Buyback Magic (DIA,QQQ)

Buyback Magic (DIA,QQQ)   There are two distinct and opposite forces currently operative in the domestic equity market, both of which have significant clout.   The first is bullish, and, as our partner in crime, Hugh L. O’Haynew, outlined earlier in the week, it’s accounted for exclusively by the corporate buyback tsunami that began shortly after Sir Trumpendonald’s tax relief regime was passed into law late last year.   The size and scope of those buybacks has been ginormous, and we’ll have more to say on the matter in a moment.   The second active force in the market is bearish and is accounted for by everyone else who plays the investment game, including fund managers, institutional investors and regular hacks like you and me.   The reasons for their selling are manifold and include, among others, weakness in emerging markets, European politics and debt, trade wars, rising interest rates and a general sense that stocks have just gotten too pricey over the last year and a half.   Indeed, a 39% rise for the Dow and a 56% percent climb on the NASDAQ since the Trumpendonald won the election is something that should get everyone squinting.   We’ll have more…

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Get A Haircut! (FXI,QQQ,DIA,USO,IYT)

Get A Haircut! (FXI,QQQ,DIA,USO,IYT)   Earlier this week, freewheeling Hugh L. O’Haynew over at our Wall Street Elite desk decided to push the toothless FAANG narrative.  He was keen on portraying them as no match for the traditionally more defensive sectors going forward.   Well, no sooner had the words spilled out of his Visconti fountain pen, than old Huey was once again proven King Solomon, wisest of all men. Our fellow Modern Bully got his timing wham-doggy perfect.  The market did a flip like a four egg omelet down at the Canary Restaurant on Cherry Street, splashing the butter and bacon fat this way and that, and scorching old Netflix by a greasy 6.5% on the day. There were signs over the weekend, of course (for those without crust on their eyelids – thick crusts like you find on the toast down at the Canary), that a selloff was in the making.  But Huey already laid it out here.   What remains for us to determine is whether the selling will continue or was just a one-off, bad hair day for the big tech NASDAQ honchos.   And the answer is…   A look at the chart of the…

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Monster Chiller Horror Market! (QQQ,DIA,USO,IYT,GLD,SLV)

Monster Chiller Horror Market! (QQQ,DIA,USO,IYT,GLD,SLV)   There’s a point in every horror movie in which the terror and gore can get no worse.  And then, as if the gods had collectively reached into their cruel joke handbag, it manages to do just that.   It gets much worse.   The freight train has just leveled the town, the bodies are strewn everywhere, widows and orphans and crying babies, fires burning, carnage, mayhem, bubonic sores and pus galore … and whaddaya know, that neo-Viking motorcycle gang from Peoria arrives, thirsting for a good mead-induced blood-letting and plump, diabetic children to sacrifice to Odin. It’s precisely at that point that the fright turns almost comic.  Sure, there are those who get up and leave because they can’t handle what they know is going to be barbarism for the most barbaric.  But for others, it’s hard to contain; the giggle is on, and it’s gathering strength, because the whole affair has been transformed into some sort of ‘surreal state of cognition’ – a dreamlike situation where you’re watching the horror, still somewhat involved, but you know it’s a dream.   Welcome to the Stock Market!   The current market set-up bears a striking…

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“Bond. Lamest Bond” (TLT,QQQ,USO)

“Bond. Lamest Bond” (TLT,QQQ,USO) We’ve been talking about the end of the nearly 40 year bull market in bonds for some time now. Indeed, we’ve been early on a couple of occasions explaining the case for its demise, even errantly putting our money where our mouth was. We admit now we were early, eager and foolhardy. It happens, sometimes. Part of the business. Yet today, with all signs again militating in favor of just such a rollover, viz. a rising rate regime, a Fed that projects its intentions to continue tightening, a bond market that appears to be accepting the threat, and both the inflationary and corporate earnings backdrop to support it, we see there are still some who are unable to swallow the case for a coming bear market for bonds. Case in point: Morgan Stanley, no newcomer to the world of Treasury investing, turned bullish on the long bond less than a month ago. In a move that’s astonishingly contrarian, the bankers at that esteemed outfit claimed that “trade tensions, declining equity markets and subdued inflation” are forcing it to recommend clients bulk up on the ten year note. We would be all in favor of Morgan Stanley’s…

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Sit Down and Prepare for an Explosive Bull Movement! (QQQ,TSLA)

Sit Down and Prepare for an Explosive Bull Movement! (QQQ,TSLA) In last week’s Options Trader Elite, fellow scribbler Matt McAbby discussed the current state of the commodities and left you with a trade on the entire complex using DBC as the underlying. His discussion included closer looks at oil and gold, among other things, and suggested a breakout in either or both was just a matter of time. Today, we want to revisit his work and take a slightly different tack with regard to crude oil in particular, because we believe there could be a lead-laden shotgun trade for anyone who points his investment weapon in the right direction. So, to review… Geopolitics We’re sitting at what appears to be the beginning of a serious regional conflict in Syria, one that may eventually pull in some of the world’s largest armies, at least five of which possess nuclear armaments. Predictably, the latest round of exploding projectiles in the Middle East has also stoked the energy complex, with Brent Crude breaking to a new 40 month high just last week. And that, as McAbby suggested, will likely spur a great deal of technical trading in the weeks ahead. And yet a…

