Finally! A Financial Ever-gasm! (AAPL,TLT,SPY)

Finally! A Financial Ever-gasm! (AAPL,TLT,SPY)   Is this it?   Like the long sought after Fountain of Youth, have we finally managed to create financial perfection?  A means by which wealth never dies?  A device by which it only grows and grows?  Where profits are guaranteed in a never ending advance toward greenback bliss?   Could it be that there is, indeed, a place where glad tidings and robust, good cheer flow in swaying amplitude?  Where the champagne flows, the laughter spills and the bad guys are routed regularly?  Where the Leafs finally win the Stanley Cup? Could it be?   There are many who point to signs that the Trump Rally is coming to an end, but we say to hail with that!  Mr. Trump, it could be, has provided just the right mix, a perfect elixir of Tweetery and policy that’s neither too hot nor too cold that keeps the pie baking sweet and crisp for all eternity.   Could it be?   Let’s look a little deeper. We’ll start with the sentiment numbers we always rely upon to determine if a top is in, those from the American Association of Individual Investors (AAII).  They run a weekly…

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Running Numbers (XLK,IYH,GS,FCX,FAS,C,TLT,HYG,AXP,V,RSX)

We’ve got so many trades come due, there’s little time for anything else!   Let’s get right to it.   First, we’ll take a look at a trade we launched over a year ago, on the 12th of November, 2015, in a letter called The Sachs of a McMorAno.   There, we urged you to dump the commodities and move hard and bullish on the financials, using two stock bigshots to play the trade, Freeport McMoRan (NYSE:FCX) and Goldman Sachs (NYSE:GS).   The trade recommended you purchase the January 2017 FCX 10 PUT for $3.00 and sell the GS January 2017 GS 150 PUT for $4.95.  Total credit on the trade was a fat $1.95.   And now?   Wow!   First of all, we closed out the FCX PUT on the 10th of December, 2015 for a dandy $4.12 and recommended you “leave your GS PUT to rot.”   And so it did.   On the third Friday of January, 2017, the GS PUT took the chloroform, expiring worthless, and giving us a very large $6.07 on absolutely no initial investment.  We’d like to thank the academy, the directorate, the foundation and the makers of Turtle Wax for all…

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Shall We Take a Dip? (SPY,TLT,GOOGL,TREE)

We’re at something of a crossroads in the market today, and not because the battle of bulls and bears has reached a stalemate.  Those traditional crossings are more easily navigated than our current predicament.  With them, there’s still a set of lights that keeps traffic moving in a more or less orderly fashion.   What prevails today, rather, is an intersection that has neither clearly marked lanes nor working lights.  That is to say, everyone is either confused or uncertain and gazing over his shoulder at what the next guy’s doing.   It’s not a comforting situation.  And even though analysts and strategists and plain old traders like us are looking at the data and charts for clues as to where we’re headed next (particularly over the short term), the answers provided by those metrics are still fuzzy, and the truth is, we could bandy off in just about any direction over the next thirty days, then retrace just as madly in another. And the reason for all the befuddlement?   You guessed it.   The new administration in Washington is about the least predictable we’ve seen in the last half century – if not longer.  The bottom line is…

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The Madness of Trade Liquidation (TLT,AAPL,OLN,PM,MO,GDX,IYT)

You’ll have to forgive our French, but there are several sectors of the market that are taking an absolute ass-kicking at the moment, and we’d be completely remiss if we didn’t pony up and say something about them.   The first is the long bond – the entire Treasury complex, in fact – that’s been given a vicious stomping of late; its worst takedown in a year and a half.  But when you throw in the technical damage done, we can’t remember seeing a month this bloody since the meltdown of 2009 gutted close to 30% from Treasury investors’ pockets.   The second is the precious metals, including gold, silver and the miners, all of which have seen tremendous declines in the last three months and which could stand to lose significantly more if the stock market continues on its sexy way, drawing in fresh flows of funds from all manner of suitors domestic and foreign.   The third is a number of big tech and internet names that we’ll likely have to address in a coming letter.  There’s just too much to deal with given the space we have.   The Coming Madness   We’ll look at the charts…

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When Things Get Twisted Down Below (HYG,SPY,TLT)

Amidst all the brawling and tussling leading up to the election, several important items were pushed to the back burner that now require our attention.   But before we get to them, a quick word on the new president-elect, the market reaction to it, Whoopi Goldberg and Barbara Streisand.   Sound and Fury…   In the first place, Donald Trump won, apparently fair and square, and we wish him lots of luck trying to fix the deep, systemic problems that plague America’s financial system (snicker, snicker).  We really do.  It won’t be easy.   Second, we note that the market selloff was fast in coming.  Overnight, Dow futures registered a 1000 point loss.  That number has backed up significantly through the morning hours and reversed higher to pull the Dow within a mere 18 points of its all-time high (1/10th of 1 percent away!) – nothing like the Armageddon we’d been warned of.   Amazing, really.  In the same way the initial selloff in U.K. stocks plagued the post-Brexit vote before the LSE went on to post huge gains, so, too, will we see a tremendous climb before month’s end on the NYSE and NASDAQ.   Buy the dip, as…

