2

Update 98: Stock Market-Hit the Gas or Pull Rip Chord-Read On

June 19, 2020 Option Professor Opinions & Observations

Well…Do you like old Westerns like High Noon? You could be on the verge of seeing the Stock Market version soon. In the last TEN DAYS we SHARED with you two (2) very valuable observations. #1 This is where we were approaching SP 3250 and our support zones and said that our SUPPORT ZONES were down at 2975 (ball park 61.8% retracement 3400-2175 & former tops of 2017 2018) and 2790-2800 (the 50% retracement/all clear signal). The idea of looking toward hedging (covered calls-collars-married puts) looked reasonable to us. #2 We SHARED with you that SUPPORT ZONE so that one could look to BUY against those levels and we certainly got a ROBUST 180 point RALLY after hitting the 2975 neighborhood. Great Call….. WHAT ABOUT NOW? We have the valuation camp (Lee Cooperman & Warren Buffett ect) having a difficult time reconciling the prices with earnings & growth estimates while the more Quant camp (Mike Wilson-Kolanovic-Tom Lee) having been very bullish in the last 3 months based on things like rebalancing/selling capitulation/the belief that the restart would be sooner/consumer resilient-robust/earnings surprises derived from less employees -real estate. THESE ARE YOUR TWO GUNFIGHTERS. You know which one we have been betting on if you’ve read our UPDATES. Starting in March we told you of our high beta portfolio of VGT MGK SMH VCR and they have gone thru the roof. We also told you of income ETFs like VCSH HYG PFF & funds like VWEAX VUSFX VWLUX and more. We also told you of epicenter stocks like CAR MAR STWD CCL GM JBLU QSR BA HAL & more that had huge rebounds PLUS Oil having a L shaped supply & V shaped demand with prices going toward 40 bucks per barrel…..Great Calls. OK>>>BUT WHAT NOW?…With rates at almost ZERO in money market..11 Programs by the FED….restarts going….1-2-3 YR MA’s are at 3009-2903-2813 RISING c& INVERTED TO THE UPSIDE Plus $1.5 Trillion infrastructure package, UNDER investment by active managers & value guys & an Administration clearly focused ONLY on November to hell with LONG TERM consequences…the bulls have a good story BUT we need to CLOSE the gap @ 3200+ which OPENS THE DOOR to closing the GAP @ 3300 & NEW HIGHS in JULY as some have forecast. The BEARISH CALL is a WINNER IF we see SP take out 2950 & 3018 (50 day & 200 day MA”S which are INVERTED TO THE DOWNSIDE. As we told you LAST WEEK…Our BIG CONCERN is the DOW TRANSPORTS & RUSSELL 2000 FAILED to get above their LT MA’s (DJTA 10,000+ RUT 1540+) which suggests this is a FUGAZI RALLY not based on Earnings GDP & Jobs but OBSCURING. This would set up our NEXT HIGH NOON @ 2790-2800 neighborhood. RIGHT NOW WAIT …we should be ready to HIT the GAS or PULL the RIP CHORD SOON.

Our UPDATES are FREE so Tell a Friend to Get Theirs …Simply email [email protected]

Stock Market

FRIDAY saw remix- quadruple expiration (stock-index-S&P futures-options) NEWS that Apple was closing some stores temporarily put coffee in the booze bowl Friday as Thursday’s 1.5+ Million jobs lost didn’t disturb traders.Many of the epicenter stocks that had big rallies but are UNDER their 1-2-3 yr MA’s have lost their steam…Florida’s virus spike not welcome. The ones that have been best for us are the stocks & sectors who have not only rebounded but have gotten ABOVE their 1-2-3 yr MA’s and have just run & run& run. We have a focus list if you’re interested shoot us an email. The BIGGEST Cash flow recipients YTD have been LQD VOO VTI GLD & QQQ not a bad portfolio as well. The IPO ETF which works with Initial Public Offerings has gone from ball park 20 to 42 in that last few months as stocks like ZM & BYD PTON TDOC DOCU & others have made an IPO banner year. Many believe competition w/ INTERFACE will actually have MANY Winners. TECH (MSFT New Highs) SEMIS (NVDA) Biotech (IBB XBI) as well as CRWD (cyber security & CRM move up. Also; AMAT LAM PYPL MU TME BABA Up. Longer term ITB could hit the double whammy of cheap $$ & new demand. While JP Morgan report credit card activity jumped 4.7% (fueled by Govt $$) the BIG RISK for banks is the June 25 result of their STRESS TEST because they added a COVID twist that centers around BUYBACKS & DIVIDENDS and if they must cut or eliminate either or both..their landscape could change; if not then the selloff could be a huge BUY opportunity ass the FED probably doesn’t have a vested interest in spearheading a mass exodus out of shares. SP LEVELS of support we see as 3080-3050-3018-2950…end of Q2 squaring?? TERRIBLY SAD NOTE: A young man ended his life who apparently was trading at ROBIN HOOD (13 million customers/average age 31 yrs old). They NOW are making changes to enhance SUITABILITY & EDUCATION…Too Bad.

Any questions..shoot us an email ……[email protected]

Bond Market

The Fed announced that on June 16 they would buy bonds and they did just that…of course a good bit of front running seemed to go on and HYG sold off by the end of the week and FAILED @ its 1-2-3 YR MOVING AVERAGES which come in at 85-86 (the highs)….INVERTED TO THE DOWNSIDE will it tank like DJTA RUT…stock sell off coming?? Stay Tuned! As we told you TLT had a blow off top at 180 & subsequent tank to the 150 handle. Our belief is a WIDE trading range could establish now 180-150 as things settle down. International Fixed Income is starting to stabilize a bit VWOB BNDX so there may be opportunity there. Munis are stable with expectation of Fed help BUT Junk/Leveraged Loans hardly out of the wood. IG quality pays not much so yield hungry still linger in HY. What should KEEP YOU UP at night in the debt market is that some believe the 10yr Treasury should be SP dividend yield plus GDP or 2%+2% = 4% yield…it’s about .70% so if these people ever become 1/2 right…TIMBER.. Our focus list has been our friend

Want to know more..email [email protected]

US Dollar/International Markets

As we told you in PRIOR UPDATES; we are NOT on the SECULAR BEAR market for the Dollar & in fact told you that 95 was the BASE. THIS WEEK we put a 97 handle back on it (close 97.66) and while still substantially LOWER than 2 months ago…the Yen-BP-Aus$-Can$ have all FAILED to turn their MA’s around and this week the rally in the EURO went the way of the Buffalo. Time will tell if sustainable foreign currency rallies will materialize Stocks are another matter..it’s time to keep a close eye on Germany Brazil Japan China Australia & Canada as they are attempting to get ABOVE their 1-2-3 yr MA”s…if they FAIL at these levels…back in the soup they go. Mexico & India have more substantial ground to go so you can put on your rally cap

Want to know more…email [email protected]

Crude Oil

The Saudis export to USA fell to a 35 Year low and prices have been stable between 35-40…BUT our target was about $40 upper band …we expected a V Shaped Demand & L Shaped Supplies (Rig counts tank/OPEC cuts/Fracking done) which is EXACTLY what has occurred. NOW the oil stocks that had huge JUMPS as we expected and told you about MONTHS ago have faded so we see a lot of DEMAND returning and IF we underestimated that we could BLOW OUT to the Upside BUT most all oil companies are way under their 1-2-3 yr MA’s….something to consider..REPLACEMENT TRADES…a strategy where you reduce stock exposure and replace it with limited risk Calls.

Got Questions…email [email protected]

Gold Silver Copper

Gold & Silver have been STALLED for 2 BASIC REASONS. #1 In the case of GOLD…the 1-2-3 YR MA”s are 1569-1420-1380 all RISING & INVERTED TO THE UPSIDE…which means to us we are in a BULL MARKET with a lot of potential runway BUT we are OVERBOUGHT. #2 THe MONEY SUPPLY has EXPLODED (good for Gold) BUT MONEY VELOCITY has tanked (bad for Gold)…it’s difficult to have INFLATION with that relationship…you need VELOCITY to RISE. So do we believe in holding LT exposure ABSOLUTELY.. are we CONCERNED this & by the popularity by retail coin buyers & ETF Money flows ….yes….GOLD SHARES GDX GDXJ ect) are holding supports and are still way UNDER their HIGHS from the last run at $1900…not sure if OK or telling us something….if we BLOW OUT 1800-1900 & GDX ABOVE May’s HIGHS…then the train is on it’s own schedule….but until then….wait a bit. Silver got ABOVE $16- $1650 and looks like it’s ready to ROAR as LT MA’s are at 17-16-16.23..a little sloppy by OK…the BIG KAHUNA is 19-21..above that level and you wanna be there. Copper has done pretty much ass we suggested for months which is move toward resistance @ 2.50 and after breaking thru try to make a run at 2.80…LT MA’s are at 2.55-2.66-2.80 so INVERTED to the DOWNSIDE albeit crossing over the first two…if we turn down from here…no good…getting ABOVE and sustaining +2.80 needed.

Soybeans & Sugar

Both Markets have turned up off their lows and have maintained their gains pretty well HOWEVER…more heavy lifting ahead….need to get those pro China buying stories going again…maybe crop interruption via weather to get above 10 buck soybeans to get acceleration…..LT MA’s 8.80-9.15 areas. Sugar prices popped out of the 9-10 area and some tell us commercials have been leaning bullish…the turn formation off 9 looks good to us but again LT MA’s loom ABOVE at between 12.20 and 12.70…by late summer we may either get volatility enough to resolve these markets one way or another.

REMEMBER… There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Consult your brokerage firm, broker, advisor to determine your own suitability. Past performance is not necessarily indicative of future results. Use Risk Capital Only.

0

Update 97: Stock Market-Too Giddy? Stress Test-Read On

June 13, 2020 Option Professor Opinions & Observations

OUR BIGGEST LONG TERM CONCERN is that the Dow Jones TRANSPORTS (DJTA) FAILED at 10,096 which is where their 1-2-3 YR MA”s remain INVERTED to the DOWNSIDE (9800=10,147-10,161) and fell OVER 1,000 points & the RUSSELL 2000 FAILED at 1540 which is where it’s 1-2-3 YR MA’s are INVERTED to the DOWNSIDE (14810-1522-1524) and fell OVER 200 points. These 2 Indexes NEVER made a new high since 2018 & told us to BEWARE of 2020 S&P move to 3400 in Feb. as the Stock Market has NOT seen a sustainable RUN without these 2 indexes participating in the last 20 years! We still subscribe to Recovery & are LT Bullish…CAVEAT EMPTOR! LAST WEEK…..we were riding high and prices were zooming thru the roof… THIS WEEK…we got one of the biggest DROPS in history……What’s going on? We told you last week that BULLISHNESS was getting frothy (our support was 2975 & 2790) and SELLING CALLS & executing COLLARS could be a good idea to HEDGE your portfolio….EXACTLY the right strategy to employ. Campbell Harvey from Duke correctly predicted that the yield curve inverted in June 2019 & that 2020 we would we see a RECESSION that would be BRIEF (1 yr) and VIOLENT which started in Feb and should end in Q1 2021. He also cited risks/concerns that seem important NOW focusing on VALUATION-PROFITABILITY- CASH FLOW-DISCOUNT RISK UNCERTAINTY. You have not heard a PEEP out of Buffett (no buybacks/one time dividend payout/all that cash pile) in our opinion because the Russell 5000 divided by GDP at this point justifies very little value & the FED has OBSCURED real prices so well that even the Oracle of Omaha can’t figure out what stocks are worth. This week Powell & the 2nd Wave fears on the Virus put the risks back in PERSPECTIVE. A DIVERSIFIED portfolio served us well this week as large cap growth & tech did well (AAPL AMZN MSFT NFLX UP on the week) & BONDS did well offsetting weakness in other areas. Powell tapered the enthusiasm from the Jobs Report (revisions coming?) and said no hikes/low rates until employment returns which he knows is not going to happen. Business debt surged to 16.8 trillion surpassing household debt. Major retailers missed May rent payments (40%) & now renege & renegotiate. Simon Prop trying to get out of Taubman buy. GOOD NEWS is forbearance usage DROPS & Car sales were up & bookings on cruises & airlines are Up but keep in PERSPECTIVE still 82% Lower YOY. Most common age in USA is 29 yrs old which means the DEMOGRAPHICS in the next 10 yrs is solid. Houses & Cars will be bought and families created-very good underpinning. BOTTOM LINE…we told you were were way away from shore (3250 vs 2975-2790)…spec was high (Hertz)….Hedging made sense (Sell Calls/Collars) BUT so far the STRESS TEST of level one (2975) held & our WORST CASE is 2790 with a GOOD CHANCE of a TRADING RANGE to develop albeit WIDE with the VIX back in elevated territory (54% jump Thurs). The range for S&P in April (2975-2450) in May (3065-2760) & June so far (3231-2982)..we suspect the 2760 low will hold so we would continue with higher lows & higher highs…many of the epicenter stocks gave back a lot but still are above recent breakout points (banks/hotels/travel/airlines ) Stay Tuned Stay Safe

