Commodity Resurrection (KOL,GLD,GS,XLP,XLF)

Commodity Resurrection (KOL,GLD,GS,XLP,XLF)   The process has taken a while to unfold and may require another few weeks to gather momentum, but there’s no longer any doubt.   Grab some more popcorn and licorice.  The commodity horror show is winding to a close. Before we get there, however, we have three trades to close out, with a nice, net take-home for the trio.   Let’s start with our October 11th initiative from a letter called Multiples, Expanding Multiples and the Energy Spectrum.  In that missive we recommended you buy one KOL January 12 PUT for $0.90 and sell one KOL January 12 CALL for $0.85.  Total debit on the trade was $0.05.   Unfortunately, the dang thing is not moving according to the ‘Normandy Will’ and we’re therefore forced to close it out for what may end up being a loss.  We emphasize the ‘may’, because anything can happen in a week in this market, and by Friday’s expiry we could, in fact, see a profit.   That being said, the short CALL is now trading for $1.25, and we’re forced to buy it back in case the stock moves any higher and puts us into a willy of a…

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Now Underway: Massive Market Fake-out! (GLD,GS)

It’s ridiculous.   Could it get any more ridiculous?   Maybe.   But if it does, we’re going to have to throw in the towel and admit that the tools we’ve grown used to employing over the last several decades are simply no longer of any value.   It will be a sad day, indeed – if it ever comes to that. We’re talking about the exaggerated lift we’ve seen in quite a number of stocks since the election of Donald Trump as president.  The indexes have taken off higher in a manner that continues to astound even the most veteran observers.   Take for example just two stocks – the Dow Jones Transportation Index (DJTA) and global banking and brokerage giant Goldman Sachs Inc. (NYSE:GS).   We’ll start with the trannies.   Here’s the chart – You can see that the rise has taken the index well into overbought territory (in green), according to that helpful indicator known as the Relative Strength Index (RSI).  Again, whether this tool continues to serve as it has in the past is becoming a greater mystery by the day.  For while it’s not unheard-of to get extended overbought readings such as these, the…

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Hey, Gold Bug! Welcome to the Inferno! (GLD,TSLA,GS,XLF,FB)

It didn’t take long, that’s for sure.   Once the mighty Trump landed in the White House, it was time for Quinn the Eskimo and his merry band of goldphiles to turn-tail and run.   Apparently.   And while we may see a bounce here in the precious metals near-term, the fires of hell are only now being stoked for gold lovers – may they endure their agony gracefully.   Either that, of course, or they can sell. We had a friend several years ago who refused to heed our warning about an imminent selloff in the PMs.  He had just loaded up on silver as the metal was topping, and we warned him strenuously against the move.  Every sign and symbol associated with that metal was screaming ‘overbought’ at that hour, but this fella thought he knew better.  He piled his own life savings on top his father’s, which he was also managing, and spoke about the fortunes he was about to make.   After that, we spoke less.  He was embarrassed, and we understood.  When we did meet, he would ask our opinion, whether we thought the metal had bottomed, or if it was close to bottoming. We…

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WAR! GOLD! DICTATOR! TRUTH! (SLV,GLD,F)

As we approach election day, the question of how the market will react to the ‘will of the people’ takes on new significance.   As of today, equities are moving in a muted, sideways fashion, uncertain of both the outcome of the contest and exactly what should play out beyond.   There are four distinct possibilities, of course, that could be triggered once the results are known.   A Republican win, and a breakout higher, or lower.   A Democrat win, and a breakout higher or lower.   Whatever happens, though, it’s almost certain the market will not continue its sideways grind much more than a day beyond the polls’ closing.   It’s also looking increasingly probable that the ensuing move will be sharp – higher or lower – should a clear winner be pronounced the day after. If the Hilarious one wins, we’re betting on a burst of Wall Street enthusiasm.  Should the Trump card get played, a steep move lower.   Now, we offer these prognostications not in any way to influence your vote, and with the additional caveat that it’s more than likely that in both cases we’ll see some swings to and fro before the market…

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Sell Everything! (SPY,GDXJ,GLD,TSLA,GM)

We had a very strong sell day on Friday, and much of the ink that was spilled over the following days was dedicated to convincing us that the blood is only beginning to flow.   But is it really time to break out the cautery?  Grab the gauze box and squeeze the wound?   Time to throw on some cayenne pepper, maybe?   Ho, ho…! MY. GAWD.   Before we get to the answer, consider some arguments in favor of the continued grand selloff hypothesis –   Investor Complacency   Some swear by it, but we don’t see it, frankly.  The AAII numbers that we watch show a very frightened Ma and Pa investing cohort that’s unable to do anything but sit on their thumbs.  The last AAII bullish sentiment readings were 29.75, and the bearish were 28.48.  That means we’re anything but complacent in the traditional sense.  For that to be the case, we’d have to see at least 50 or 60% bulls.  And we don’t.   What we do see is the neutral crowd in the lead by a longshot.  Neutral, by the way, may as well be ‘neutered’ as far as the investment game goes.  Someone who…

