Inaugurating the Profit Search (GOOGL,FXI,KOL,XLP,XLF)

With the New Year under way, we find ourselves with a raft of trades to report.   So pour yourself a tall mug of mead and light up a Camel… Why the goat?   Our first trade was launched in a letter called China at New Highs; Buy China! back on the 1st of June, 2015.  It was a very long dated affair that didn’t prove itself in the end.  We urged you at the time to trade the Chinese market in bullish fashion, specifically recommending you purchase the FXI January (2017) 51 CALL for $5.20 and sell the FXI June 44 PUT for $0.22, the July 44 PUT for $0.48, the August 44 PUT for $0.81, and the November 44 PUT for $1.56.  Total debit on the trade was $2.13   And when all was said and done, we owned the shares and took on quite a bit of water, as we summarized in our March 29th, 2016 letter called The Urban Banking Reversal.  See there for details.   As for today, suffice to say that we now bury the hope contained in the 51 CALLs that expired with the inauguration last Friday.   On a related matter, we…

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Synthetic China, Real Money (FXI)

Today’s topic is China.   Funny.  There was a time when every day’s topic was China.   Then China went kooky.   It was last summer.   After that, no more talking about China.   We talked about other things.   The Fed.   Terrorists.   The election. But now we’re back to China.   Why?   Because China matters again.   Why does China matter?   Take a look – This is a chart of the iShares China Large Cap ETF (NYSE:FXI) for the last six months, and there you can see that…   We’re in bull mode, as the higher highs and higher lows attest (red circles). We have a rectangle forming over the last two months – what some refer to as a ‘congestion’ area – which represents a period of technical consolidation (blue rectangle). Buyers and sellers are operating in a range because bears are convinced the intermediate top for China large caps is in, while bulls believe we’re just taking a breather here. Indeed, after the strength of the last five months that was initiated by a potent surge in volume (in black), FXI registered a 25% gain and then ran into resistance. Resistance arrived…

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Gulping Up the Silver (UUP,SLV,NFLX,FXI,DIA)

That’s it.  We’re in a downdraft.  A potentially short one, albeit, confined within a longer term uptrend.  But it’s a downdraft nonetheless.   Last Thursday, senior Normandy know it all, Matt McAbby, offered you a short term trade on the QQQs that’s worked out well.  Friday’s action saw the QUBES drop by better than one percent, and the setup still slightly favors a further decline.   We’ll have more to show-and-tell on short term market direction in a moment, but we want first to take an opportunity to discuss a few potential market-turning catalysts on the horizon.   Island Castaways   The first and most important item on the agenda is the upcoming vote on Britain’s exit from the European Union, a deal that’s come to be known as ‘Brexit’. The issue is a rather weighty one, though we can’t say it’ll affect markets in any meaningful way over the long term.  Certainly banks and bonds will be affected in the short term, but the decision is hardly likely to upend any one country or region, financially or economically, for keeps.     What’s rather more likely is that the market will be erratic going into the vote as well…

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The Urban Banking Reversal (URBN,C,GLD,FXI)

    Amid all the wailing and round-the-clock attention the damned primaries are getting, you’d think the Super Bowl had been changed to a non-stop, twelve-month televised death match!   But this isn’t sport, friends.   This is your life.   So, in the interest of offering you a brief digression, we offer hereunder a pithy primer on what all the hoopla is really about.   And it goes like this –   If you’re rich and secure and haven’t been overly picked on by government, you vote for Cruz. If you’re poor and secure and haven’t been overly picked on by government, you vote for Hillary. If you’re young and pissed and are looking for someone to hang, you vote for Bernie. If you’re old and pissed and are looking for someone to hang, you vote for Trump.   The Essence of the Times in 62 Words!   A few trades to run down before we begin.   One is simple, the other, not so much.   We’ll start with the easy one.   On February 23rd we opened a trade using the SPDR Gold Trust ETF (NYSE:GLD) in which we bought the March 24th 113.50 PUT for $1.92…

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Don’t Miss the Boat (MSFT,TSLA,GLD,FB,FXI)