Questions on Covered Calls-Collars Hedging-Cash Put Selling-Spreads?? Shoot Us an email at [email protected]

Stock Market

The big question now is “Will Mega Cap Growth/Tech/Semis Hold Us Up”? Many feel if they give way then a more substantial drop is in the cards. As usual; it is a market of stocks not a stock market and that proved out in spades last week as stocks like PYPL MSFT AAPL AMZN NFLX NVDA XLK than the oils/banks/epicenter stocks. ATT (T) may be selling Warner games and could fetch $4 billion which would help them get ready for 5G or reduce debt. Gaming stocks loss their luster (WYNN LVS MGM DKNG PENN CHDN) but they could be buys on a pullback as slow or no openings expected to change over time (Singapore/Vegas/Macau/Sports). Best Buy (BBY) is opening 800 stores which is a relief to many while Ross & Tj Max (ROST TJX) should have a field day buying merchandise from retailers drowning in inventories & needing cash flow. Cloud computing, Cyber Security & semi-conductors in vogue. Concerns remain around state restrictions on restart procedures & the shape of consumer demand.

Want to learn more about what sectors/stocks are on our radar list?? send questions to [email protected]

Bond Market

Lower for longer is the message from the Fed as no hike until full employment mandate hit sounds like a pipe dream. Spreads are tight and expected tighter and our warning about duration risk a couple of months ago was EXACTLY appropriate as yields rose off the panic lows of March. NOW it appears investors have overreacted to the rebound with way too much optimism and the TLT going from 180 top to the 50 handle of last week may see a TRADING RANGE develop between the 2 points (180-150). The Fed changed the rules on Main street lending with lowering minimums to $250K & increasing Maximum to $300 Million while extending repayments to 5 years & no principal for 2 years. These things may end up being written off as grants who’s kidding who? Looks like that $500 billion in the muni facility will get some action soon as NYC needs $30 billion for MTA & Port Authority can’t be far behind…Hawaii is a total mess..needs $$$. Getting into High Yield & Leveraged Loans is welcome news to the investors (HYG_FFRHX)…thee still languish BELOW their 1-2-3 YR MA’s suggesting they are FAR from out of the woods…so Powell keep that check book out. Short to Intermediate duration seems to remain the sweet spot for debt.

Questions on what’s on our radar list email [email protected]

US Dollar/International

This week value & international got whacked after having a decent run. One reason was the shift from a 95 handle mid week on the Dollar Index to the 97 handle it finished the week. Like children running home to Mommy…when it hits the fan (Thurs)…the y still come home to the buck. LAT WEEK …We told you we were NOT in the secular bear market camp on the Dollar as we were above 95 support & many currencies had FAILED to get above their 50-200 day MA’s. So far; this patience has paid off. Germany hass a huge stimulus deal as their banks need help & the ECB issued DOUBLE the expected stimulus. IF we are to have an economic REBOUND of growth Europe & EM should do very well BUT VGK & EEM still struggling to get above their 1-2-3 YR MA”S so like their currencies-need more price proof. Aussie$ & Canadian $$ need more up & hope oil & Gold remain hot.

Crude Oil

Well the cops showed up in the oil sector this week (Increased Stockpiles) and took 10%-25% off the recent high prices. We told you last week that our short term Upper band for prices (25-40) had been reached and you could dust off your hedging tactics (Trailing stops/Sell Calls/Collars/Married puts) which would have been handy this week. Longer term…while we admit the demand concerns & stockpile build are concerns…we remain steady that L shaped supplies ( Venezuela output at 1945 level) & V shaped demand (albeit prices have moved up at the pump) portends higher levels in 2021 (40-55). A thieves market but done with $15. For Buffett’s sake we hope so.

Gold Silver Copper

Gold cash prices had their best week since April but GDX still consolidating above the 28-31 support zone. INFLATION is not a concern at the Fed or elsewhere for good reason. MONEY SUPPLY numbers have gone thru the roof in record amounts BUT MONEY VELOCITY has tanked the other way as banks have taken in assets thus curtailing velocity. For Inflation to get going you need to REVERSE this dynamic which will happen in 2021 & 2022 which is when your dreams of FIELDS of GOLD (Sting) have a better probability of happening. IF we take out 1800…a run to 2000 could happen and beyond in years to come. Still run the risk of a big pullback to LT MA’s in cash & stocks. Silver remains above 16-17 which we view ass constructive…it seems to react well when stocks react well (industrial)….UNDER $15…bye bye Silver. Copper is still a believer in the economic turnaround as we told you the last 2 months with increasing ranges (May 2.47/2.28 & June 2.70/2.42) with the 3 yr MA ahead at 2.80. All 3 MA’s remain INVERTED (2.55/2.66/2.80) so still a bit from all clear and if global restart stumbles..back in the soup she goes. The ones on our radar FCX & SCCO are hanging in there pretty good so far.

Soybeans Sugar Ect

Ass we told you…we believe these two markets have been turning up but both need additional strength & sustained price action to confirm. NOW prices UNDER $8 dollar Beans & $9 on Sugar seem unlikely as so there you go…lines in the sand…now we need supplies & demand to feed us bullish information so we can go from a walk to a jog to a sprint…price resistance remains above…if the lows hold/news improves..by year end maybe we go.

REMEMBER ……There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Consult your brokerage firm, broker, advisor to determine your own suitability. Past performance is not necessarily indicative of future results. Use Risk Capital Only

0

Update 96: Stocks-Acceleration-Just like Our Forecast-Read On

June 6, 2020 Option Professor Opinions & Observations

WOW….the only way to describe this week in stock price across the board. If you are a regular reader you know that after the capitulation selling in March (advance decline line & volume SCREAMING panic low); we have been all over this REBOUND rally. Not only have we told you possible levels of concern (2640/2790/3000…now 3250-3350) but EXPLAINED WHY & HOW it was happening so you wouldn’t get caught BEARISH or OUT like so many who looked at where the PUCK WAS and not where the PUCK WAS GOING! Let’s give newcomers a quick review of base case…..we got a self induced lock down of our economy at a time when stocks were EXHAUSTED by about ALL measures (SP 3400)…..which caused a PANIC unwind of 3 years of buying…..this allowed Trump/Mnuchin/Powell to put their PLAN into action….which was to EXPLODE Fiscal Deficits/National Debt/Money Supply & the Federal Reserve Balance Sheet & to make Money Market Rates ZERO! Not terribly sophisticated..ANYONE can run up DEBT & the FED CONTROLS short term rates……so now then you have investors SHORT or OUT with NO RETURN on cash…..PANIC….ACTION…you give 1200 bucks out to people & more for kids PLUS you jack UNEMPLOYMENT benefits REPLACING LOST INCOME (Personal Income JUMPED in May 11% with 40 Mill+ jobless) & you create PROGRAMS set up by MNUCHIN so POWELL can LEND money and comply with the FEDERAL RESERVE ACT of 1913 which speaks of purchasing TREASURIES…….NOW we have programs for every day (month??) of the week (Municipal Liquidity Facility/Primary Secondary Market Corporate Credit Facility/Temporary Asset Backed Securities Loan Facility ECT)……which allows them to by everything from Mortgages IG to Junk Bonds…EXAMPLES of Fed HOLDINGS are ANGL HYG HYLB IGIB IGSB JNK LQD SHYG SLQD SPIB SPSB USHYY USIG VCIT VCSH….a long way from TREASURIES huh?…..RESULT is Investors first plow into high beta names we told you about months ago like MGK VGT SMH VCR and now have plowed into EPICENTER stocks (cyclicals/hotels/airlines/travel/restaurants ect) PLUS small-mid caps and dividend paying stocks & staples-Value. Heck even HERTZ whose stock was at 40 CENTS rallied Friday to almost $4 DOLLARS closing @ $2.57 and they just DECLARED BANKRUPTCY!! We told you the REASONS we rallied #1 RESTART much quicker than expected #2 Consumer quicker to spend #3 STIMULUS (LEVERAGING) is beyond imagination & of course the BULLS BEST FRIEND…T.I.N.A….the FED has created a THERE IS NO ALTERNATIVE situation for investors who want or need to make money….that’s OUR View. HOW MANY PEOPLE DO YOU KNOW UNDERSTAND WHAT’S GOING ON? They understand their ACCOUNTS are UP…for Team Trump-Mission Done!

To let others know how to receive our weekly updates or to ask any questions….to register & ask questions email [email protected]

Stock Market

What a Ride!! We got the BEST 50 day rally ever/65% of S&P made new 3 month highs & 97% of S&P trade above their 50 day M/A. SURPRISED? You shouldn’t be as history shows us the trajectory or symmetry of the decline can be matched by the recovery (Remember RECORD 15 day DECLINE in March). In March & April the train was leaving the station for the high beta stocks on our radar MGK VGT SMH VCR and accelerate they certainly did (AMZN FB MSFT AAPL GOOG NVDA AMD ect) and they continue to perform well as short interest at CME & under investment by active managers saw a real panic after the employment report shocked the bears. The VIX is comfortably under 30 which we told you was key for this nascent rally. HOWEVER some of these stocks are stretched a bit (trading 20% to 40% ABOVE 200 day M/A’s) which could mean selling Out of The Money Calls to Hedge or Collars would be worth a look (email us if you need explanations). So what areas could be the next in ROTATION….how about the boring Value/Staples/Small cap/Midcap/Industrials/Materials/ Overseas/Gaming and epicenter stocks (banks/travel/restaurants/dept stores ect) ? On our Radar List beyond our higher beta names includes VIOG MGV VTV VONV VOE VOOV VIS VAW VDC VFH VEU VEA VGK VPL VIGI VXUS VYM in addition to many individual names. OUR EXPECTATIONS remain a potential of filling that gap up near 3300-3350 BUT reality is we have rallied almost 50% off the lows and the FEB LOWS were right around FRIDAY’s Highs plus exuberance could be assigned to Friday’s mood. RISKS NOW include #1 VIRUS SPIKE (or BULLISH if no NEW cases by June 15th), #2 CHINA & Trump (he now has his boat legs back w/ market rise), #3 REVISIONS likely in the Unemployment Report (2.5 mill up & 13.3% rate??) as the Bureau of Labor Statistics only had a participation percentage in the survey of households and businesses in the 60’s & numbers they’ve NEVER dealt with so experts paid millions are probably not that far off (8.3 mill down/19+%). #4 VALUATIONS…if you use the Buffet Russell 500- divide by GDP you would need ice & tilt your head back as you would have a NOSE-BLEED:):) BUT our “Three Amigos” Trump Mnuchin Powell still call the shots through keeping short term rates down & giving money away to anybody who asks (PPP extend 24 months & Unemployment likely extended too)…..so if someone wanted to trim or sell fat out of the money calls/collars…no fight here…our 2 big support zones are 2990 & 2790 and with this weeks run up we’re getting further from shore BUT investors have been SELLING BONDS & adding stocks…if this goes from a skip to gallop then we could get the juice for the S&P could to join the Nasdaq by making new highs sooner rather than later.

