Long Wash Cycle (TLT,SLV,XLB,XLK)

Long Wash Cycle (TLT,SLV,XLB,XLK) Intermarket analysis is a helpful tool for the technical trader attempting to anticipate the next big move in the investment universe. What is it, exactly? Well, over time, certain cycles are evidenced in the movement of stocks, bonds, commodities and the dollar, with associated relationships also seen between Emerging Market debt and equity, as well as in the play between large and small cap stocks. In general, however, the main body of evidence points to 1) rising commodities (and a falling dollar) preceding 2) a turn lower in the bond market, followed by 3) a retreat in stocks. That is, when inflation is driving the cost of raw materials higher, interest rates are eventually forced upward, pushing investors out of their fixed income holdings and ultimately equities. It should be noted that the process is anything but clean, meaning it takes place over the long term, and is accompanied by rolls and rises in each asset class, such that it can best be seen only with a wide angle lens and often only after a significant time span has elapsed. Attempting to time one’s investment shift decisively out of one asset class and into another with…

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The Nutella Market (XLB,XLK,TLT)

The Nutella Market (XLB,XLK,TLT) There’s very little in this world that can compete with thickly spread Nutella on a crispy rip of focaccia. Hell, just dip that sucker into your oversize jar and give her an uncaring hack-snort swallow… And let the goop fall where it may. Is that life, or is that life? I’ll say… Unless, of course, you keep it up for too long, and it sends you to the oncology ward with a prep for chemo. Don’t Do It! The market has begun to act as if all is sweet and simple again, as if a dollop of the Ferrero hazelnut-cocoa genius was already stuck to its palate, blood-glucose levels were frenzied and a titanic insulin shock was fast approaching. When you see the biggest names on the street hitting new highs, or coming to within a whisker of their records, you know that it’s only a matter of days before the next spasm of buying is upon us and the indexes, too, begin logging all-time bests. This is the phase when rational discourse is abandoned, trust in the past and all it has brought becomes a religious tenet, and money is thrown fastball style at the…

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Y’wanna Buy the PetroYuan!? (FXI,USO,MSFT,FB,XLK)

Y’wanna Buy the PetroYuan!? (FXI,USO,MSFT,FB,XLK) If we’re on the cusp of a new bull market in commodities, as we here at The Modern Bull believe, then the winners and losers will be clear cut and big. But when it comes to measuring the impact of rising energy, metals and foodstuffs prices, it’s very hard to determine how China will be affected. The reasons for this are manifold, and not least because that country is among the least transparent when it comes to all things economic – and, of course, because free markets don’t operate there as they do in many other parts of the developed world. China is among the world’s largest producers of farm produce – much of which ends up supplying domestic demand, though a great deal, too, is exported. At the same time, it’s the globe’s biggest importer of oil and gas, as well as many metals. So what’s the net effect on a country like China when, say, oil prices jack up sharply, as they have in the past few months? To put it in its most general terms, China’s markets and wealth are very closely correlated to global commodity prices, something that cannot be said…

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Spies and Spycraft (FB,XLK)

Spies and Spycraft (FB,XLK) There’s lots to report today, so sit back and grabba java. We start with the following but of pithy wisdom straight from the leaders of our fair firm’s investment advisory board. And it goes like this – The more secrecy that exists in a state’s apparatus, the weaker the state is, and the more vulnerable it becomes to a widespread revolt or armed insurrection. Commit that to memory. We offer it up today, not only because our own fair commonwealth has far too much backroom subterfuge and chicanery, but more worrisome, because we’re moving in the wrong direction! We’re being ever more scrutinized, bureaucratized, analyzed and plain old watched – particularly via the technology we use. And that poses increasing problems for those of an independent freedom-loving stripe – like us, and, very likely, you, too. The news is filled with constant detail of how much data collection an average citizen is subject to, and what’s outright terrifying is the increasing ‘profiling’ that’s now occurring via the ‘innocent’ search engine technology we daily avail ourselves of and the social media sites we frequent. You Heard it Here First It’s no surprise to long time readers of…

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DR JOHN (DR,XLK,PRI,MTD,IWR)

DR JOHN (DR,XLK,PRI,MTD,IWR)   Our good friend, Matt McAbby, wrote in last week’s Options Trader Elite about a scenario that he referred to as the ‘non-bear’ market.  That is, the possibility that the current bull run in equities would continue until… well, there was no market anymore!   He was referring to a complete shutdown in trading that he suggested might continue either temporarily or, conceivably long enough to count as permanent because by the time everything was up and running again, the new reality would have rendered the whole project superfluous.   McAbby’s contention was that the possibility of an attack on American soil, either conventional or non-, is not a risk that investors pay enough heed to, let alone plan for, and he believes that’s a mistake.   He elaborated that we should start now, slowly and methodically, to prepare for such an eventuality. His chosen path was to begin the move back into precious metals – after almost seven years deriding that ugly puppy – as the signals now appear to be pointing toward higher prices for the gold and silver.   Pressing Further   And while we share in his belief that gold and silver are certainly…

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Two Cent Technology Trade (XLK,GLD,FCX)

