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October 22 2021 Option Professor Opinions & Observations
Hello Everybody!
Since we got back from the Caribbean a few weeks back our insight have been spot on. First we told you of the important support on SPX at 4300 area and then the resistance at 4360 & 4450 both crucial to the rally. We sent out an alert on the Gold & Silver stocks that have had a significant rally (Gold had best week in many months). We sent out an alert suggesting short term traders evaluate switching out of big gains in stocks and replacing them with limited risk option strategies BEFORE tech rolled over. Now what is ahead?? Here’s our view….tapering and interest rate hikes are on the horizon. In the weeks ahead central banks (ECB-Canada-the Fed) will announce plans on tapering while developing nations (Russia & Brazil) are announcing substantial interest rate increases. We will be looking for sideline oil out of OPEC to cool off the prices (they meet Nov 4) but who knows what will be decided as oil companies like the high prices, OPEC sees we are trying to switch to electric and fracking and investment are not quick fixes. How will the winter paly out? If we are colder than normal and Russia fails to deliver more energy as promised.. another leg up is in the cards. If we break 1.75% on the 10yr Treasuries; you could see 2%+ before EOY. Inflation may close out the year with a 5% handle and next year could be 4% for all we know. Some say demand will rollover and supply chains will resume and kill the inflation beast.. we’ll see. Should rates rise; valuations (which we have told you based on inflation rates and now higher yields should be 18 PE) are at risk of compressing not unlike China has seen. Some say the US Dollar will roll over due to fiscal and trade deficits exploding (although corporate & personal taxes paid are at records). We hear European stock are the place to be on that scenario as well as emerging markets. In this type environment; banks, materials, energy, consumer discretionary, industrials and reopening stocks may be the place to be. The Transports (CSX UNP ect.) have been running great as when bottlenecks subside …who’s going to deliver all these goods.. Santa?? We may be able to survive next week as earnings may put the glow back on traders faces but once all these central backs start taking away accommodation we will see what happens with the 10 Yr Treasury…..if it behaves (1.50% to 1.70%)…..then the 5%-10% year end rally may still be on but if there is an exodus out of bonds….upside capped. Stocks Bonds Commodities Real Estate……nothing looks particularly cheap here so some cash for a rainy day OK Instead of fearing the Ides of March…we may need help from the Gnomes of November if interest rates pop.
Do you have specific questions?…email us at [email protected] with questions & Contact Information
Stock Market
We got about a double top at SPX 4550 and now we will see if the VIX hitting 15+ and a market high point coincides with a correction of 100 to 150 point like it did last time in August. If not; the 4500-54550 area may actually be the base level for the rest of the year. Find out what we like here….go [email protected]
Bond Market
Should you look at your bond portfolio in the last few weeks you probably are seeing valuations dropping. Some areas like high yield still attract interest despite negative real yields as well as preferred shares and the frontrunner floating rate issues…..want more information…email us at [email protected]
Us Dollar/ International Markets
Our view is the DXY will not be able to get thru 94-96 and has a decent chance of rolling over due to deficits both fiscal and trade. This should benefit Europe-Pacific Rim-Emerging markets. With Chinese stocks trading at reduced prices and valuations and with 40% of the market in tech..we have ideas for prior to Bejing Feb 2022 Email us at [email protected] and we are happy to share with you.
Crude Oil Natural Gas
We have told readers about this sector since oil was trading in single digits in 2020 and Nat Gas (LNG) was at half the prices they are today. NOW??…you tell me what winter weather will be and if Russia & OPEC will release reserves…we will tell you where prices go….early November they meet…email us at [email protected]
Gold Silver Copper Crypto
Gold & Silver are teasing with rallies but then fade down…we believe there is a good chance of a face ripper rally by the end of the year but not without closes over 1800-1850 Gold and 25 Silver. Copper has been touted as the new oil as supplies are tight (most mines already done and new ones are in dodgy countries with dodgy infrastructure). Having said that in the last year this market in all forms have been very good to us. We told everyone Bitcoin & Ethereum bottomed in July months ago so we are not adding on strength…we get another tank job we have our levels of interest as the new ETF may mark a short term double top but anything is possible with crypto either way….next week let’s see CPI data….Email us at [email protected] with questions
Soybeans Coffee Sugar
We told readers about Soybeans going up last year between 8 & 10 and it ran to about 17. We said former resistance at 12 would be an area to trade against an we just got a great rally off that area that faded. If we hold the recent lows and take out this weeks high…we would be very encouraged. Coffee and Sugar were brought to readers attention at 12.50 Sugar and 100 Coffee….little steep now for us email us [email protected]
Remember All investing involves risk and it is not right for everyone. Consult your brokerage firm/broker to determine your own suitability and risk tolerance. Past performance is not indicative of future results. Information and opinions are for informational purposes only It is NOT advice.