Questions?? email [email protected]

Bond Market

AS WE WARNED YOU….DURATION may be risky with all this printing & exuberance as we said “Do you want to lend ANYONE money for 30 YEARS at anywhere near 1%??….This week apparently no one else did either as TLT which WE SAID had a blow off (possible generational) BLOWOFF at 180 on March 9 and now trades with a 150 handle. The Fed doesn’t have as much influence on the long end and actually WANTS a steepening yield curve so banks (VFH) can make money & it looks like forward growth expectations are positive. This can be positive to a point for stocks as money flows their way. Forget about old standards…the FED is loaning in manners UNHEARD & UNPRECEDENTED Amounts & Directions and they approved PRIVATE Equity in Retirement Plans (Eugene Keogh rolls over in his grave) Will Powell & the Fed pour Cold Water on this Rally this week….. Election Year….Nah! Team Trump knows they got what they wanted out of this CRISIS…..Our Radar List includes VCSH VCIT VUSFX VMBS VWEAX PFF

Thoughts to Share?? Tell a Friend email us [email protected]

US Dollar/International Markets

We told you in prior UPDATES that the Dollar Index was in a RANGE of 101 & 99…and which ever way it BREAKS may indicate the next trend…well LAST WEEK the DXY broke under 99 & had a LOUSY week…this week was NO BETTER & in fact we closed with a 96 handle (96.95). Some say the Dollar has begun a SECULAR bear market which would be POSITIVE for EARNINGS but at this point we do NOT share that opinion. Gone are our yield & growth advantages plus our deficits & balance sheets are a mess. Our LT 1-2=3 yr MA’s come in at 98/97/95.50 areas so they’re not inverted buy 2 have been BREACHED…..Did we learn anything from STOCKS where we told readers that S&P getting back above 2800 (3yr MA) may result in a 2016/2018 scenario of BULL MARKET as BREACH is not turn down. So before we say SECULAR…let’s see if we can get under 95 and how long it stays there BEFORE we stick a fork in the US Dollar. The Us Dollar is pointing down & It COULD happen as Euro & Yen are closest to getting above MA’s with British Pound/Can$/Aus$ to follow…all need a bit more but this could EXPLAIN the better performance of EEM & FEZ & VWO…more??

Crude Oil

What we told readers was that we would get an L Shaped supply curve (rigs closed/Frackers shuttered/OPEC Cuts) & a V Shaped Demand that could send oil prices back up to 25-40 area this year (fill in March gap) and possibly 40-55 in 2021. This is EXACTLY what is transpiring. HOWEVER we have now 4X the price in Crude (10 bucks to 40 bucks) on lower volume so we would suggest keeping close tabs on your oil stocks (XOM CVX COP XOP XLR VDE ect)) and if you feel they are running out of gas (no pun intended) you could dust off defensive tactics like trailing stops, trimming (if you double on a stock & sell 1/2 you have a free look at the remainder), out of the money covered calls, collars ect….BUT some do say longer term…a lot more runway.

Gold Silver Copper

We have been CLEAR about our concerns about GOLD being OVERBOUGHT basis its 1-2-3 yr moving averages & the failure of cash prices to exceed 1800 & the retail rush to buy coins 150 bucks over spot…..those CONCERNS this month came home to roost as we now have a 1600 handle on spot & GDX has trimmed better than 15% off its highs. NOW…we have the 1 yr MA at 1560 area and GDX tested the breakout point & 50 day MA around 31 area so this week the 50/200 day averages around 28-31 important to hold & let’s see if this weaker Dollar/Debt explosion/Consumer Rebound puts legs under our wobbly fighter. Silver is exciting to us because it’s trading with a 17 handle and its 1-2-3 yr averages come in around 16-17 bucks…not bad….PLUS if we can clear & stay above 19-21 it has the potential to look like Bo Jackson when he turned the corner in Monday Night Football (YouTube it:)…lots of open space and if we’re V Shaped on the economy..well that could be a tailwind…maybe that Gold Silver Ratio will finally tighten. Copper; as we have said has been approaching the 2.50 level & this week it blew it out…will it last??…we’ll see this week but the momentum is ok but getting above 2.60 could be a tough hurdle. FCX & SCCO had a good week.

Soybeans etc.

We told you to keep an eye on Soybeans and with China buying Monday & Tuesday we got a pretty good spike to the upside. Still resistance looms above at 880/900/950/10 so while constructive we need more stronger price evidence upward to get us thru & into higher levels above. Sugar prices have been on our radar and this week they got moving….some say that food supplies could get tighter IF Demand come in way stronger than supply chains are prepared to deliver…..only time will tell….follow the numbers.

REMEMBER There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Please Consult your brokerage firm, broker, advisor to determine your own suitability. Past performance is not necessarily indicative of future results.

Use Risk Capital Only.

0

Update 95: Stocks-TINA Or An Officer & A Gentleman

May 29, 2020 Option Professor Opinions & Observations

Welcome Back Everybody!…Well we broke thru 3000 this week and tested the breakout point Friday & closed higher..not bad. Many investors (not our readers) are confused at WHY??….Is it because Unemployment is low? Is it because consumer spending is robust? Is it because Earnings are great & guidance great? How about GDP & LEI? AGAIN..as we said #1 Restart was way quicker than expected #2 Consumer bounce back believed more robust #3 Monetary Stimulus was fast & beyond imagination. HOWEVER..the biggest reason is what we brought to your attention 2 months ago! THE BIG REASON is when the FED manipulates the short term interest rates to ZERO; investors MUST invest even if they have no great reason nor understanding of the VALUE of what they’re buying. Do you remember the movie “An Officer & A Gentleman”..if not..stream it. Anyhow one scene has Lou Gossett hosing down Richard Gere & making him do drills so he will quit the Navy. At one point; Gossett screams at Gere…Why Don’t You Just Quit…to which Gere screams at Gossett “Beacuse I Have Nowhere Else to Go”..that’s Stocks. This week we saw more than 2 million more souls file for Unemployment as the Good News was that about 4 million didn’t renew (of course there will be some going back to work as we re-open..we contend many will not be). Personal Income jumped this week by 10.5% because the CARES Program cared so much they ended up paying people more than going back to work. Consumer spending was not so lucky as it dropped 13.5% (maybe the FED can actually spend money for consumers and Amazon deliver the goods??) Demand destruction has been palpable but as we said the Income hit has been made up by CARES/Unemployment. Spain just passed Basic Income for all…since we’ve followed Europe & Japan into fiat heaven..maybe that’ll be our answer to income inequality. China & Trump are at it again…the rhetoric is inflammatory & China will return serve this week. China did not kidnap companies or “rip us off” because Walmart & Nike & Apple and many many more voluntarily moved the supply chains over there to get CHEAP labor and make BIG Profits…now we are supposed to take our tax dollars to lure these same companies back through incentives & tax breaks? The BIG RISK to our view that the SPX could fill the gap around 3300 and stay above the 1 yr 2 yr 3 yr MA’s (2996-2887 & 2794) is IF Trump turns the Covid 19 crisis into a domestic & International political football which freezes up the consumer & IF talk becomes action resulting in a breakdown of supply chains & international commerce. China’s time horizon is decades & Trump’s time horizon is November. The Fed’s still in there; but so is short term investor exuberance…learn how to hedge….if we dip…watch the M/A’s.

Do you have questions for us? simply us email [email protected]

Stock Market

This week we saw some give back in some retail names like TJX, ROST, KSS M & JWN while the big guys COST WMT AMZN plus TGT (8 bucks away from all time highs) had constructive moves. Other rebounders like Oil, Banks, Hotels, Restaurants also seemed to lose some gas this week. Our high beta group MGK VGT SMH VCR seemed to regain popularity by the end of the week as the Russell & Transports-Value lost some luster. Defense was on display as Utilities (VPU) saw money directed their way as investors feel the bills will be paid & the yields are juicy. Some believe there is value in the Russell 2000 (VTWG) and also in infrastructure globally (AMY CCI ECT) as since the printing presses are running wild ..why not throw in some jobs. We’ve got a lot on our radar…let us know if you’d like to hear more This week..watch BABA & be careful if we close under SP 2995 or 2880.

Need to ask a question? Email us @ [email protected]

Bond Market

The Fed’s buying various areas of the markets & some believe the Junk market (HYG VWEAX) is worth a look as well as Intermediate term (VCIT) and the bid reamins on Munis (VWLUX) as bridge financing to states & cities ect seems probable. Short term debt (VUSFX VFSUX) still holds some allure but the RISK seems to be at the longer/extended terms as while there was no inflation after 2008….this stimulus is GLOBAL & 35-45% of GDP & the Dollar had a LOUSY week. So if you want to lend for 30 yrs @ 1+%-Feel Free!

Lots to Learn……send us an email @ option [email protected]

US Dollar BITCOIN

As we just said…the Dollar sold over this week…started at about 100 and had a 97 handle at one point only to close at 98.29. The Japanese Yen still traded ABOVE its 50 day MA (107.81 vs 107.78)& UNDER its 200 day M/A’s (108.34) so the jury is still out on that one…but it’s close. HOWEVER The Euro is another story as it had a great week as it closed @ 1.11 which is ABOVE both the 50 day & 200 day M/A’s but they remained inverted down so In Sum…we need a bit more price proof to reassure us that a turn is here. The commodity currencies (CA$ AU$) have maintained their advance so far while Bitcoin hovers around plus/minus 10,000 closing at 9470..stay tuned.

Crude Oil

Those of you keeping track know that we said months ago that oil supplies would be L shaped (low rig counts-closed Frackers-OPEC cuts) and Demand may be V shaped due cheap prices and summer demand. This would lead us to 25-40 bucks a barrel this year and possibly 40-55 next year which so far has played out to script. OXY cut its dividend 7 the stock was taken to the wood shed and led the oil indexes to fade as well…they’ve all had a big run so a pause to refresh & a pullback seems in order..not quite the bargains.

Gold Silver Copper

While Gold is still overbought basis long term M/A’s…Gold got back on the bicycle this week and is starting top look like it wants to blow out 1800 and accelerate…this week is big….if it turns down then our thought of Summer doldrums could still play out….if not maybe add some more (GDX GDXJ ect). Silver is potentially a superstar if we ever clear 19-21 & if industrial use kicks in (SIL SILJ PAAS). Copper is banging away at that 2.50 price line & could accelerate again if China’s demand kicks in better. These are hard assets in a world of exploding money supplies–go figure

Soybeans ect

We saw the play Waiting for Godot and now we’re watching the show Waiting for Soybeans as we remain in the 880-820 range for another week. Sugar price are very interesting to us as we are holding the 9-10 levels & if we clear 1130-1150 an acceleration to the upside would not surprise us.

REMEMBER: There is a substantial risk of loss in short term trading and options trading and it is not suitable for everyone. Consult your brokerage firm, your broker, advisor to determine your own suitability. Past performance is not necessarily indicative of future results. Use Risk Capital Only.