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Military Efficiency (LMT,GDXJ,QQQ,GLD,SLV)

A system is put in place to create efficiencies.  That’s its role.  It’s not there to help you find your inner child or to bring out your innate human potential.   It’s about being faster and cheaper and glitch-free.   A criminal justice system therefore attempts to deal with criminals and crime in an ‘efficient’ manner.  An education system aims at ‘efficient’ indoctrination of facts and theories in its students.  A healthcare system desires to kill disease and administer to patients with the utmost proficiency.   And why?   Because that produces savings.  And savings means profits.  And everyone’s happy with profits. So what’s the problem?   The problem arises when the system gets too big, when it moves beyond a genuinely human-scale operation and turns industrial.  At that point, individuals are ‘processed’ through the system and all sense of humanity is lost.  Sure there may be a clerk or teacher or nurse in the building who still has a human touch, but by and large those qualities are weaned from workers, who are themselves extensively trained to work more ‘efficiently’.   On the edges, this means that individual souls are treated with contempt.   Those with learning disabilities or…

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Gold Gap Zeroes Out (GLD,GDXJ,FCX)

There will be some very interesting developments across the market over the next few days and weeks, and maybe the most important will involve the precious metals.   Why?   Well, to begin, the dollar has now traced a very bullish continuation pattern called an ‘ascending triangle’.  The pattern looks like this – An ascending triangle is always bullish.  It’s an indication that in the battle between bulls and bears, the latter are slowly running out of ammunition, and once their last shots are fired, buying power will overrun them and advance above resistance toward a new high for the move.   And…   The upshot of a pop in the dollar is that it’ll pressure all the commodities, including gold and silver.  Commodities are priced in dollars, so currency gains generally push prices lower.   At the same time, a dollar advance will make U.S. equities a more exciting prospect for foreign investors.  Not only will stocks setting new all-time highs, but with the dollar on the rise, those same investors will have a chance to pocket an additional gain against their local currency.   This is a chart of the Dow Industrials for the last six months –…

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Brand New Trading Regimen (UNH,NKE,GLD,SLV,SPXL)

Our thinkers and hardhats here at the monthly Normandy roundtable have been busy contemplating and pushing our brand in new directions as this final, mother of all bull markets winds to a close.   So we have some updates for you… As you know, our position as both investors and publishers has been consistent and clear from our founding – to provide you with the big picture and all the necessary tools you need to successfully trade markets, build and protect your wealth and survive the challenges of a potentially cataclysmic civil upheaval, if and when it should occur.   And we’ve been largely successful in all those ventures, as our monthly readership figures amply imply.  We’ve been growing in trajectories we never could have imagined when we first sat down to drink a quart of the bubbly mead.   That said, we’ve also documented our increasing alarm over the strange and changing nature of the investment game these last years, as government intervention in markets has created an unprecedented and highly volatile financial Frankenstein, whose end no one, including us, can foresee.   It won’t be healthy.   Regardless of the outcome, however, we do believe there’s a silver…

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System Signals Silver Sale (SLV,GLD,XAU,TSLA,GM,MSFT)

There are all sorts of trading systems out there.   Some old-timers swear by the Graham and Dodd fundamental model, that tells you to buy them when P/E ratios and dividend yields are sparkling and dump them once the ratios are no longer competitive.   Others will tell you that’s balderdash, and only technical analysis can produce for you winning trades over the long haul.   There are those who swear by cycle analysis, point and Figure charting and Elliott wave theory.  Some adhere exclusively to Dow Theory. And still more go in for Gann triangles and Fibonacci retracements.  And believe it or not, some have even made consistent money trading the interplanetary orbitals of financial astrology!   Here at Normandy we’ve examined them all at one stage or another, and we’re here to tell you that absolutely no system has all the answers – and certainly none is foolproof.  But we can also tell you from experience (and the academic literature is fully behind us on this) that the single best method of making money in the trading arena is by using a trend following system. It doesn’t sound too exotic, and it’s not likely to make you the…

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White Metal, White Hot (SLV,GLD)

We mentioned it before, but it bears repeating – the latest moves in the precious metals market have been both extraordinary and widely advertised.  And while it’s clear to all that the move off the December lows has breathed new life into gold and silver, it’s not so clear whether it will last. There we go again, throwing water on the precious metal flame.   Certainly, there are doubts – and today, those doubts are potentially more potent than they were just a week ago.   But before we get to them, please, don’t get us wrong, the latest rally has been tremendous, and we acknowledge the very real possibility of a turn in the PM market.  Every bear market ends, regardless how long it lasts, and gold’s turn will also come… if it hasn’t already.   What makes us worry is not so much the action in gold.  Rather, it’s silver – the latecomer to the party – that appears to have imbibed a little too much and a little too quickly.   Have a look here – This is six months’ worth of the iShares Silver Trust (NYSE:SLV), a reliable proxy for the metal.   What’s clear from…

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