Haughty, Haughty Boy! (NUS,NOC,SPY)

Haughty, Haughty Boy! (NUS,NOC,SPY)   Much of the commentary here at Modern Bull over the years has been dedicated to preparing for a bear market – and a potentially devastating one, at that.   It has long been our belief that we’re now witnessing the mother of all bull markets, the final, euphoric blow-off top to an advance that began in the depths of the Great Depression some eight decades ago.   It’s an hypothesis shared by others, though to our credit, there are very few who are willing to stick out their necks and claim – as we do – that we still have one more ‘Old Faithful’ spasm of buying ahead of us, the likes of which has never been experienced by today’s market players. What follows, of course, will not likely be pleasant.  And we’ve been proponents of stocking up now in preparation for what’s liable to come.   Banking on Yourself   We, of course, were the first to introduce the world to the Four Gs Investing regimen – Guns, Gold, Gas and Grub, a catchy and poignant slogan that a number of ill-witted, unimaginative copycats have since gone on to pilfer.   As you’ve come…

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I’m Having An Attack! (AAPL,SPY,USO,FXI)

I’m Having An Attack! (AAPL,SPY,USO,FXI) Isn’t it always the case…? The news is horrible. The threats are palpable. The rhetoric and bombast are as hot as ever. Suspicion and anger are ubiquitous; finger-pointing; mud-slinging; muck-raking; belly-aching… For gawd’s sake, my meniscus has been twice herniated, my pylor valve is stuck, and I just burned the honey-garlic spaniel! The kids are gonna kill me… The Decibel Level Climbs When the news is not reporting the Mueller/Trump duel, it’s all about rising oil, with 1) Iran and the potential loss of three and a half million barrels of daily oil supply, or 2) Yemen trying to take out Saudi oil infrastructure, or 3) Israel gearing up for a takedown of Iran in Syria and Lebanon, or 4) Venezuela, whose oil production is veering toward zero, as funds to pay for the extraction of that country’s vast reserves go squandered or missing or who knows where. And now Warren! This week it was reported that Señor Buffett had his first losing quarter since 2009, reporting over a billion bucks lost for Q1. The damage is everywhere. And here’s what’s worse. From Wall Street we’re seeing growing concerns that the breadth of the market…

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Where The Markets Meet War (SPY,NOC)

bs’d Where The Markets Meet War (SPY,NOC) There are days to be thankful for, friends. And this is one of them. For all that we have (and don’t really deserve), we should bend over backward and thank our tormentors. For all that we want and still haven’t gotten (and really don’t deserve, either), hold on a bit. For in the end, there’s little doubt that the greatest of all Supreme Court Justices will bestow upon us our worldly dessert in the most precise and poignant manner. And may he do so doubly to our enemies! Revenge and the Making of Foes It’s hard to figure where the current round of trade wars will end. There are those who posit that we’re fast-tracking toward a military confrontation with the likes of Russia, China and Iran, and whoever else we might end up feuding with (Canada? Mexico?). And there are those, like the President and his cabinet, who claim that this is simply about protecting American business from an unfair playing field that we, in our unthinking ideological rush for an ill-defined ‘globalism’, created ourselves. It’s now simply a matter of healing those self-inflicted wounds and restoring thereby our former glory. In…

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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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Turn Tide, Turn! (TLT,LVNTA,SPY)

Turn Tide, Turn! (TLT,LVNTA,SPY) We file these reports on a strict weekly deadline. No matter what happens, we’ve committed ourselves to arriving at your inbox on time, week in, week out, every Thursday by noon. And, of course, it’s tough nuts to us if we have to offer a trade in the midst of a major market selloff. Lord knows how tough it is to read markets while a storm of volatility is crashing down upon us, just like that which appears to be at our doorstep. We have a few options available when this happens, to be sure. We can refocus on a calmer quarter of the investment world and attempt a trade where no one is looking, so to speak, and, indeed, that has proven an effective strategy on several occasions. The commodities, as a group, have been surprisingly stable during this week’s five percent NASDAQ selloff, and could provide us with a safe harbor trade, if needed. Or we could hedge ourselves with a bet on just about anything that offered limited upside or loss potential. A short term spread in either direction would accomplish that. But we’re going to undertake something a little less conventional at…

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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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The Bigger Picture (SPY,FNV,DIA,UUP,DBC)

The Bigger Picture (SPY,FNV,DIA,UUP,DBC)   For some time now, we’ve been kicking up a big to-do about how the current market has lost all sense of the fundamental and is being driven exclusively by sentiment and cash flows.   And there’s no gainsaying that as we approach the final innings of history’s greatest ever bull market, we’ll see ever more money making chase after equities as they swerve higher and lower, as volatility ratchets up like Norse stretch rack and indecision in the bond market creates powerful cash surges between equities and fixed income.   That said, we want to reassure you that we still believe the major indexes’ best days lie ahead – but it won’t be nearly as smooth a ride getting there as we’ve seen over the last year. We’re going to take a look at several discrete items now to acquaint you with our market thesis going forward.  But before we do, let’s first summarize the broad forces now at play in the system.   Push and Pull   The foremost driver of today’s capital markets remains the massive liquidity infusion of the last decade courtesy global central banks.  This single factor has set the underpinnings…

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THE POLAR VORTEX HAS SPLIT! (UNG,USO,SPY)

THE POLAR VORTEX HAS SPLIT! (UNG,USO,SPY) OH. MY. GAWD!   In a development that’s caught nearly everyone off guard, a massive high pressure system recently sundered the normally quiescent Arctic ‘polar vortex’ in two!   It’s a little known, unique weather event that, according to meteorologists, could bring MUCH WARMER TEMPERATURES TO THE AMERICAN EAST COAST AND MUCH COLDER TEMPS TO THE WEST COAST AND CONTINENTAL EUROPE! Did you get that?   In the coming weeks, the weather may change due to this disruption of the normally static low pressure cell that sits over the Arctic!   And whaddaya know, U.K. natural gas contracts have already spiked some 3.5% in anticipation of the cold blast, while the Russians, who supply a great segment of Europe with its natgas and heating oil, appear to be revelling in this ‘natural’, though odd, wintry phenomenon.   But was it all a Russian plot?!   It didn’t take long…   The inevitable conspiratorial plotlines have already begun spinning on the web and, to a lesser degree, from American and Western European officialdom.  The theorists are all wondering whether Vlad the ‘Vortex Cleaver’ Putin had a hand in this latest weather oddity.  And while we’ve…

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Phoenix Envy (SPY)

Phoenix Envy (SPY)   The market will move in the direction the majority least expect, for a duration that no one can predict, reversing precisely at a time that the greatest number are blindsided.   Or as a wise investor once wrote, “The market’s raison d’etre is to reach as deeply as possible into the pockets of average investors and empty them.” It’s for that reason that professional investors developed tools to protect themselves.   And one of those is the ‘moving average’.   Here at Normandy, we use a proprietary selection of moving averages that have often raised eyebrows, but we use them for a simple reason: they work.   After settling on them some fifteen years ago, we’ve employed them unstintingly to read market direction, and we believe they’ve made an outsized contribution to our industry beating track record over the years. We want to offer a word now on moving averages in general, 1) because we regularly get inquiries regarding our own, odd quartet of MAs and 2) because of late, they’ve once again proven themselves righteously accurate.   So…   The bottom line on MA’s is this…   Like so much in technical analysis, once a…

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