2

Update 94: Stocks-Do We Break 3000? Ask the Option Professor

May 22, 2020 Option Professor Opinion and Observations

Good Day Everybody…we are at a major junction and the big question remains…Do we BREAK ABOVE S&P 3000 or we get TURNED AWAY? If you have read our views on the market you know that are base case has been that the market was earlier this year OVERVALUED (3400 SP) and once it broke 3250/3000 that the market could accelerate to the downside due to illiquid investments (ETF’s) being sold en masse. The collapse was followed by our view that a REBOUND rally REVERTING up either 38.2% (2840) 50% (2790) or 61.8%/200 day M/A (2975-3000) was a good probability. NOW we are here knocking on Level 3 again this week. Why?…because investors are grasping that #1 the Virus fears/REOPENING is happening faster than thought #2 the CONSUMER may come back faster than thought #3 the STIMULUS has been faster & larger than anyone thought. We showed you a higher beta portfolio on our rader MGK VGT SMH VCR which have all snapped back big time. We also explained the beaten down sectors at the epicenter also may play a huge game of catch up which they have. WHY?? …because investors are feeling that if companies don’t hire back & work remotely (half of their expenses will be CUT BIG TIME & Earnings will roar. This all makes perfect sense as long as the S&P STAYS ABOVE the 50% retracement level/3 yr M/A 2790. Three Key 1-2-3 yr M/A’s come in at 2988, 2884 & 2791 all RISING and we CLOSED @ 2955 with a BIG GAP around 2925-2850. The BIG risk to taking out S&P 3000 in the SHORT TERM is the prices have DISCOUNTED much of these views. For EXAMPLE; Rent a Cars Restaurants & Hotels (CAR-MAR_QSR) are up 100% off lows, Materials & Industrials Casinos (VAW VIS LVS) have rallied 30% to 50%, even Airlines (DAL LUV) are up better than 30% PLUS some LEADERS are getting EXTENDED from their 200 day M/A’s like AAPL-MSFT-FB-AMZN about 20% & Semis/Virus stocks like NVDA-ZM-PTON- TDOC 50% to 70%. IN SUM; our opinion is if we hold 2790 we will EVENTUALLY get thru 3000 and a lot more to come as TINA wins again…BUT Trump is saber rattling with China …if that ends up BREAKING BADLY…..be PREPARED for the GAP under us.

Questions….Ask the Option Professor … @ [email protected]

Stock Market

We have shared with you sectors on our radar..the high beta..MGK VGT SMH VCR and also recently the catch up sectors like VIOG (small cap growth)..VOOV (S&P Value)..VOE (Mid Cap) VBR (Small Caps) to name a few on our radar. Gaming stocks like DKNG CHDN PENN have had good runs as has most of the market…so is it time to price out HEDGES like Collars -Covered Calls & Married Puts on situations you thinks may run out of steam or to just protect some gains. Stocks turn before earnings & earnings turn before GDP so we will see if in the short run if stocks have turned enough. We have many sectors & strategies on our radar from Precision Medicine, Robotics, Big Data, Internet of Things (IoT) to Income, Growth & Speculation

Questions…Ask the Option Professor..@ [email protected]

Bond Market

The blow off top in TLT 180 continues to hold as DURATION may become a risk that rears its ugly head. With the FED supporting everything from commercial paper to ETF’s on fallen angels we see bids of PFF & HYG which have juicy yields and also IG & short term like VCLT VCIT VFSUX VMBS nad even Munis are improved VWLUX. The reason duration could be problematic is if SUPPLY CHAINS cannot keep up with RESTART demand then prices could pop. We see big cutbacks in oil supply so if DEMAND spikes expect to pay more at the pump..things feel settled…for how long?? Should you have fixed income inquiries….

Ask the Option Professor @ [email protected]

US Dollar/International

Didn’t Elvis have lyrics that said “I’m caught in a trap & I Can’t get out”..well ditto for the US Dollar which is caught between 101 & 99 for 2 months. went home @ 99.79. The Japanese Yen & the Euro still trade under their death crosses so for now …we stick with the buck. On the international scene..they lowered the boom on China stocks as BABA JD TCEHY got sashimied as Trump apparently looking to make China a big part of re-election efforts. We feel this is risky as bringing the supply chains home to workers unfamiliar with the jobs & maybe lacking the desire for the task. To be honest…it looks like you’re getting a chance to get on board…Emerging Markets & Europe look exhausted. Need more info…got questions

Ask the Option Professor @ [email protected]

Crude Oil

If you followed the updates…we have been spot on in oil….we felt the flood fight between Russia & Saudi would not end well and it certainly didn’t ….followed our view that we would have cutbacks (Rig counts/Shale shutdowns/Opec) which would lead to a L shaped supply picture followed by a V shaped DEMAND with the RESTART. We told you of stocks on our radar COP XOM CVX HAL WPX VLO SLB HES CVR & many more. Our targets for this year was 25-40 which we already saw & potential for 40-55 in 2021 Should you have any questions…simply shoot us an email

Ask the Option Professor….@ [email protected]

Gold-Silver-Copper

Our position on Gold remains constructive as it has been since it broke out at 1350 BUT it is OVERBOUGHT basis its LT M/A’s and the rampant popularity & failure to get above 1800 & the gold stocks still LAGGING give us pause in the SHORT TERM that we could have a SUMMER VACATION for the bulls if it doesn’t get going….LEARN HEDGING…Silver has become a horse of a different color since it broke above 16-16.50 maybe due to the RESTART which has lifted many laggards. Maybe pullback to that region would be good…do not want to see a 15 handle now. Copper got whacked by the China skirmish this week so let’s see find a bid ass well a FCX SCCO.

Ask Option Professor @ option [email protected]

Soybeans ect

Not much to report here as prices are locked in the 860-820 window awaiting some signs on how the planting growing harvest seasons will play out as well as competitors situations like Argentina & Brazil..both countries are a bit of a mess right now…LT Sugar prices may be turning if 9-10 holds.

REMEMBER.. There sis a substantial risk of loss in short term trading and option trading and it is not right for everyone. Consult your brokerage firm, broker, advisor to determine your own suitability. Past performance is not necessarily indicative of future results. Use Risk Capital Only.

‘

0

Update 93: Stocks-Reversion Rally Over? Not So Fast -Read On

May 16, 2020 Option Professor OPINION & OBSERVATIONS

Hey everyone…another exciting week for stocks as we saw S&P go thru the 2800 level (every Tom Dick & Harry had their stops there) and drop to the 2766 area only to close back above 2850. THE BIG QUESTION???…Did we peak @ S&P 2975 area below our LEVEL 3 resistance area (1yr & 200 day M/A plus 61.8% of 3393-2174 decline)? We say NOT CONFIRMED YET….Why? Simply because the 3 yr moving average @ S&P 2790 has not seen a close UNDER that level & all 3 moving averages (1yr 2yr 3yr) have not crossed to the downside & essentially are still pointing UP. So the EVIDENCE we see still suggests that this is looking like 2016/2018 where the market resumed its UPTREND within months rather than the years it took in 2001-2008.

HOWEVER…We recognize comments from Tepper-Druckenmiller & Buffet about VALUATIONS & PREDICTABILITY…we recognize the risks are that company earnings could lag as about 50% of workers earning less than $40k are jobless..almost 40 million total…we see retail sales dropped 16+%..the most on record…about 50% of all companies can give NO forward guidance & many companies are suspending dividends & forget about buybacks…landlords (many small guys) are getting stiffed on rent/mortgages which trickles down to revenues for the states (NJ said state revenues DOWN 60%). Governments & People & Corporations are taking on HUGE debt to BRIDGE themselves…always a risky proposition. IF IF IF we squash the VIRUS fear & Companies have a VIGOROUS RETURN to EARNINGS due to LOWER levels of COSTS due to less employees & real estate….& we clear SP 3000…BE Bullish…Be Very Bullish. The next few months are key for PRICE & TIME….SP 2800-2500 will turn these KEY MOVING AVERAGES down & set the stage for a drawn out recovery (Powell’s Fears)……S&P 2750-3000 will support the Big Year End Rally theory of 3200-3400 & new highs next year & SHOCK many who will be left wondering how we can have HUGE Unemployment & Rising Stocks.

Anything confusing?..email us at [email protected]

Stock Market

NEXT WEEK is a big week for earnings on retailers such as TJX WMT TGT and many more plus NVDA & DE. This week saw big moves down & up in FAANG stocks spec names like DKNG (on our radar also CHDN & PENN). Trump & Co. think it’s a good time to escalate tensions with China as they mess around with Huawei & talk about bringing our supply chains “home.” China responded against QCOM & Trump launched new restrictions on China investments in USA start ups & Telecom Infrastructure. Foxconn’s profits plunged almost 90% due to Covid-19 which may be bad news for AAPL. SMH sold off pretty good on the news & we’re watching this fluid situation as if Mega Cap Tech & Semis head for the hills..maybe we should too. VIRUS stocks (ZM PTON DOCU IBB) had decent moves this week …but these EXTENDED Sectors may be candidates for collars ect to PROTECT your Equity against Declines while allowing for more Upside. Also: some are considering out of the moneyy cash put writing on stocks they like at lowe levels and hedging upside using the premiums to buy call spreads. Too much to cover here…Questions—email us at [email protected]. We follow sectors & ETF’s in our work…some of the ones in various stages of uptrends are VOO MGK VGT SMH VHT VCR VONE VOX VTI VDC VIG…while others have had rebounds of varying degrees but have NOT regained their longer term moving averages.. VPU VNX VAW VYM VDE VIS VFH Plus Value & Small Caps…some believe without Banks & Industrials participating..it is tough to sustain a bull run….many in the laggard sectors are trading below book value but in this environment….tough to figure value..use Cape Ratios?

Do you have any questions?..ask us at option [email protected]

Bond Market

Run for Cover!!…there’s an AVALANCHE of debt issuance hitting the markets ($1 Trillion Corporates & $3 Trillion Govt). The FED started buying ETF’s this week and of course Boeing getting $25 Billion sold in their condition some say was confirmation that the lows are in. Powell & Fauci have something in common…they have to deliver reality with the dose of hope. Powell said this week that the recovery may take a long time as it will be of little solace to the majority of Americans if the FED/Administration are Successful at REINFLATING asset prices at the Expense of the Unemployed. WARNING…Duration may have significant risk to it as INFLATION would be a killer to low yielding long term Bonds….if they bring SUPPLY CHAINS back..does the costs of Tech rise?….is FOOD Inflation here to stay & with all the cuts in oil cap expenditures/rig closures spell HIGHER fuel costs? C’mon we’re going after a $4 Trillion dollar fiscal deficit & & a $10 Trillion Fed Balance Sheet & Paul Tudor Jones is HEDGING with BitCoin….this game of market crash—Rates @ Zero—-TINA—force Grandma into risk is crazy. Trump wants NEGATIVE INTEREST RATES ass a “present” to the people…who’s he kidding…he wants the public to get in on the Govt scheme of unlimited borrowing with little interest (cost of service actually down) to boost real estate & financial assets/spending. Remember Atlantic City-Big Debt/Lagging Revenue=Busted! Thankfully; Powell wants no part of negative rates (yet) as he sees that once you get into that hole….you can’t get out…Europe & Japan are drowning. Our radar VUSFX VFSUX VMBS VCIT VCLT PFF..watching high yield HYG VWEAX….Follow the Fed but carefully.

Send us your comments at [email protected]

US Dollar/International

Seems like the Dollar has turned into the Hong Kong Dollar (used to be fixed at 7.7 to 1) as we remain in and around the 100 number for weeks. The $$$$ range is tightening between 101 & 99 approx…..we closed at 100.36. The Japanese Yen & Euro have failed to surpass their 50 & 200 day moving averages so for now the path of least resistance for Yen & Euro are lower while a solid move thru 101 could ignite a dollar rally. The Aus $ & Can $ have held their 20% bounces as oil & Gold have improved…maybe more if commodities rally Internationally; On our radar BABA JD TCEHY BIDU but Emerging Markets & Europe still look dead in the water.

