Child’s Play (GDX,XLP,DIA)

Child’s Play (GDX,XLP,DIA)   It’s fun to be a kid in the summertime, and play all those games.   When we were little, there were a bevy of inventive minds on our street, children who were just as happy to make up their own amusements as play ‘Kick the Can’ or ‘Hide and Go Seek’.   There was Stewie Ferguson, for example, who invented a real doozy of a game called “Smell my Finger”. The Viccari twins, I think, made up “Where’s the Worm?” And both those games, of course, became threateningly exciting when a blindfold was added to the mix.   It was rompus fun for all, summer and winter, too, when the O’Malley dog had puppies and we sat in a circle around the Sedgewick’s chestnut tree playing “What’s Barney Licking?”   How Little Things Change…   Today, the blindfolds are still on while investors carouse with “Run up the Techs” and “Valuation Revulsion”. And while no one seems ready to join in a round of “Pliny the Prudent”, we’ve decided to initiate a bout of that classic game today, regardless of who throws in with us. We’re not the only ones peddling the commodities story these days….

Read More

Wrap It Up and Ship Her Away! (IYT,AAPL,DIA,XLP,DBC)

Wrap It Up and Ship Her Away! (IYT,AAPL,DIA,XLP,DBC) We’re going to open today with an indicator that gets far too much attention, but that still has much to offer if taken in proper perspective. It’s the VIX Index, the Chicago Board’s measure of implied volatility in S&P 500 options, sometimes called the market’s ‘fear gauge’. Those with a simplistic view of the VIX claim that when it’s low – watch out! – the market is about to take a spill. These folk see the complacency behind low volatility in options as an inevitable contrarian sign that the market is about to explode. And there’s truth to the notion that low volatility is eventually replaced by high volatility. The opposite is also true. Periods of high volatility lead directly to periods of low volatility. On a long term chart, it looks like this – But it’s also clear from the chart that volatility can remain excessively low for extended periods of time, rendering the “VIX at historic lows!” crowd all but irrelevant. A New Take We were been pioneers in the formulation and application of a related indicator that we termed ‘volatility compression’. It’s a marker that has served us well…

Read More

The Problem With Flying (XLP,DIA,TLT)

The Problem With Flying (XLP,DIA,TLT)   There are a few things that kinda trouble us these days, but none so much as the technical picture of the Dow Jones Industrial Average, whose daily, weekly and monthly charts are all now spinning through lala-ville, overbought every darn j-candle of them, and presenting the very picture of a dead man walking.   So it is.   And we have to acknowledge the reality.   But before we turn to the actual charts, know that neither the S&P 500 nor the NASDAQ are as bloated as the Dow.  Know, too, that the Dow Transports and the rest of the world’s major market indices are also nowhere near the froth-flood we see on the Old Lady of New York.   And we’ll have more to say on that in a moment.   But first, take a look at the Dow’s daily paste-up – Here, you see a picture of some 1500 points achieved in under just eight weeks (in blue), a relentless juggernaut of a climb that rarely saw a down day and pushed the index’s Relative Strength Indicator (RSI) high into overbought territory for almost a full month (in green).   What the…!?…

Read More

Inaugurating the Profit Search (GOOGL,FXI,KOL,XLP,XLF)

With the New Year under way, we find ourselves with a raft of trades to report.   So pour yourself a tall mug of mead and light up a Camel… Why the goat?   Our first trade was launched in a letter called China at New Highs; Buy China! back on the 1st of June, 2015.  It was a very long dated affair that didn’t prove itself in the end.  We urged you at the time to trade the Chinese market in bullish fashion, specifically recommending you purchase the FXI January (2017) 51 CALL for $5.20 and sell the FXI June 44 PUT for $0.22, the July 44 PUT for $0.48, the August 44 PUT for $0.81, and the November 44 PUT for $1.56.  Total debit on the trade was $2.13   And when all was said and done, we owned the shares and took on quite a bit of water, as we summarized in our March 29th, 2016 letter called The Urban Banking Reversal.  See there for details.   As for today, suffice to say that we now bury the hope contained in the 51 CALLs that expired with the inauguration last Friday.   On a related matter, we…

Read More

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…

Read More

The Finale (XLP,XLF,UUP)

Let’s review.   We’re now at the beginning of the final, stock market blowoff top, the one that will go down in history as the greatest and most spastic, bubbilicious equity buying frenzy of all time.   Forget the roaring twenties, forget the South Sea Bubble, forget Tulips and Go-Go and Nifty Fifty and the Singaporean Twin Ballerina Bubble of the mid seventeenth century – nothing will compare to what you’re about to see. Buy and hold?   Hard to tell, because we don’t know at this stage how long the rally will last.   Buy single stocks, an ETF, or an index?   Sure, if you want.  But again, the timing will be difficult here, as it’s sure to be a jerky ride to the top – something like gold in 1979-80-81 – up 20%, down 40%, up another 55%, down 35%, up 60%, etc., etc.  Hanging on to anything will challenge even the most testosterone gifted investor.   That being the case, we prefer a slightly different approach, which we’ll outline in further detail in a moment.   But first, a brief refresher.   We got to this stage in financial history on the back of a drug-induced…

Read More

The Builders: Trump, China and the Depot (HD,XLP,XLY,XOM,USO)

When the FBI demanded access to Apple’s encryption technology to unlock the iPhones of the San Bernardino terrorists, we were disturbed.  As far as we were concerned, Apple’s refusal to empower an already intrusive surveillance state was commendable. But others saw it differently.   Donald Trump, for one.   Trump went on the offensive, saying we ought to use ‘common sense’ and give the government what they need to fight the bad guys, to know if there were accomplices, etc. And that would be a great thing – to catch the bad guys. All of them. And lock them up.   But there was something unsavory about Trump’s appeal and his further suggestion that we boycott Apple products until they comply with the government’s dictate. To our minds, there’s something resolutely hollow about a government’s claim that privacy must be sacrificed for the sake of criminal justice.   In our experience, there’s always a larger, unaddressed problem that necessitates the need to pursue this type of ‘justice’. Somewhere, there’s a faulty policy, a bad practice, poorly conceived laws or just plain wrongheadedness that sets us up for intrusions of this sort, that allow, for instance, the state to listen to…

Read More

Staple those Discretionaries! (XLP,XLY)

A broken record.   When I was young, and kids listened to LPs, there was an expression that epitomized someone who droned on repetitively about this or that. We said he sounded like a ‘broken record’.   It wasn’t such a friendly moniker, but for us, it summed things up nicely.   And today, at the risk sounding like the same broken record we mocked in our youth, we feel compelled to repeat the message we’ve been broadcasting for several weeks now.   Again!? Why!?   Well, because we believe that all the ballyhoo currently being trumpeted across the airwaves and over the fibreoptic lines that span the financial world is no more than that – just plain old ballyhoo. And the market crash of biblical proportions that all the fancy-pants fund managers and media talking heads would have us believe is already upon us – isn’t. And what’s more, we believe the opportunity to cash in wildly – indeed, quite possibly the last chance to cash in like Crowbar Jim Dundee did at the Lee Family Laundromat – is today upon us.   The Proof, Willy, Give us the Proof!   Who you calling Willy?   The charts below…

Read More

Powered by WishList Member - Membership Software
GET YOUR FREE SPECIAL REPORT:
"THE SEVEN DEADLY SECRETS OF CHINA"

GET YOUR FREE SPECIAL REPORT:

"THE SEVEN DEADLY SECRETS OF CHINA"

Enter your e-mail address to claim your FREE Special Report “The Seven Deadly Secrets of China”

You have Successfully Subscribed!