Episode #56: OptionProfessor Market Update

Here are our VIEWS & OPINIONS
NEWS….The yield on all Treasuries & Stocks came down sharply this week in reaction to inversion of the yield curve. By week’s end yields rose and Stocks recovered a bit. Gold shares slide off their highs while the dollar was firm as was oil prices.
Stock Market- I saw a break under 2975-2950/VIX +17 as a sell signal but said that if 2800-2700 hold then a Q4 rally may still be in the cards. Quality high yielding stocks are of interest as it appears that the FED will cut at least a ¼ point in September Consumer data remains good which is 70% of growth. Also; tech, semis, financials and small caps & MAGA could see a turn if we hold and get a Q4 rally. Resistance now @ 2950-3000. In China watching BABA &FXI..FEZ –Europe.. US– SMH JPM MAGA
Bond Market- 10 year Treasuries broke 1.5% and the 30 year hit all time lows under 2%. My take is there is a panic to get in and that sometimes is not a good idea. Some long term bond etf’s are 30%+ above their 200 day moving averages and YTD returns are 4X normal. Consumer/employment good…prices /wages are rising a bit…earnings OK & comps will be getting easier in Q3 and beyond….are we underestimating European growth/possible ECB stimulus/China deal/GDP-inflation surprise??….if so China-US-Europe stock rise and rates back up. If you follow the herd long enough..you know what can happen.
US Dollar-as I’ve said all along…the trading range is 98-99 top range..94-96 bottom range…need a sustained break to call it.
GOLD-SILVER- as I have said the breakout was 1350-1375 and the Silver 14-15….now we have come a long way fast so 1520-1580 is resistance which is former lows in the past and we are way above the 200 day moving averages. My take is the metals either go parabolic further or more likely sideways-pullback. GDX/GDXJ/SIL/SILJ (large & small cap miners) pulled back a bit. Everyone clamors about cheapness of Silver & Platinum due to historical rates to Gold—Have they lost some industrial uses?
Crude Oil—seems well supplied & impervious to geo political news..however if the Q4 contrarian view materializes and we clear 60-70…watch out…prices way down & sentiment stinks.
Soybeans..still keeping an eye out for that Chinese buying…so far like waiting for Godot..if it clears 9.50 & 10.50….let me know
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Thank You.
REMEMBER..past performance is not necessarily indicative of future results. Options & trading involves substantial risk of loss and definitely not right for everyone. Consult with your broker/clearing firm/yourself to determine your suitability.