Crude oil

Well as we’ve said…capital exp cuts/oil & gas rig counts (record lows) plus Fracking Operations going from 1158 to 92..throw in Saudi/OPEC cuts and our base case of L shaped supplies with V shaped demand makes 25 to 40 range by year end & 40 to 55 range for 2021 look better by the day. CVX XOM WPX COP SLB OXY (debt?) VLO MPC ect all on the radar.

Gold Silver Copper

Well we added exposure to the Gold stocks this week as it appears to be breaking out to the upside on GDX GDXJ SIL SILJ plus spot Silver breaking ABOVE 16-16.50. Having said that; these are add ons and the risks remain that the Gold is OVERBOUGHT over its long term moving averages & bullishness (coins $135+ over spot) is concerning…so we don’t fight the tape..but a break even stop on the extra positions is kind of our thinking. A strong dollar & CPI readings that are declining not normally Gold’s cup o tea Copper backed off the 2.40 area which caused SCCO & FCX to fade..CHINA??

Soybeans Ect

Still no real action to report as window is tightening between 860 & 820 & now we must see if the planting-growing-harvest seasons will deliver news and or if China’s bid ever shows up…until then we monitor prices in the thought that under the right circumstances volatility will create risk & opportunity….we also have Sugar prices on our radar..for now..no legs yet.

REMEMBER There is a substantial risk in short term trading & option trading and it is not right for everyone. Consult your brokerage firm, broker, advisor to determine your own suitability. Past performance is not necessarily indicative of future results. Use Risk Capital.

0

Update 92: Stock Market-Higher…Why? Read This & I’ll Tell You

May 9, 2020 Option Professor Opinions & Observations

Ok…Who’s Confused??…Put your hands down & I’ll share with you our opinions & observations on what the heck is going on out there. We’ve told you about some reasons in past updates & will discuss potential tactics that we are considering right now. It comes down to OPERATIONAL LEVERAGE & RETURNING TO PEAK EARNINGS. Let’s start with the Unemployment Report which was the worst on record. Up to 34 Million that we know of out of work….we got PPD/SBA Rescue Programs with money going out people who don’t need it & people that are Deceased plus companies like Shake Shak (they gave it back others won’t). Two guys Ken Langone & Bernie Marcus were on TV saying it’s a travesty that they get Social Security checks when they made so much money off the system with (Home Depot) & the money could be directed elsewhere. A Continuing Chaotic Disaster.

The 3 main reasons behind the rally (after $5Trill to $12 Trill Stimulus & Fed Socializing markets) are #1. Rebalancing as Stocks were Discounted to Bonds #2 Reversion Rally back toward the 200 day Moving Averages #3 Belief that Operating Leverage will return companies to peak earning faster than expected & TINA (there is no alternative) is irresistible allure to $5 Trillion in money markets and Global money that has been sitting in Death Valley (a.K.A Europe/Asia/Emerging Markets). When the market were in the midst of wholesale selling in stocks & buying of Treasuries in March..the FED stepped in and stabilized the Credit Markets first…Why?..because if you went to cash a check & the system was frozen or money markets broke the buck…real panic would have set in. So FUNDS in allocation models had to sell Bonds & Buy stocks to return to their percentages (e.g 60-40/80-20 ect). Selling volume was exhaustive so we snapped back 400 SP points quickly. After a 1200 point drop..we told you the moving averages were way above the market so with the FED involved…odds were great for a snap back to either 2640 (38.2%) 2790 (50%) or 2950-3020 (61.8%- 3yr M/A/200 Day M/A). We are at the TOP of those 3 levels & some sectors (examples include Tech-Healthcare-Consumer Discretionary-Communications) have already risen above. AS WE TOLD YOU-in 2001 & 2008-the 1-2-3 yr SP M/A’s inverted to the DOWNSIDE and it took years to turn them back UP….in 2016 & 2018; those averages were BREACHED but never CROSSED & in MONTHS we resumed UPTRENDS…I am sure the Admin-Treasury-Fed are well aware of this & explains the PANIC to print money in the Trillions & the FED either THREATENS to buy things & send money out in a very CHAOTIC fashion. Desperate to avoid ASSET PRICES languishing thru the election..they said what the heck..let’s BLOW OUT the fiscal DEFICIT & National DEBT and REINFLATE ASSETS (like what happened after the tax cut-buy back financing)…..Get that S&P back above the 3 yr M/A (2790) so investors can feel OK again….if it doesn’t work…we’re gone after the election..we’ll leave a pile of manure for the next guy…..if it works…reelected & maybe 4000 SP. Now let’s talk about #3 which is the IMPORTANT ENGINE of the scheme. It’s NOT PRETTY but if it WORKS…the rich will get richer. Here ya go….the return to PEAK EARNINGS (like after the 2008 Crash) can happen thru Operational Leverage…it’s SIMPLE….you have less REVENUES so how do you return to profitability??…..you CUT COSTS…..the WORK FROM HOME has exposed inefficiencies in business as to how TECHNOLOGY can replace people (cloud) & all this real estate expenditures can be consolidated (zoom) So: if you have less labor costs & real estate costs your lower revenues are profitable & if revenues jump over time…you do the MATH. Sound familiar??…Business did the same things with their supply chains when overseas cheap labor/no factories led everybody over to CHINA….no buildings no employees no RUST BELT ect….China didn’t KIDNAP our companies…they went there to MAKE MONEY at American worker expense. Look at BIG 5 TECH firms & see how many people in the USA they employ & how much USA real estate they use in relation to the $5-6 Trillion market cap…..a joke….FINALLY…the dirty little SECRET…..most of the unemployed either NEVER FINISHED high school or only finished high school. As such; 2 things have come out….they weren’t MAKING any money (only a 10% hit to Income) which the FED can make up with printing BUT worse yet if this scheme works out as it has in the past….these people are NOT all coming back to work. So you could see HIGH unemployment but a RISING stock market due to VIGOROUS EARNINGS RECOVERY based on cost cuts. FINALLY..the Fed has played this game BEFORE after 2008….get money market rates (cash) down to ZERO & FORCE PEOPLE to take risk if they have any hope of any return on capital & it TRANSFERS some of the BAILOUT to investors & PRIVATE EQUITY & OFF the FED who is so far off the ACT of 1913 it’s RIDICULOUS….TINA’s back with a vengeance. It is BULLISH the FED can LEVERAGE their balance sheet to INFINITY & the SCHEME to INFLATE ASSET prices is working so long as we STAY ABOVE the SP 2790 area. WHAT’S THE RISK? The RESTART is SLOW…..The VIRUS explodes….the DISPARITY in WEALTH spells trouble AFTER unemployment runs OUT….INFLATION pops…and if (when?) we see China & or Russia ACT UP

More Information ……….Email Us…[email protected]

Stock Market

We just went over why we continue to see higher prices…..sector ETF’s like MGK VHY VCR VHT SMH have all been mentioned here and all have been doing just fine surpassing their 200 day moving averages. NOW the question is will they hold water or simply see the PACE of advance moderate. If you’re BULLISH you hope for the ladder as investors by these areas REGARDLESS of valuation models. One of the RISKS is the cutting of BUSINESS & CAP EX spending that many firms are announcing and the pace of the restart….even Cloud/Cyber Security ect. need capital outlays. If you subscribe to a RETURN TO PEAK EARNINGS via cost cuts…then your OUT OF Favor sectors (virus epicenter) with low P/E’s and still OVERSOLD basis their 200 day moving averages could be worth a look as many are trading BELOW Book Value…Retail, Restaurants, Banks, Hotels, Travel-Leisure Oil. Mega-Tech, FANG, Health Care clearly has led ; but if this rally is to broaden and the effects will be muted due to FED/Fiscal stimulus, then the catch up trade could be ok. Some Banks & Mortgage Processors may have a bumpy road ahead but some have low P/E’s & are priced below book & can take some heat due to good cash positions. Regionals (KRE)…Large (C & BAC) & processors (ESNT, RDN MTG) are on our radar. For the REST OF THE MARKET…..Option prices have been ELEVATED for some time….which means pricing out COVERED CALLS for some downside protection & pricing out fully paid cash SELLING PUTS on stocks you like at lower prices is worthwhile strategies to investigate for suitable investors. Remember Buffet sold $6.5 Billion in April/$137B in Cash….and while still bullish Long Term on America…valuations & this experiment has a range of possibilities

Want to discuss views?? Email optionprofessor.com

Bond Market

ISSUANCE is the buzzword this week as $37B came to market & BA & other troubled companies continue to raise funds via the markets much to the DELIGHT of the FED. The line was drawn this week as UAL had to pull the $2+ Bill offering as investors apparently are not that DESPERATE for yield. Fed to buy some HYG next week we hear & we noticed many fund that were trading at a PREMIUM have sold off to flat as the FED said they would not buy over NAV. China exports to the USA up 2.2% while Imports -11% suggesting FRONT RUNNING Tariffs again & poor demand. Treasury offering $3 Trillion..over 10% of National Debt…off the charts. Some sayy CAVEAT EMPTOR to those buying DURATION as the Fed has little control past 10 yrs..we agree & focus on VUSFX VFSUX VMBS VCIT when hunting.

Need Clarification? Email optionprofessor.com

US Dollar/International Markets

Well…Dollar Index is around the 100 mark still (99.76) so again we say the the Japanese Yen & Euro are sitting just under their 50 & 200 day moving averages and the are inverted to the DOWNSIDE so that is the path of least resistance for the YEN while the Euro is hanging on for dear life at about 110. Hey we got yield advantages (albeit smaller) and the restart has instigated optimism….Canadian $$ & Aus$$ improving in tune with oil improving..may be a proxy for an oil trade?…slice it anyway you like…so far the Dollar is stable to strong and if 35 mill jobless is ok..What kills it?? AS far as International markets (Europe/Asia/Emerging)…..they all look dead and haven’t really done anything on a 1-3-5 yr basis so tread caefully.

Crude Oil

In the last 2 weeks they have called off the dogs in oil…can you trust it up 20=% for the week 60+% for the month? Another expiration ahead and a break under 20 could spell relapse. Stocks on our radar brought to your attention XOM CVX VLO MPC HES COP PSX OXY WPX HAL ect & gas guys like LNG have has good runs so in the short term covered calls collars & married put could be worth a look if the legs go out, LONGER TERM….as we have said the SUPPLIES may be L shaped (shale/rig counts disappear/OPEC) with DEMAND returning V shaped (cheap gas-America travels) so we stick with 25-35+ year end & potential of 40-55 in 2021 we get cooking as hoped.

Got questions?? ..Email option [email protected]

Gold Silver Copper BITCOIN

The Gold prices were pretty sideways this week with Silver getting back to a 15 handle while Copper is pressing toward the 2.50 neighborhood. The BIG NEWS this week was the story of Paul Tudor Jones (one of our favorites & runs the JUST fund) who said he was going into Bitcoin as a HEDGE 7 viewd it as Gold in the 1970’s (early years/just off Gold Standard/beginning of leveraging USA exploding Money Supply). You obviously can buy BITCOIN futures (if you are suitable) but not for the faint of heart as the 52 week range has been about 14 Grand to 4 Grand now at 10 Grand…if you drove like that on the freeway…you’d get a DUI:):)…on our radar GBTC. Gold/GDX flirting with legitimate breakouts so we hold core positions from much LOWER levels..so far no add….2-3 yr M/A’s way under the market suggests overbought and would rather buy dips in a BULL market…Silver rebound & stocks up is nice but still fall Short of resistance while China back to business helped Copper prices & our buddies FCX & SCCO

Want to know more…email us optionprofessor.com

Soybeans Ect

It’s getting warmer…and the prices are heating up as well as we went up almost 25 cents a bushel this week albeit we fell a bit on the close. Our gut (without much price evidence) was that $8 Beans could go 9-10+ this summer if China buying & supply/yield disruption would give us the juice needed to get the trifecta of spec/fund buying with farmers lifting hedges & squeeze on whatever shorts could be squeezed. the price areas of 8.60 to 8.80 the 9.0 to 9.50 could really tip the scales for the bulls…nice week…need more…coffee prices turned up a bit (SBUX opens??)..otherwise not much.

