research is no roasted marshmallow affair. It’s cold and damp down there, bud – enough to send a fellow to the sanatorium for a week. But Hugh implored us, and that’s where the records are kept, so below we went.     The work was onerous and the air was dank, but in the end we…

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Dollar Miner, She’s a Whiner, Bet Your Money, Take your Time (UUP,GXD)

  There’s nothing to talk about. That’s it. It’s over.   Call the latest moves whatever you want, but don’t call them just another dip – just another buying opportunity before the bull resumes.   This thing is getting buried, and you’ve got a front row center seat. Pictures permitted. Not for the faint of heart.     We’re of course referring to the commodities in general and precious metals in particular, the sector and subsector that have absorbed unimaginable, galactic blows during this latest market selloff. Not that anyone seems to have noticed – or wanted to talk about, so robustly ugly have they been. Commodity Anorexia!   Let’s start our analysis with the chart of a company whose very name is synonymous with the commodities, a miner of both base and precious metals with significant energy interests besides, Freeport MacMoRan Inc. (NYSE:FCX). Until a year ago the company had a market capitalization in excess of $40 billion. Today it’s worth but a shadow of that figure – weighing in at a mere $8.35 billion.   This is the epitome of market ugly.     The company’s shares have been in a five year free-fall, nearly congruent with the broader commodity asset…

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Closing an Oil Winner (FCX)

Before we dive into the cheesecake, a quick word on oil. We’re of the opinion that this week will tell the tale for oil for the next four to six months, at least. The charts show that both the United States Oil Fund (NYSE:USO) and the Select Sector SPDR Energy ETF (NYSE:XLE), the first a proxy for crude, the second a measure of big cap oil producers and marketers, are presently at tipping points, moments in their investment trajectories that could just as easily bring them into a deep swan dives – bear markets the likes of which we haven’t seen in the oil patch for seven years – or pull them higher into rallies that jolt the oil bears out of their languor like a metal spike in the shin. What’s most interesting about these two wildly divergent possibilities, is that the technicals are pointing toward lower prices for oil and the oil producers, while fundamental considerations – including the possibility of a widespread war that engulfs the entire Arabian peninsula – are militating toward much higher prices. Hmm… Let’s begin our analysis with a gander at the technical picture – This is the Select Sector SPDR Energy ETF…

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The Dam Begins to Crack (FCX and TLT)

We’re starting to experience some VERY NICE movement in the market after a period of stagnation that feels like forever. In point of fact, it’s been anywhere between two and five months of sluggishness, depending upon the sector examined, but as the dams begin to break and the flows begin again to rejuvenate, we’ll likely see increased opportunities to make fatter profits than we’ve enjoyed in a good half year. But before we get to looking at where that movement is centered, let’s take a second to close out a recent corpulent trade and bank ourselves a bellyful of bills. We start with a trade launched March 31st in a letter called A Treasury Bond Longshot, in which we argued that an overbought read from the long bond’s weekly RSI indicator was as good a sign as any that we were heading for a decline. We wrote – The most salient feature of the chart is the overbought RSI read that was registered in January (red circle). Only twice in the last decade [have]such readings been recorded, and the market sold off dramatically in the months that followed. The first was in December of 2008, the second in the fall…

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Anxiously Awaiting the Bull’s Advance (GLD, GS, FCX)

Do you remember the Mind Attack of 2015? Remember where you were? The anxiety you felt? The fear? As if things were closing in? Some say it’s passed, but I don’t know… There’s certainly something to be said for the last few weeks tension in international markets. Between ISIS’s latest hijinks, the ongoing war for Eastern Ukraine, Greece’s temper tantrum and the murderous rampage underway in West Africa, we certainly don’t lack for reasons to be antsy. And yet, at the same time, we also see a great deal of light. Start with the major market indexes. The Dow is a mere 84-points from an all-time record high. Huh?   That’s right – a move of just one half of one percent will set a record, yet who’da thunk it – what, with all the trash talk from the media. Consider also – Sentiment is strong – because it’s weak. How’s that? Take a look at the charts – This is the latest read from the American Association of Individual Investors (AAII). And as a barometer of Main Street’s excitement for stock ownership, it’s, of course, best used as a contrarian indicator. That is, high bullish readings (and corresponding low…

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