Two Cent Technology Trade (XLK,GLD,FCX)   It’s looking increasingly like the toppling market we saw just a month ago is now regarded by investors as ancient history.   Yes, there was a retreat – of sorts – over the last week, but it was selective.  And what emerges is that the leaders of this market – the big cap NASDAQ numbers – are stronger than ever.  Stocks like Amazon, Netflix, Google, Microsoft, Apple and Facebook are either at their all-time highs or pushing strongly thereto.   It’s a phenomenal show of strength on the part of some of the most obscenely valued securities on the planet, and an equally remarkable show of faith on the part of those investors who are ready to jump the bid at these levels.   Shocking, but maybe we shouldn’t be so surprised.   A Moving Target   At this stage, we can say that the momentum for equities is upward.  What will be in ten days or two weeks is anyone’s guess.  A look at just a few of the aforementioned companies’ charts shows that whatever danger the market perceived a month ago has clearly subsided.   Take a peek – These are six…

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FREEWHEELIN’! (DIA,VOX,XLK,XLF,XLF)

FREEWHEELIN’! (DIA,VOX,XLK,XLF,XLF)   We didn’t create the world we live in, but we inherited it, and that leaves us with just two choices with which to deal with it.   On the one hand, we can opt out.  We can attempt to move away from the reality that exists and forge something new, perhaps with like-minded individuals, or alone if need be.  We may even be able to do it where we’re presently situated – there may be no reason to relocate whatsoever.   The other option is to work with what we’re given and attempt to make the best of a sorry or compromised, or even downright miserable predicament.   And so it is, too, with the financial world.   Consider –   We live at a time of unprecedented government intervention in financial markets, a phenomenon created by (among other things) a concerted, global money-printing drill that abandoned all semblance of restraint with the financial crisis of 2008/09.   Have a look – With the advent of Quantitative Easing the lid blew off, the Fed was fruitful and multiplied, and we entered a new era of falsity that continues to this day.   An Age of Lies  …

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Confusion, Lies, and the Trades They Inspire (CAT,AAPL,KSS,XLK,IYH)

Confusion, Lies, and the Trades They Inspire (CAT,AAPL,KSS,XLK,IYH)   A good number of the folk you meet on a daily basis are whacked.  But it’s important to know that there are actually several types of whackos out there, including two that are regularly confused with one another.  In truth, they suffer from distinctly different maladies.   On the one hand, you have the confused individual.  He’s raised in a milieu of half-truths, modern statist brainwashing and outright lunacy and simply doesn’t know any better.  He therefore spouts his nonsense with conviction because it’s all he knows, and it’s well-nigh impossible for him to get outside the box that was built for him. He suffers for his addle-headed tripe, to be sure, and others around him also likely suffer.  And so it goes.  On and on.   On the other hand, there’s the liar.  This blackguard has no sense of integrity and speaks his nonsense for largely political reasons – to advance his own standing in the group or vis-à-vis another individual – and there’s very little that moves him outside of his ‘advancement’ agenda.  There is no genuine charity or sacrifice in him (save for furthering the cause of his…

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We’re All Gonna Die! (XLK,GM,F)

We’re All Gonna Die! (XLK,GM,F)   Just a moment to recap exactly where we are and how we got here.   To begin, our bull market began in March, 2009 and, despite the odd shimmy and shake, it continues apace, spurred ever higher by the machinations of a giddy central bank that refuses to take bear for an answer. This past fall, with the election of Snidely Whiplash, the market kicked into overdrive, beginning what we believe is the final blowoff top to the bull that began in either 2009, 1981 or 1933, depending upon how cataclysmic your worldview.   But that’s for another time.   Today, we find ourselves at a crossroads.  Not a difficult or impassable one, in the least.  Rather, a point at which a pause is necessary before the next phase of the bull unfolds.   The Story of a President   When the latest phase of the bull was launched in November/December, it was the financials that assumed the leadership mantle.  All the banks and brokerages saw double digit gains, at least, within just a few weeks.  And after a few months, additional profits of 40% to 60% were booked.   And then the financials…

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Buy Me a Gift! (TSLA,XLK,FAS)

Buy Me a Gift! (TSLA,XLK,FAS)   There’s nothing more disheartening than having to remind someone it’s your birthday.  Not just anyone, of course, but someone who’s supposed to know and has forgotten.   Why?  Because it puts you in the awkward position of making someone else feel awkward for the purpose of getting something from them. Face it: there are those who will certainly forget, those who you HOPE won’t forget, and those whom you can’t under any circumstances LET forget, because THEY can’t afford to – they’ll feel worse than you if they’re not reminded.   And there the trouble begins…   Here at Normandy – birthday or no – we feel it’s our responsibility to point out the uncomfortable truths that are often overlooked or intentionally ignored by the rest of the newsletter cadre, and to deliver them to your inbox in an upbeat manner, such that you don’t turn us off – heaven forfend! – and go looking elsewhere for more ‘cheerful’ news.   No, no, we say.  The truth may hurt, but a dose of humor certainly helps the medicine go down, as archangel Julie Andrews once put it. The uncomfortable truth that we want to…

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