REMEMBER There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Consult your brokerage firm, broker, advisor to determine your own suitability. Past performance is not necessarily indicative of future results Use Risk Capital Only ,

0

Update 91: Stock Market-Too Fast-Too Furious-Level 3 Holds

May 2, 2020 Option Professor OPINION & OBSERVATIONS

The Wild Ride continues and it should be of no surprise to our readers as we’ve said many times that when the VIX is above 30 (last 10 weeks) you must EXPECT volatility. For newcomers; let’s review our opinion on stocks since Jan 1. Our view was that the move toward 3400 S&P was on very shaky ground (VIX was low (complacency), the advance decline line (market breadth) failed to confirm new highs as well as the failure of the Transports & Russell to failure to make new highs. Additionally GDP #’s, revenues & earnings coming out of 2019 were not great & a turn wasn’t expected until late this year & the S&P was about 3-400 points above 200 day M/A….This where you consider HEDGING (Collars-Covered Calls-Married Puts & Stock Calls Replacement Trades). If you don’t know what these mean…you can simply…EMAIL us @ [email protected]. Once we broke 3200 then the 200 day then the 50 day M/A and the VIX jumped thru 20….the fallout picked up steam..we warned you of ETF’s masquerading as liquid investments was going to cause a liquidity vacuum when passive investors all want out which explains the speed & size of the drop. The FED had to come in as the BID as no broker or dealer was going to buy into that sell volume. When the VIX BREAKS 80 March 16-20…you know the FED is coming..and they did…there to give liquidity & relief to the system….not to stimulate…the Fed Act 1913 has them buying Treasuries now they are into Mortgages, Commercial Paper, Munis, Corporate & Junk Bonds & IG ETF’s…it is TEMPORARILY EXPEDIENT NOT a L.T. GROWTH STRATEGY. After the drop; we indicated how oversold we were and; along with Quant guys like Kolanovic & others, believed the rebalancing of portfolios could give us a rebound rally. We gave you 3 levels where the rebound could take us (#1 2640-38.2% of the drop…..#2 2790-50% retrace…..#3 2930-2975 3020 61.8%/1yr M/A & 200 day M/A). We had a record DECLINE in March & a RECORD rise in April. On Friday…we failed at LEVEL 3…this where we are. WHAT’S NEXT???…we use many things in our analysis…one of which are MOVING AVERAGES as they are based on TIME & PRICE not predictions. We have a 20 yr S&P chart with the 1 yr, 2yr and 3yr moving averages…they come in at 2978…2878…2789….we closed about 2830 after spending only ONE month under the 3 yr M/A……and the averages have NOT CROSSED ….we see this is as VERY GOOD….BUT the Jury is still OUT….Why??….because in ’08 & ’01 the Averages CROSSED DOWN & it took YEARS to cross back up BUT in 2016 & 2018 the averages were BREACHED but never crossed and it was mere MONTHS before the uptrend RESUMED. So IF we can stay ABOVE these averages and proceed to get above LEVEL 3….then BE BULLISH….. HOWEVER….IF May thru Sept keep us UNDER the averages & the 1 yr & 2 yr averages CROSS DOWN UNDER the 3 yr averages and ALL 3 averages POINT DOWN….you may get your year end/Jan Effect rallies BUT they may come from lower levels and the timeline of economic recovery will be extended. Keep it simple stupid (KISS)….30 Million+ Unemployed…3.8 million borrowers in forbearance (no pay up to a year)…GDP -4.8% Consumer spending -7.5%..Business spending -10.5% BEFORE May 1….The big five this week (AAPL AMZN MSFT FB GOOG) basically see deterioration occurring and Apple not forecasting or guiding in Q2 while Buffet’s BRK.b lost over $50 Billion (worst ever) and said they cannot reliably predict when business activity will normalize or how these events will alter future consumption patterns of the consumer and businesses. So if sharp guys like these DON’T KNOW how the Restart & Return to NORMALCY plays out….WHO DOES?….For those of you sitting on the edge of your chairs to see what Buffet did during the March CRASH with all that $128 Billion CASH he has been holding..ANSWER…not much..now @ $137 Billion!

Have questions? Get the S&P Charts? Email Us [email protected]

Stock Market

Record rise in prices month in April…mostly compared to other post CRASH period (1987/1930’s). From housing to retail to oil to banks to travel/ hotels/ rental car/cruises all had their bounce this week catching up to the rally in tech & semis. As we said last week…the stocks still way under their 200 day averages could play catch up and we outlined the sectors..exactly what happened. BUT…now we see Q1 business spending DOWN 10.5% and Cloud revenue to MSFT not bad @ +59% but AWS below forecast @ +33%. Well if we DROPPED 10.5% in Q1….what do you think business spending will be in Q2…up?? Therein explains the rollover in tech & semis which are not priced for revenue cutbacks. These sectors were some of the only ones that did NOT take out he Dec 2018 lows and if the DO THAT…you have the recipe for giving back this rally and worse if the unwind is greater than anticipated. The BIG FIVE are $5.1 Trillion market cap and if Mega Cap sells off…unlikely Transports-Airlines/ Energy/Financials/Materials/Value/ Industrials/ Comm/ Consumer Discretionary/ Health Care (largest number of unemployed after restaurants) can support this market. The 5G-infrastructure , Semis, Cloud Computing/Edge, Cyber Security trends need companies to INVEST and Q1 they indicated they are pulling back….To us…this dynamic is NOT BULLISH. The high beta portfolio that treated us so well after the crash is in jeopardy of rolling over and the laggards that rallied may lose their legs as well. HOWEVER…follow the 1-2-3yr averages and if we maintain S&P 2775 or better & climb above Level 3 then a RISING TIDE may lift all boats. QUESTIONS…Will elective surgeries return?…SYK MEDT BSX…Will unsold clothing get bought by discounters? TJX ROST Will RIG CUTS & renewed demand help small Texas banks? TCBI IBTX CFI..Will reliable dividend plays work? CSCO INTC PFE, JPM JNJ VZ KO ect. Will air travel return? JBLU
AAL UAL DAL LUV Will gasoline usage jump? CVX MPC HES ect Can the banks make money with this yield curve ect? BAC WFC JPM C..Is the Bio tech boom over & What about Health Care? AMGN BIIB IBB or UNH CI HUM Is Gold going to make new highs? GDX GDXJ….Lots of questions…Lots of Risk We have many stocks & sectors on our radar such as Ai, Robotics, Precision Medicine, Big Data, Block Chain, IoT, Europe Asia Emerging Markets and more as well as Hedging Tactics Protecting Values Against Market Drops.

Any questions??…shoot us an email at optionprofessor.com

Bond Market

The FED started out injecting $75 Billion a day!! but for the week ahead the number is $8 Billion so that’s quite a pullback. As we said the Fed..ECB & Bank of Japan met this week and our “Open Bar” analogy seems pretty close. The “We’re Here to Support Without Limits ” mantra remains with the only questions being what effect it will be short term & long term. Well the rush to issue Junk is on ($38 Billion almost 5X more than the previous month). Delays in downgrades and debt covenants being changed to liquidity levels and Europe changing Debt Ratios all sound like life support to us. The Fed is encouraging companies like Boeing (lots of problems) to issue JUNK DEBT (let some other fool lend them money) rather than issue EQUITY (sell shares =dilute stock) is a scheme to do a bail out without the Fed spending money. The scheme includes the belief that the FED will be their for Junk so it’s really not that risky…so they buy them up….also investors plowed INTO Junk ETF’s while LEAVING Municipal Bond ETF’s to the tune of $1.3 Billion. New York, Houston Illinois Dayton and pretty much everywhere are broke and that’s the next shoe to drop. Mortgages & many questionable companies debt have been bid up FRONT-RUNNING the Fed’s announced commitments…if you want to play Santa..people expect gifts. Some say there is value in the Securitized Debt area…albeit with risk. The Big News to us was the idea floating that Trump was thinking of absconding with the $Trillion that China holds in treasuries (5% of our national debt). WOW…that can’t make the other countries ($6 Trill) or the public ($18 Trill) feel to good. We said running up RECORD Deficits & Debt with employees that are temporary & risk takers (Trump-Mnuchin_Powell-Kudlow) could result in a slow growth & low valuation long term like Japan & Europe. We still have a need for income and Treasuries rival money in your mattress. There are a number of income producing avenues on our radar.

Got Questions??…send us an Email at [email protected]

US Dollar/International Markets

The Dollar Index started to slip this week under 100 level and closed with a 98 handle which was close to the low of the week and a new low for the last 30 days. Our Readers know…..We’ve been watching the Yen & the Euro for a possible turn as the 50 day & 200 day M/A/’s are converging and the market prices have been just below. So let’s see where we are…..the Yen closed at 106.93 and the averages are at 107.92 & 108.28 so NO SALE there and they’re inverted to the DOWNSIDE…the Euro was a bit better closing almost at 1.11 up 1%+ on Friday…with the averages at 1.09 & 1.10….. there is an attempt at a turn but needs more TIME & PRICE to confirm the turn….if Trump goes with Tariffs or retaliation & we our “Service-Debt-Consumer Driven” economy implodes in May….we could have a catalyst for a Dollar turn….. For Now..the Dollar remains the one eyed man in the valley of the blind. International Markets saw the candles get blown out last week as the GDP showed a drop of 15% in Imports..not good for China & Japan who without us buying are troubled….car sales stink…not good news for Deutschland. We follow a number of international ETF’s on our radar for regional exposure.

Want to Learn More?? Email us at optionprofessor.com

Crude Oil

Another one of the big bouncers we brought to your attention weeks ago with CVX HAL XOM COP OXY SLB HES PSX WPX ECT all zooming off their lows as Rig counts collapse and demand is expected to be robust as lower gas prices historically has brought out the mooch in all of us. There was a rollover at week’s end and we may give back as the June contract expires and volatility raises its head. Cutbacks, furloughs, job cuts, defaults, bankruptcies doesn’t sound like a recipe for a bull market BUT our view is that supplies will get worked off (L shaped) & Demand will increase over time as lower prices and mobility could move price toward 25-35 by year end & up substantially by 2021…as we said if DEMAND stays in then abyss…all bets off…PBR & the DEBT of WPX & OXY (reports May 5-Buffet & Ichan Involved) are areas of interest but need a better hold of outcomes.

Let us know your questions Email us @ [email protected]

Gold-Silver Copper

Well…GDX GDXJ are still flirting with the highs but $ 1800 Gold still yet to be seen. Replacement trades wherein one replaces some or all of their position with limited risk bullish option positions are being considered by some to try to reduce cash risk but has specific pros & cons & not right for everyone. Good News for Gold is that the Dollar is potentially at a turning point and retaliation tactics floated by Trump against China is unnerving. Gold Prices trading above the 1-2-3 yr moving averages all pointing up. NOTSO Good News…..failure to take out 1800-1900 highs…$135 OVER spot on Gold Coins…LAGGING Gold miners vs. last time up here…and OVERBOUGHT versus the 2 & 3 yr moving averages….end of the calendar year beginning of the new year sometimes BEST for Gold..maybe a Summer of Discontent?? We have been right on with the Silver as he failed at 16.50 200 day M/A resistance and now has traded with a 14 handle. Watch SSIL SILJ PAAS ect Copper still in the 2.00 to 2.50 range as restarts worldwide still in jeopardy BUT if we get going in China & US New Construction…Watch for FCX & SCCO

Need more info? Email us at option [email protected]

SoybeansAgs ect

Grains still can’t seem to muster a rally with sturdy legs but the levels of $8 Beans $3 corn and $5 Wheat & 10 Sugar have held so far so if Summer can bring increased DEMAND along with supply chain shifts (weather/yield) then maybe something might give…deflation vibe in ags has been sticky. Some say the future could be brighter in commodities…so far not so.