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Let the Risk/Inflation Rally Commence! (SPY,TLT)

The final phase is upon us.   And within a few weeks, we’ll be witness to one of the greatest underwritings of risk the human species has ever known.   Nor will it be fun.   Unless you’re a bit twisted. Be prepared to watch men jump from heights and expect to fly.  Watch them attempt to match strength and wits against the wildest of caged animals.  See, as they roll the dice of a life of prudence and surety against fortune’s wheel of chance, grinning all the while, a glass of bourbon in hand.   Oh-boy!-oh-boy!-oh-boy! …   It’s a’coming. Rudyard Kipling’s poem, “If,” spoke of the passage to manhood and the exceptional mental fortitude required to arrive there.  So when we offer above his reference to gambling, we don’t believe he was sanctioning the sort of capricious recklessness that’s going to characterize what’s about to come.   Indeed, what we already see coming.   Have a look here – This is a chart of the iShares iBoxx High Yield Corporate Bond ETF (NYSE:HYG), a stock that’s a proxy for the state of the American junk bond market.   And what does it show?   Among other things, that…

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Contrarian Sentiment Bullgasm (SPY,TLT,AAPL,TLT,XLK,DB)

These are our kind of headlines – It’s not often we get a splash of copy that includes the likes of the above on just a single perusal of the news galaxy, but that’s exactly what happened when we powered on yesterday.   And we’re pink-tickle drunk over it.   Why?   Simple.  The Iron Law of Investor Certitude (ILIC) makes it perfectly clear that –   The stock market is a machine that is built, maintained and finely tuned for the express purpose of separating Joe Average Investor from his life savings.   It therefore follows that if no one is invested, there’s no such separation of savings to be had.   That being the case, the market will now be forced to rise until a threshold level of average Joes are teased back into the game and can be fleeced of their hard earned cash by the machine. Hate to get nasty about it, but when the thing is a screaming buy, we just gotta scream ‘buy’.   That being said, the world is not all headlines, as you well know.  Sometimes the contrarian message is hidden in the actual article that follows.  And sometimes, as we’re about…

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Drilling Down to the Bond Core (TLT,UUP,GDX)

Before we jump into the fray this week and send you reeling with our ever colorful prose and one-handed, market-beating prowess, we’re going to take a moment to report on two trades that require attention.   The first was launched on the 13th of August in a letter called We’re Selling the Bond Rally, wherein we advised you to make two separate trades. The first was the sale of CALLs on the iShares 20+ Year Treasury Bond ETF (NYSE:TLT).   The reason for the advice was purely technical. We wrote –   After a very sharp bounce higher that coincided with equity market weakness, TLT has risen to its 137 day moving average…and we have good reason to believe that the rise will end precisely there. Why? Because the 137 day moving average has proven itself the workhorse in the moving average arena, reliably marking key resistance and support levels time and time again. And because it turned over in early June and has now been gathering momentum on the downside, we feel there’s little hope for a TLT breakout above that line at this juncture…   As it turned out, we were dead on. The CALLs expired worthless for…

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Helen Roper’s Revenge (FAS,GS,TLT,GLD,UUP,GDX,KWHIY)

The old lady’s loose flowing garments were testimony to her growing brood of kids and the tendency, as one gets older, to pay less attention to the body’s need for dietary discipline.   We’re speaking, of course, of everyone’s favorite landlady (and Stanley’s wife), Helen Roper, who in many ways characterizes the investment landscape we’re now passing through.   Helen, you’ll recall was a product of the post-war generation’s affluence and the yearning of many aging folk in the 60’s and 70’s to reconnect with their inner child and lead a more fancy-free, shame-neutral life than their parents.   A Generation of Teens   So, too, with us today, though we’ve taken Helen’s moral lassitude and free-thinking, love-me-dobedobedo to heights undreamt of in 1977.   And that’s also likely why our markets are so disconnected from reality, and will continue to be so until all of us have doffed for good the fat rings and frisky hairstyles of the late mamasita who never managed to get her Stanley.   Recovering from Vladimir   We’re now going to take a quick run through the trades we missed reporting while we were suspended in a borscht-induced hiatus this last quarter. We now…

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Land of the Rising Gun Trade (KWHIY,GS,TLT,DJXT,DJXR)

  We’ve spoken numerous times in this space on the theme of war and its place in the current investment cosmology, and we feel it’s time to expand that coverage somewhat today.   There are a great many conflicts underway globally that America is only involved in tangentially, but we believe that’s about to change.   There exists, for instance, the standoff between Russia and Ukraine, where U.S. forces have been growing incrementally; between Syria and a host of anti-government groups in that country, in which American forces have participated to date in limited fashion – although Russia’s recent entry into that sphere likely betokens an upgrade of American force in the region.   You have the Saudi-Yemeni conflict, in which Iranian and U.S. armed forces have until now played only supporting roles. Iraq, Korea, the South China Sea – across the globe, American servicemen are stationed in a great many simmering and outright hot locations that are just now about to get hotter.     The situation is unfolding, we believe, in tandem with an understanding that we’re on the verge of a global structural financial event. When exactly that event will occur is unknown, so the great powers…

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