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She Thought She Was Going to The Dentist… (TSLA,QQQ)

She Thought She Was Going to The Dentist… (TSLA,QQQ) When I was young I had a friend whose father used to repeat the same lesson to him over and over again. His dad was an Englishman, so it helps to hear his words with that distinct pompous accent that accompanies so many who hail from the Land of the Rose. He used to say: The only ship you should never embark upon is a partnership. Can’t tell you how many times I heard that. As it turns out, we parted ways when I was 11 or 12, but my buddy (we’ll call him Denny) grew up to be a professional thief. I read about him several times thereafter in the papers, always with pictures on his way into or emerging from a courthouse, accused of every possible white collar deceit you can imagine. Did seven or eight years – twice – last I heard. The good news is Denny never had any accomplices, from what I understand. Respected his father, old Denny, after all. There’s something to be said for that. Let’s go 50-50! We got to thinking about our old comrade because the market today is splitsville, schizo-undecided, with…

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Neither Here Nor There (QQQ,TLT,FB,IEF,SPY)

bs’d Neither Here Nor There (QQQ,TLT,FB,IEF,SPY) It happens all the time. The Mrs. goes out to buy some fish for Friday, and the boys and I are left lunchless, waiting all afternoon for the car to pull into the driveway. Sheesh. Not that we object to her having a few hours with Meave down at the Brutus Café on Plympton St. And I can certainly whip up a round of tomato, mayo and cheese sandwiches that the lads are downright fond of… But in the meanwhile, we still get to worrying. Oh, she’s never delayed too long – and certainly the habit is so common now that we should have faith that all’s well, and her need for a break and a wee chat is just fine. It’s just not knowing that’s the hard part. Kinda like today’s market direction. Where the Hellarwee!? It appears that any confusion you’re currently experiencing regarding the next moves in equities is now as widespread as the flu. NOBODY has a clue. As the following charts from the American Association of Individual Investors (AAII) show, the normal order of sentiment amongst investors has been inverted, shaken, pilloried and set to Stravinsky’s ‘Rite of Spring’….

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Debauch of Self-Referential Verbiage! (FB,QQQ)

Debauch of Self-Referential Verbiage! (FB,QQQ) We’ve written literally dozens of letters in this space on the role of Facebook (NYSE:FB) in the market – and in the world at large. In fact, it was just months after the IPO was offered and the shares were trading in the $20ish range that we wrote As Goes Facebook, So Goes the World as part of our ‘Bourbon and Bayonets’ letter series. In that particular letter, we first introduced you to our thinking on the company. Thus spake fellow Normandy scribbler Matt McAbby back in May, 2013 – And five years later, that about sums up what happened – including the oxygen-deprived mockery part. But there’s more. This is a random sampling of our later scrawlings on Facebook – That’s where we were in April, 2014. Consider these, too – And the question is now whether our thinking is still as clear on the matter. Does Facebook, indeed, lead the market? And the answer is, yes. Have a look at a prophetic post we offered last summer in a letter called When Liberty’s the Target – We’ve discussed the ‘winnowing’ process that occurs at market tops at various times over the last several…

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A Tale of Two Markets (QQQ,DIA,SPY)

A Tale of Two Markets (QQQ,DIA,SPY) Here’s some technical puzzlement to lead off the day… What’s to be made of the dichotomy between the Dow and S&P 500 on the one hand, both of whom have failed to better their former all-time highs from late January, and the NASDAQ, whose fashion-forward tech names have easily managed to best those levels over the last few days? Does it mean we’re headed for a retest of the February lows, as the charts of the Dow/S&P would suggest? Or are we rather headed higher, with any dip in the coming weeks or month just a chance to gather ye marbles, while ye may. The answer to that question may reside in the finer detail of the charts, and for that reason we’re now going to show you four indexes, and share a little of our thinking on each. We do so because immediate market direction is dependent upon a number of key resistance and support lines that we’re now about to show you. To start, here’s a look at the Dow Industrials for the last six months. What’s most prominent here is the unfolding pennant formation (in red), a continuation pattern that’s consistent…

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China Needs to Chill (FXI,DIA,QQQ,SPY)

China Needs to Chill (FXI,DIA,QQQ,SPY)   We’ve put ‘war’ on the backburner for a stretch of time now – what with the winter olympics and the market falling out of bed and shootings in Florida. But it may be time to return to the military theme now, as, apparently, the powers-that-be have not lost sight of looming martial conflicts for even a minute. Potentially the biggest news comes from the Chinese-North Korean border, where the world’s largest military has just deployed an additional 300,000 soldiers in preparation for a potential war.   The Chinese themselves have little interest in warring with the North Koreans, but every reason to want to control the territory after a potential conflict with the United States.   It’s noteworthy to point out that this has happened before. During the actual fighting between the North and South in the early 50’s, the Chinese deployed some two million soldiers along the same border to deal with the perceived American threat.   Times change, of course, and the Chinese military is far more advanced than it was 70 years ago, but it appears attitudes have remained steadfastly entrenched.   A Sprint to the Mountains   Many believe the…

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