There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Consult your brokerage firm, broker and advisor to determine your own suitability. Past performance is not necessarily indicative of future results. Use Risk Capital Only,

0

Update 90: Stock Market- It’s Crunch Time for S&P–Big 5 & BRK.B

OPTION PROFESSOR APRIL 25, 2020 OPINION & OBSERVATIONS

OK…We had our Crash & Our Fed Injection Obscuring Real Values & our TINA (there is no alternative)…..for those of you unfamiliar with the racetrack….a SUPERFECTA Winner is when all 4 horses you pick in order come in…THIS WEEK..we have 4 very important events occurring starting with the S&P 500….moving thru toward EARNINGS….ending with Q1 results from Buffett’s BRK.A….the cherry on top are 3 Major Central Banks (Japan-Fed-Eurozone) announce monetary policy. LAST WEEK..we had UNEMPLOYMENT jumped to 27 MILLION unemployed. We also saw SERVICES PMI’s at 27!…anything under 50 is CONTRACTION… common words are now DELINQUENCIES & FORBEARANCE…4 MAJOR banks have 18+BILLION set aside for loan LOSSES….some Companies have skipped LOC’s and gone right to issuing JUNK BONDS which have sold like hotcakes we assume because managers need to hit their 5%-7% Targets plus the mantra circulating that a 2nd half REBOUND & a Fed PUT is CERTAINTY. CEO’s posted Earnings this week/most suspended GUIDANCE-NO VISIBILITY. NOW…Looking FORWARD to the 4 EVENTS—#1 S&P 500 MOVING AVERAGES are a VERY Important Part of the work we do…..we are FOCUSED today on the 1 year/2 Year/3 Year numbers….we believe TIME & PRICE can smooth out aberrations and help IDENTIFY Trends….they are factual ALBEIT in a HISTORICAL perspective. We have a 20 Year Historical Chart (available to you via [email protected]) that show all 3 averages since 2000. Only during the DotCom Crash of 2001-02 & the Great Recession of 2008-09 did all 3 Averages CROSS & head lower. During 2016 & 20118 they were all BREACHED but NEVER Crossed…..ALSO in 2001 & 2008; it was 2-3 YEARS est. until they crossed back UP…in 2016 & 2018 it was only a couple of MONTHS before getting back ABOVE the averages and resuming the UPTREND. Where are we at RIGHT NOW?….the NUMBERS are about 2965 and 2870 and 2775. This THURSDAY is EOM for April…..our view is that IF S&P 500 can close above 2775 and stay ABOVE it in the months to come…then a case can be made that the FED FLOOD of liquidity WORKED AGAIN….if NOT and these MOVING AVERAGES INVERT to the downside then these sharp rallies will be no more than REVERSION rallies that roll over. OK..let’s go to #2…THE BIG FIVE EARNINGS-FB AMZN GOOG AAPL MSFT-ALL coming out this week for ONLY 3rd TIME in collective histories. The CONCENTRATION of 5 companies in the INDEX has ONE parallel in 2000’s when CSCO-GE-MSFT-XOM-INTC had slightly higher dominance (interesting to note XOM has essentially gone full circle & GE lost 90%). The Fab 5 have a market cap of $5.1 Trillion or about the value of all ex-US stocks & more than the bottom 350 stocks in S&P 500. What could KEEP YOU UP @ night? Well….is it impossible that AD Spending….CLOUD & Enterprise Software spending & 5G-I-phones-Services spending could be REDUCED? Could MARGINS be PINCHED & Costs RISE? If so; these Stocks are MIS-PRICED. These are GREAT companies with GREAT ideas They NEED CONSUMERS. In 2015 & 2018 the aftermath of these guys all announcing the same week was NOT so ROSY so CAVEAT EMPTOR. Other sectors announcing this week are Health Care–Ci HUM PFE ABBV ….Energy–XOM CVX PSX COP Comm.– T Charter, Comcast Restaurants YUM MCD SBUX ….Brands Kellogg’s PEP Colgate Addidas Kraft Heinz…Industrials HON BA IP CAT GE URI..Transports UPS…Tech TWTR TSLA QCOM…..#3….We believe this is the BIG ONE…..BRK.B which reports EARNINGS late this week & 13-D filings May 15th. What could we LEARN?….Well…earnings will tell us more about the $128 Billion they had in cash….did they spend it in March? On May 15 we will learn positioning as of March 31 which includes the CRASH in PRICES……and therein may be the TRUTH….We saw an interview with Charlie Munger which may reveal their thinking in that he essentially indicated we have just been thru a TYPHOON & it would be nice to come out the other side with a comfortable amount of LIQUIDITY. If CEO’s have no Confidence in EARNINGS VISIBILITY…..the the second part of P/E….the EARNINGS Part is hard to quantify…..which Means a CHEAP PRICE but you Don’t Know What VALUE you are getting…..that would mean a Heavy Emphasis on GAMBLING and that has NOT been their forte….Buffett’s got a lot of one liners like When it Rains Gold Bring a Bucket Not a Thimble….but the one we like is Be Greedy when Others are Fearful & Fearful When Others are Greedy…well A Reminder that he does NOT say Be GREEDY when Others are being STUPID! IF the Earnings & 13-D show Cash Remains HIGH… we’ll take it as plowing into stocks because PRICES CHEAP without P/E VALUATION is GAMBLING. The final event #4…is Central Bankers meet and will come out with plans for recovery…..let’s face it…it’s an open bar with monetary policy….Japan & Europe buy everything in sight and now the US is onboard with only stocks off the table…but since stocks are only one level lower than Junk Bonds in the capital structure we would not bet that they are off the table. The trick is set up a program with Treasury (Mnuchin will go for anything) to comply with legal restrictions and call it BAIL OUT UNDERACHIEVING TRADERS (BOUT)….McConnell says don’t bail out states/cities/counties….well either he’s found religion after BLOWING UP the National Debt & Fiscal DEFICITS or he’s playing a game of not being on board to save face with DONORS while knowing Full Well his state of KENTUCKY is fiscally upside down and can’t wait for all that FREE MONEY to fix their financial & pension shortfalls

Any Questions for Us?…Simply email us at [email protected]

Stock Market

As we have said…the upper band of Level 3 RESISTANCE ball park is 2930 & 3030 (61.8% retrace & 200 day) which we tried to approach but the air got thin around 2880-2900. The high beta ETF’s on our radar VGT VCR MGK SMH & VYM all finished the weak strong & the tech ones are ABOVE their 200 day moving averages…..with the huge OUTPERFORM (since 2001)of the Nasdaq to the Dow….we see 2 distinct outcomes…..the rally is for real and we stay above 2775 SP at such time a rotation to undervalued sectors begins or this iss a Reversion Fugazi rally (like 3000 to 3393 SP) and we roll over from Level 3 resistance. Well if you believe scenario 2…you would fade AMZN/AAPL/FB/GOOG/QQQ into whatever big rally into earnings this week or you might look for sectors still TRADING SUBSTANTIALLY UNDER their 200 day moving averages like Financials (WFC C BAC JPM 25-42% under 200 day M/A’s)….Energy (XOM CVX COP SLB PSX all about 25-50% under M/A’s) Industrials (VIS 20% under) Small Caps (IWM almost 20% under) Materials (VAW 14% under) Retail (XRT 17% under) Value (VTV 22% under) Homebuilders (ITB 20% under) are some EXAMPLES. For those NOT on the bandwagon that a 2nd Half recovery is a certainty…this rally toward 3000 SP is a chance to adjust asset allocations. Stocks on the radar this week TCBI ZM INO INTC BYNF PTON IBB Canadian Banks ADC AVGO BAX OXY GDX DIS VIAC NFLX TDOC PLUS in the Big Data Robotics IoT AI & Precison Medicine. Also; HSIC XRAY GILD KMB CMG EEM EWZ ULTA & Boston Scientific to boot.

Do You Have Questions…email us at option [email protected]

Bond Market

The Big 3 Central bankers meet this week and if I had one warning it would be that if the Stock Market rally has legs….the Fed in May could temper the printing presses and that is NOT what the yields (Tsunami of DEBT from Govt-Corporations-Public-Soon States) are discounting HOWEVER if they elect to go to YCC (Yield Curve Control) then rates could dive lower and maybe under extremes break the buck in some funds (remember oil last week). Economic numbers (Unemployment-PMI’s-GDP’s- Balance Sheet Damage) are being dismissed as this MOTTO of we are CERTAIN to get a rebound in the 2nd Half could be dangerous IF the restart is low & the Virus return sin the fall. Who knows…we know we have 27 Million+ Unemployed and PMI & GDP numbers tanking…our President is a self proclaimed cheerleader all over the place on restarts & cures (disinfectant injections??)….We have never seen these kind of numbers before with delinquencies & forbearance the norm….Sharp Guys are raising Billions to buy DISTRESSED DEBT so be careful of JUNK & Sovereign JUNK & some commercial mortgages look like a dice roll only a FED hand out will cure….Also McConnell says to hell with the states…let them go bankrupt….reassuring to gray haired muni holders?? Some states like Colorado & Alabama can’t run up debt so it’s a moot point. For those of you who like extra shots of Sherry in your Lobster Bisque…maybe High Yield in OXY WPX & single asset/single borrower in high quality Hotels & Resort. So what are we focused on in the near term until we see CLARITY over TIME… Our focus is relatively short term & relative quality (VUSFX VFSUX VMBS)

Any Questions??? email us @ option [email protected].

US Dollar

As we have said..the Dollar is the one eyed man in the valley of the blind…as the entire world is running up so much DEBT on top of DEBT with no GDP that who knows what this paper is worth? Volatility has left the building in FX this week as we are basically right around the 100 the price equilibrium of the last 3 months. What is the Yen & Euro doing..both of which have been on the ledge of their converging 50 day & 200 day moving averages? The Yen is 107.46 with the averages BOTH at about 108.32 so we would view a break OVER those levels as NEWSWORTHY while the Euro is priced @ 198.21 with averages around 109.50 & 110.50 so moves above those levels would get us to take notice…the commodity based currencies of Canada & Australia are holding their rebounds but all of this begs the question..What are the waiting for?…Central Banks meet this week & Economic Numbers are rolling out…our guess..that’s exactly what they are waiting to see.

Crude Oil

What a difference a week makes after the historical negative pricing on the May expiring contract (minus 40 bucks!). We would not discount another rendezvous with price weakness ass June expires but -40 does sound like capitulation to us…..if DEMAND return which has been true before with excessive low prices then we still have a fair chance at a rebound by year end and a set up for better things in 2021….IF NOT bar the door Katie as defaults & bankruptcies will engulf the US Oil business. Trump says he’ll be helpful, Buffett took OXY stock in lieu of cash for $200 mill payment do & Carl Icahn said he thinks assets look good the risk reward looks OK…add it up and it seems to us as constructive behavior….but they could be wrong. The refineries could have pretty good margins so we focus on those cos.

Gold Silver Copper

Well we got our new highs on GDX (now you DO NOT want it under 30) but now Gold has now twice faded off 1800 and Bank of America is calling for $3,000 and the Gold Coins continue to command HUGE premiums over spot. There is so much room between the 30’s and the former highs near 70 that seeing if we can maintain above 32 and a break of 1800 BEFORE adding to core positions from lower levels seems prudent….in a bull market they say buy PULL BACKS…Silver as we said has 50-200 day moving average resistance in the area of 16-16.50….SILJ has rebounded but not above its 200 day M/A at about 10 so the jury remains out…Copper still meandering between 2.00 and 2.50 nad FCX cut spending & projects to shore up their balance sheet and prepare for making it thru to the other side of this thing. On our radar…GDX GDXJ FSAGX KL KGC NSTG AEM AUY SBSW AGT Pluss PAAS SIL SILJ NEM WPM SCCO and others.