With the biggest turnaround in the stock market in 80 years now upon us, the greatest danger facing investors is no longer being invested in equities – it’s rather missing out on what could BE a profoundly successful investing year.   That’s right, despite Wall Street’s worst start to a year ever, the major indexes have now sprung back into the black for 2016, and that has folks looking over their shoulders, wondering if it behooves them to do like their neighbors and colleagues and get back into the investment saddle. We just can’t go out anymore…   Now, whether the turnaround is due to the latest round of earnings, which were far better than expected, or the latest fed-meddling, or because folks are genuinely getting used to the Donald’s hair, is immaterial to us.   We prefer to look at the scoreboard.   And the bottom line is – we got too deeply oversold.   Chase the Market – Without Losing Your Head   The greatest profits are made from market-following systems, and we do our best to give you that here at Normandy.  We don’t find it necessary to spot the turns precisely – because there’s no need.  Our…

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The Changing of the Guard (TYL,FB,FXI)

It was a pleasant, sunny day back in September that we issued you, our dear readers, a challenge for year’s end.   The letter was called A Challenge to the People, and in it we asked to know where y’all saw things ending up – everything from the S&P 500 to oil to the dollar to the World Series. For whatever you had the prognosticating acumen, we challenged you to step forth.   And we, too, offered closing projections for 2015 at that time.   Here’s how we made out. The Final Tally: from Hugh L. O’Haynew – Investment Icon/Show-Biz Impresario/Financial Wunderkind DJIA At the time, everything had just fallen slap-ass lower, so there was little hope of a blockbuster move occurring here, but we thought things would end better. We wrote: “Look for the Dow to break again above 18,000, but not by much.” That’s for sure. The old gal got as high as 17,970 in early November (damn close!), but trailed off since then to finish the year at 17,425. GRADE: B   Gold In September we hadn’t much hope for the metal, commenting that “Precious metals are the tundra of the investment world today – barren, cold…

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Why Go to Hell in a Golden Hearse? (FXI,GLD,TSLA)

We want to lead off today on a serious note, with a quick word of tribute for a giant in the world of investment advisories: the late Richard Russell, a man who shaped the way the industry functions and whose integrity and intellectual honesty should be a beacon to us all. Richard Russell passed away on the 21st of November after 57 successful years writing the Dow Theory Letters.   His sweet, straightforward manner and his willingness to stand by unpopular positions will be missed by all who read and knew him.   Open Trade Report   We’ve got two trades to comment upon today. The first is our ongoing FXI saga.   You’ll recall that we’re currently the proud holders of three board lots of the iShares China Large Cap ETF (NYSE:FXI), and that we’ve been selling CALL options against them in order to recoup a small loss from a former trade. As it stands today, we’re long three FXI December 31st 40 CALLs and by the looks of things, we could see our shares called away as the calendar flips into 2016.   Have a look at the chart –   What’s most exciting for the China bulls…

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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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A Month’s Worth of Winnings – Repeat After Me! (TSLA,FXI,XHB,RSX)

An important thing to remember about stock movements, and one that’s been documented in abundant fashion by market technicians, is the propensity of both individual stocks and indexes to perform a ‘test’ of prior lows after falling.   That is, stocks fall to new lows every day, bounce, and more often than not, reverse course a second time to ‘test’ whether that former low was, indeed, a firm bottom.     Smokin’!   Of course, should the security in question pierce below its former low, it’s likely further declines are in store. Should support hold, however, the stock is almost assuredly headed back toward its last retracement high.   Have a look now at a chart of the S&P 500 for the last six months, and pay particular attention to the far right edge of the chart, where an apparent ‘W’ shaped bottom is being etched out –     This is the test we were talking about.   The index could fall another 30 points, or roughly two percent, and still be on the good side of the test, and it’s our view that that’s precisely what will occur.   The oversold RSI read in late August also supports…

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A Challenge to the People (FXI)

We had a very interesting piece of information cross our desk the other day.   The folks who run our fine publishing institution sent it down with a few shaddies of chilled escargot and some iced Dom just before the week closed out, adding that we’d better have peek at it before heading off to the links for our weekly round of hookers and beer.   ‘Hookers’, of course, because we can’t drive the damn ball more than 100 yards without it swerving like a Gamakatsu Octopus rig.     The Dance of the Eight-Legged Mandarin Sea Monster   The bit of news that was passed along can be found here, and for those in need of a quick synopsis, it goes like this –   Chinese authorities have over the last few weeks essentially curbed all speculation on the Chinese market by shutting down trade in stock-related futures.   And it was no small accomplishment. The Chinese futures markets are the two largest such bourses on the planet. Via a raise in margin requirements, initiating select investigations into short sellers and by tightening position limits, the People’s Republic has without any pomp or ceremony summarily reduced trading volumes on both exchanges by 99%….

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