Update 120: Stock Market-Warned You About the Sell Off-Read More
November 20 2020 Option Professor Opinions & Observations
Greetings!…..We warned you last week about the sell if that would occur if we failed to take out the SP 3670 highs. Hey…according to a Bank of America survey many managers are at a 20 year high in bullishness….credit card activity, restaurant & hotel bookings are rolling over (mobility fade) ..el virus is spiking in cases, hospitalizations & deaths…..food lines in Texas look a a major free in bumper to bumper rush hour….all the vaccine news was greeted by ho hum & cities are either closing earlier or threatening worse.. Mnuchin is taking money back from the Fed….stimulus talks are a joke while Trump claims squatters rights….10+Million getting relief & claims jumped this week…so we have more a few headwinds to overcome. We told you in AUGUST that Sept Oct Nov were going to see spikes in volatility and so far each month has given a great discount buying opportunity & we suspect that may happen again….HOWEVER IF they can get the VIX under 20 to draw the sideline cash/cover shorts… then all bets are off….T.I.N.A is not dead but resting until we get more clarity virus & stimulus…air got thin. We can explain hedging tactics and asset allocation models so feel free to email [email protected] with anything you want to discuss. Yes 2021 is supposed to be a great year..how much is discounted?…how great??
Stock Market
The S&P lost some ground this week ass did most indices…the question is a small pullback or something more serious?/…As you know we have been big value players as the P/E ratios and dividends are attractive plus even more the cyclicality which may surface with a re-opening next year. BABA seems to have hit a short term low around 250 and ass we go into the holidays keep an eye on EA ATVI SONY SNE NVDA as gaming seems to be on a run. TSLA has gone nuts ass it will be included into the S&P on DEC 21st so watch out for the stampede BEFORE to turn into ADIOS after it goes in (remember the run up into the split on AAPL?). Investors are confused by the vaccine news and the timetable of implementation….so first they bid up banks industrials airlines epicenter (hotels ect) only to switch to Covid Plays later in the week (ZM-PTON-TDOC) and more….Buffett’s disclosures as of Sept 30 shows trimming AAPL…reduced stakes in Liberty Media, M&T Bank, Barrick, WFC PNC JPM..left COST & added GM BAC KR PFE BMY MRK ABBV TMUS …looks like he likes pharma and not so many banks plus a 5G play….will the schizophrenia go on thru year end or was value just a pull back after a big VALUE run and resume? We saw unusual activity in options in SQ & Snap so keep an eye out….we’ve got lots of stocks & ETF’s on our radar list…email us @ optionprofessor.com
Bond Market
Let’s see ….we got a Fed/Treasury fight regarding closing down some facilities by year end (trying to set up trouble if we need the funds before transition?)…..yet TLT as we told you would rally out of 154 and had a GREAT week….if stocks sell off & data continues to erode…look for more upside. Around the horn…..preferreds PFF were range bound and yield over 5%….high yield was also flat and yields around 5%….but munis as we said are the place to be so far MUB has had a great 2 weeks & people love tax free income….floating rate high income FFRHX has been bid up in the month of NOV….our parking sport in short term IG corporates & limited duration tax free have served their purpose..finally Emerging Market debt VWOB has also been bid up in Nov and yields over 4%…..the Fed is a real backstop but duration has risk…ask us more @ [email protected]
US Dollar/International Markets
The Dollar has faded but not broken down in the last week or so holding the 90-92 neighborhood we identified as support a while ago…will it fall on its own weight…maybe BUT LISTEN TO THIS….our yield advantage has now returned ass yields have risen and Japan & Europe are a mess (particularly Europe) and while many believe the Fed adding reserves will kill the Dollar the TRUTH is Fed has added to GROWTH and not inflation and that in turn STRENGTHENS the Dollar..not to mention positioning is ALL SHORT US $$’s. Past cycles bear this fact out. NOW on international stock markets Japan’s market we told you about months ago has turned down a bit -very dependent on our consumer who is stalled….we bought BABA this week and will do so all the way down to 200 if we are so lucky…big gap at 290 to be filled…..EEM has stalled after a heck of a run and Europe VGK is rising based on hopes that the virus will turn valuation & Lagarde’s help Dec 10th. As we told you Mexico EWW Brazil EWZ & India INDA are stable to higher. Got questions on how to play the [email protected]
Crude Oil Natural Gas
Storage is back to the rim like earlier this year ass the virus killing demand short term & Aramaco is selling bonds to pay the dividend…XOM’s doing the same thing…some people call these type companies zombie companies…we have been bullish on this sector & have been paid during the big advance but now we could stall/pull back but still believe in the longer term demand return storis so every pullback may be a buying opportunity. CVX the best in breed have had a big run so keep some powder dry…longer term 45-60..Natural Gas that we were bullish on at 2.00 ran to over 3.50…but warned you it’ss volatile bent back to 2.78 this week & LNG is aobe M/A’s @ 54…do you want to know how we play oil? [email protected]
Gold Silver Copper BitCoin (GBTC)
There are a few things we find interesting about Gold….some which we told you about already….first off our view after the parabolic move this year to $2100 was a trading range of 2100-1800 would develop and it has…now that range has closed to 2000-1800 where we sit today….In Q3 Central banks were net SELLERS of Gold and fund flows show investors are LEAVING the ETF’s. With economic numbers rolling over…inflation fears are following suit. Some say we will see the Dollar rise and Growth return but not inflation as yield have also risen. Mining shares have faded 20+% off their highs so we better be getting to the buy point soon as we are now testing the 200 day M/A’s in many stocks GDX GDXJ SIL SILJ ect. We should know soon as Gold is still up for the year and Silver twice as much. We told you $30-$22 would be the range for Silver and we got there…now make that $26-$22 and whichevr way it breaks could see acceleration…some (like us) would love to see a hard selloff to $1750 Gold/$20 Silver as ideal entry #’s. Copper is the All-American metals as it hit 2 yr highs this week…a train we’ve beenon since 2.50…..FCX our favorite we’ve been on since single digits is now at OVER $21 any pullbacks would be buys as longer term closes at above $20 sustained opens up the door to 30 & beyond…unless black swans BitCoin has gone wild and is press ing the all time high 20,000 and our vehicle GBTC has been a pleasure….the year after halving tends to be good. Aquestion on these inflation/dollar [email protected]
Soybeans Coffee Sugar Cocoa
BIG WEEK for all four of these…new highs in Soybeans pushing toward $12 which we told you about in the $8 dollar neighborhood….we told you Coffee was in the support zone in 100-110..this week hit 125 area…..and Hershey’s caught traders on the wrong side of their interest which led to the biggest rally in Cocoa in decades. How do we follow these? optionprofessor@gmail
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