Do you have questions???…email us @ option [email protected]

Soybeans Ect

Well a big story is the meat plants & the jump in Beyond Meat stock (some say if you didn’t like fake meat before you won’t now and 130 area-Feb highs-could conclude a panic run into the stock of the last week and month-lots of short interest….dangerous game…only time will tell)…..Corn & Sugar got pressured during this oil fiasco as ethanol usage /supplies are out of whack or perceived to be…..Coffee has faded away a lot of recent gains ass deflation vibe still running around…for how long? As we said our gut feels that Soybeans could go 9-10-11 under the right circumstances (China-Weather?) but need moves about 8.80/9.30/10 to get that ball rolling and we’ve rolled the other way….Gut is not price evidence…so we wait…..

REMEMBER There is a substantial risk of loss in short term trading & option trading and it is not right for everyone , Please consult your brokerage firm, broker , advisor to determine your own suitability. Past performance is not necessarily indicative of future results. Use Risk Capital Only

0

Update 89: Stock Market – TINA’s Back!

April 18, 2020 Option Professor OPINION & OBSERVATIONS

OK everybody we all have seen this movie before do you need are review? Here you go….FIRST we get a market CRASH….usually based on way to much leverage (Dot Com-Real Estate-Corporations)…SECOND.. the FED comes to the “rescue” by printing money (money supply just jumped 15%+) and buying assets (they are so far outside of their boundaries it’s a joke) and driving interest rates to ZERO in money market funds (kill the saver). Now we get the THIRD..which is TINA-the acronym for “There Is No Alternative” Simply put…everybody is forced to buy RISK assets if they want to make any money. Even the FED knows they may have gone too far in the short term inflating asset prices as their DAILY QE was $75 Billion per day in March has now been reduced to $15 Billion per day. After the FED left interest rates at ZERO for a ridiculously long time after ’09 and caused asset prices (S&P 500) to jump about 88% in about 4 years (peak to trough) EVEN they have to know that the returning the S&P back toward the all time highs with 22 + Million UNEMPLOYED, no EARNINGS, negative GDP, soaring DEFICITS ect. has the potential to not end well if the rosy outlook about restarts, therapeutics & vaccines should hit a speed bump. On the S&P 500; we have breached the FIRST resistance zone (2640-38.2% retracement)…the SECOND resistance zone (2790-2850 50%-breakdown point) and are now moving toward the THIRD (2930-3030 areas-61.8% retrace & 200 day M/A). We have seen the biggest DIVERGENCE in the Dow & Nasdaq since Dot Com 2002 as people plow into “safe” tech & semiconductors with huge valuations We understand positioning & rebalancing of 60-40 portfolios that Quant guys like Kolanovic/JP Morgan & Tom Lee Fundstrat talk about on TV. We also believe much of that is being done…..after that volume is executed… Who’s going to buy above S&P 3000?….The BANKS made a KILLING (always PROFIT during panic selloffs) during Q1 when they exploded the BID/ASK spreads in both Stocks & Bonds (since the FED was talking to Larry Fink of Black Rock & others in March about their plans…why didn’t they announce to the PUBLIC DON’T Sell into this distressed market we are going to bail you out?) At any rate….they got plenty of MONEY & SET aside BILLIONS for loan LOSSES ect. How will we do into RESISTANCE zone number Three? We believe SUPPORT zones to be 2850..2700/2640…..2550-2450 & 2200-2000.

Questions or Speak With Us…… email us at [email protected]

Stock Market

We ended the week with a bang as the market zoomed on restart hopes & an anti viral therapeutic from Gilead (Remdesivir) which had positive but only anecdotal news. The Dow outpaced the Nasdaq by 2+X as the 18 yr highs on the divergence between the indexes closed. Could it be the huge stampede into tech & semis & virus stocks may be losing steam…maybe? We saw a downgrade on AAPL this week as questions about expensive I-phones & revenues out of their services business are being questioned. Also; AMZN ran up to 2460 (all time highs) which put the P/E ratio valuation at OVER 100X earnings & OVER 30% premium to its 200 day Moving Average (1867). We feel that 20-30% over is rich….40-60% overheated….70%-100+% is stupid. Virus beneficiaries like NFLX, ROKU, PTON, looked to have peaked and to a lesser extent ZM (10 million users to 200 million users since Jan WOW!) & TDOC…..many believe both these companies will have long runways but maybe price to valuations have gotten ahead of their skis. Dividend plays (COST & JNJ raised) continue to be centered in banks (JPM C WFC), pharma (MRK BMY PFE) & energy (XOM_CVX) & certain REITS (AMT, BIP, CCI,STOR). However; if we get a phase where cash flows are tight..suspend dividends? The high beta ETF’s on our radar VGT VCR SMH VYM MGK have all had a great run in the last month so between here and 3000–time for a trim? NEW ON OUR RADAR–There was podcast with a Mark Cuban interview where he discussed 3 areas he found interesting for the futurist…#1 AI (artificial intelligence) #2 Robotics #3 Precision Medicine….all have stocks that could participate in the sector…so AI…we’ll look toward the usual suspects (AAPL AMZN MSSFT IBM INTC NVDA CRM)…for Robotics (ZBRA CGNX KIGRY ABB PTC DASTY…for Precison Medicine (NSTG AGIO & ARKG). Additional interesting areas include Big Data, Block Chain, Cryptography & IoT (Internet of Things) which is broken down to consumer which is composed of devices and infrastructure that enhancing our daily lives & industrial which is composed of sensors, robots and equipment that improves efficiency & automates operations of industry such as electric grids & smart factories which may expand to return manufacturing to USA. Big data stocks (YEXT AYX SPLK ESTC TLND CLDR MDB)…Block Chain (IBM BABA)….Crypto (MSFT V NVDA PYPL CME AMD GS SQ) & IoT includes (INTC CSCO IBM QCOM ADI EMR NXPI ROK) & the ever present MSFT AMZN GOOG to a lesser degree. LOTS of RISK here…moderation always the key.

Bond Market

Normalcy starting to return to prices as a month ago EVERYTHING was trading at a huge DISCOUNT to NAV and the liquidity was “frozen” to the FED buying or saying they would buy and sending prices to a PREMIUM to NAV…both probably made no sense. Some closed end Muni funds were at a 24% Discount to NAV and are now flat while High Yield was at 24% but still at 8% Discount. The FED has got 9 Facilities to spread money around to a variety of problems…there will be NO SHORTAGE of problems for them to finance. the PPD/SBA programs are out of money (did you think people would pass on FREE money?)…but the sharps are already playing the ssystem with companies taking the money & then sending their people off to collect unemployment….and other SOLVENT businesses like MULTI BILLION $$$ HEDGE FUNDS are collecting the money & because they know where to go & how to fill out the forms….jumping ahead of the poor slobs who need the dough…disgusting…..how did this happen…well the real estate promoter, ex-hedge fund guy & his buddy from venture capital/private equity land (Trump-Mnuchin-Powell) did not REQUIRE proof of hardship as their buddies/donors would have a difficult time proving hardships from their homes in the Hamptons. At any rate…hard to believe that all these programs will work “flawlessly” but estimates of 2-12 Trillion supporting this bail out certainly has put downward pressure on short term rates and stabilized debt markets for now. This total collapse of revenues/cash flow/demand followed by the avalanche of DEBT be thrown on top reminds me of that scene in Good Fellas where the mob takes over the restaurant and runs up debts until you can’t borrow another penny & they torch it. You may hear more about YIELD CURVE CONTROL ahead if the FED decides to target a long term interest rate by buying/selling as many bonds as needed to hit that target rate…we did this before to finance the cost of World War II…if they do that yields could drop a lot…..the poster child for this lately has been Japan since 2016…we are facing higher debt needs as the deficit jumps with Social Sec/Health Care/Tax Rev & an aging population & this downturn. Japan’s stock index Nikkei recently traded at the same price it was at almost 30 yrs ago & the GDP to debt is way over 200 & we understand their P/E ratio is about 12…so low rates/low growth/low valuations..not tasty recipe. On our radar for income..relative quality/shorter duration VUSFX VFSUX VMBS and for the more aggressive….maybe short term paper on GM & WPX.

Questions or Speak with Us?..email us at option [email protected]

US Dollar/International Markets

Not much to report this week as the Dollar index closed a shade under 100 while the two currencies that are on the ledge remain on the ledge. Something Has Got to Give at some point. The Japanese Yen closed at 107.57 and the 50 day M/A & the 200 day M/A are both around 108.50 so it need to get on it’s horse if we are to breakout to the upside or maybe it will accelerate to the downside instead. The Euro closed at 108.79 and its 50 day & 200 day M/A’s converge around 110 areas so again it needs to get on its horse to get going. The Can $ Aus $ NZ $ all have rebounded after their collapses but the currencies in Latin America (Brazil/Peso) plus South Africa & Russia seem weak to varying degrees. In the international Markets; we see EEM has rallied since the March collapse…had a decent day Friday but overall seems stalled…ditto for FEZ which is it’s European counterpart. As Reggie Jackson said about his role on the Yankees (he was the straw that stirs the drink)…the same could be said for the S&P versus these indexes.

Crude Oil

Lots to look at here….Cash prices remain pressured while the June contract trades above 25 a barrel. Rig counts are supposed to be CUT by 33% not easily restarted while Saudi & Russia they will cut more if necessary. Again; our view is that supplies will be L shaped in the months to come and demand may be V shaped which explains our intermediate term targets of 30-40 and our longer term targets between 50-60 dollars a barrel. We also acknowledge that demand is in the abyss and if it remains there all bets are off..but that is not our base case. We thought XOM & CVX were bargains during the drop and both appear ready to defend their juicy dividends… sometimes you have to look at huge volume and panic selling and say to yourself….is all the news discounted?….is there value? so far so good but a 5% break would make trimming and covered write/collars look interesting. Another big one… SLB arose from the ashes after they announced earnings.

Gold Silver Copper

So far holding a core position from much much lower levels has been our opinion and waiting for a combination of a higher Gold price with GDX sustaining levels above 32 has kept us from adding to exposure. The GOOD news…money/credit deficits are far outpacing GDP and rates are so low that if inflation pops…the Gold could fly…..the BAD news is that gold coins are trading at an OFF THE CHARTS premium/ETF’s are raking in the dough both suggests froth & we are deeply concerned with the lag in gold stocks (last time we hit 1800-GDX was about 70 NOT 29!)….somebody’s wrong here… we’ll watch for now to see who’s right….we told you Silver needed to get above the 50-200 day M/A averages @16-16.50 turn turn & above 19-21 to breakout…so this week it traded with 15 handle so it has failed to so far. If it can get going WPM PAAS SILJ are on our radar. Copper is still plugging along in the 2.00 to 2.50 range and our choice FCX up 20%+ in last 2 weeks.

Soybeans ect

Good news for the Agricultural community this week as $19 Billion in aid was announced and why not….everybody else is getting paid out. The key observation here that may give us a clue..in the past we saw farmers use the subsidies pay down some debt & save for a rainy day…..rather than buy equipment ect. Is that what America will do with it’s found money?..if so GDP could remain stale. As for Beans…we said our gut says that $8 dollars could go to $9 or $10 or more rather than $7 or $6…but our gut is not price evidence…we wait to see wait planting/growing/weather seasons bring us.

REMEMBER There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Please consult your brokerage firm, broker advisor to determiner your own suitability. Past performance is not necessarily indicative of future results. Use Risk Capital Only.