Episode #58: OptionProfessor Market Update

Option Professor’s Opinion & Observations Weekly Update August 30 2019
August is behind us and in Stocks most induces closed lower for the month. Is it an indication of more to come in the month ahead? This upcoming week we have tariffs on Sunday, Tues manufacturing data (PMI), Wed. regional Fed Presidents speak, Thurs ADP employment report and Friday the Big Kahuna..US Jobs data for August. This will be followed by ECB meeting Sept 12 and the really Big Kahuna..Fed Meets 9/18….so yes..I do believe volatility should increase as the bull bear debate has we’ve seen Stock violently  up and down moves of 4% short term….suggesting when resolution is made the move should be big.
Stock Market…as I said the move above 3000 not to be trusted as Transports, Russell and major stocks failed to confirm highs. Resistance 2950-3000 S&P….break under 2825 could spell 2700 area quickly. If you would like to know what we are watching regarding among other things high dividend paying stocks and what upcoming dates the lock up periods end on 2019 new issues.let us know. Will earnings forecasts be downgraded??….Is it time to price out EOM October puts & credit call spreads??
Bond Market–Treasuries-Corporate-International…. big blow off to the lower yields and higher prices in the Treasuries in the month of August as momentum players pressed the side that has been working since Nov 2018. However; the numbers have not been horrendous and the 200 day average is way below the market (overbought). So I anticipate the Fed not to gas up this fire as i said last week (and Dudley reiterated)..the Fed is not in the business or underwriting trade wars & re-election schemes.Save AmmoAs we turn to corporates; i like short term investment grades (VUSFX & VFSUX) to keep duration relatively short term…in the high yield space…watch HYG…it has hung in there but if we have Stocks drop & a cut in earnings….break of 85 could spell trouble..if forced to participate (VWEAX) has a reasonable duration and diversification. Preferred (PFF) has been firm..is a turn coming?.Italian 10 yrs have seen yields plummet..no thanks..while emerging market debt (VWOB) have done well since Dec..for how long?
US Dollar….new 52 week highs on DXY this week so this yield collapse has not hurt the values (98.8). Our economy in the USA  is stronger/yields differentials beneficial so no surprise here. I have said this all along 99-95 is the trading range and despite Trump’s moves and jawboning….our currency is king….although  the UK Governor outlined the concept of a worldwide digital currency as he stated reliance on the US Dollar as the reserve currency standard method of payments has become too risky…Goldman guy.
Crude oil….it has declining tops since April’s high@ 65 or so….as I’ve said must break 60-65 and hold 50 to remain interesting but I must say those juicy yields on RDS.A, OXY, CVX ect. are very tempting. It seems we have a well supplied market immune from thegeopolitical skirmishes than previously would have sent prices flying…..like stocks..September could be the feast or famine month.
Gold Silver….as i said..I have been bullish on Gold and the breakout above 1350 was a go but fast and furious it went and now the resistance has held around 1520-1580 (formerly lows late 2012 early 2013) and the 200 day moving average is way under current prices….so absent a parabolic breakout thru 1600 (1700 next target)….I say let’s see if we can get aboard 1375-1450 area.Silver…pretty much ditto the Gold story and while the white metal is being touting as a cheap metal that will close the gap in the Silver Gold Ratio but I suspect that the industrial uses for silver and platinum have changed which may explain the differences.
SOYBEANS….well we continue to see no buys out of China and I’ve seen farmers and there reps crying on TV about how bad their businesses have gone….but until I see closes above 9 and 950-10….I’m not seeing any home run here.
Email us at optionprofessor @gmail.com with any questions or to set up a time to reviews questions you want to discuss.
REMEMBER past performance is not necessarily indicative of future results. There is a substantial risk of loss in options, short term trading and all investments. They are not right for everyone. Consult your clearing firm/broker-advisor to determine suitability. 

Episode #57: OptionProfessor Market Update

NEWS: Well the big news this week should really not surprise anyone & sets right in my base case. The S&P 500 may very well have seen a short term peak @ 3027 and it’s failure to take out 2950-3000 sets up a further downside move. The Fed in Jackson Hole essentially says that they will watch the data which shows decent consumers spending albeit on credit and that the trade war is killing manufacturing, capital expenditures and the farmers. Trump appears unhinged with his banter and Powell will not underwrite either overly aggressive trade/currency wars or short term re-election schemes. Save some ammo for a rainy day.

Stock Market- I never liked the rally to 3027 and said so. My reasons included the lack of new highs in some major stocks and more importantly the Transports (DJTA) and the Russell 200 (RUT). Today; on a percentage basis, both are far weaker than DJIA/SPX. Cut to the chase; the rollover has support at 2825 and 2700 area but with VIX @ 20 area plus the Presidential banter…who knows?

If you want to discuss how the uses and risks of protecting your portfolio…email us @ [email protected].

International…strong dollar and trade wars weigh on Europe & Asia & Emerging Markets….don’t catch a falling knife but also don’t put your head in the sand. If & When this thing settles down (maybe by mid Oct); valuations & prices & trends may be much more compelling. Cooler heads/humility must prevail on trade and today that seems far fetched….but we all know things can change.

Bond Market- Yields dropped sharply with an inversion and the 30 yr Treasury hitting record lows. The returns on long term duration (EDV) are many times the historical norm so one wonders if a pause to refresh is in the cards. I do know if economic number (GDP/Inflation) were to surprise on the upside in Q3-Q4; the risk on duration would be huge. Right Now..not the case.

High Yield- this is an area that is giving a clue that stocks are just having a correction. So far HYG has not broken & one would think that if it was game over; HYG & Leveraged Loans-International (VWOB) and the bunch would be in the toilet. So far; they are not.

US Dollar-good size drop today on DXY but still well within the parameters I have said which is 99-95 (97-98 area now). Hey, a strong economy & elevated comparable rates will get people hanging around your currency.

Crude Oil-still stuck between 50-60 (53-54 now). A break above 60-65-70 would certainly make the oil stocks interesting as their

P/E ratios and Dividend Yields are nothing to sneeze at. Right now….it’s a falling knife.

Gold Silver–OK I have been talking the bull story since the break above 1350 witha pullback call @ 1520 area which we saw.

Right Now..turmoil and budget deficits and stimulus talk globally sounds like printed money is getting out of control. A percentage held in GDX & GDXJ has been a good call and remains so but still be aware that we are way above the 200 day moving average.

Soybeans- China was supposed to be buying now they got tariffs on the beans…a real tank job. As I’ve said before break above 9-950-10 combined with new would get my attention….farmers not as made whole as previously advertised.

EMAIL [email protected] with comments/questions or requests for specific on what we are monitoring.

REMEMBER-Disclosure: There is a substantial risk of loss in options/futures and short term trading and they are not right for everyone. Consult your Advisor, Broker and Brokerage firm to discuss what is suitable for you. Past Performance is not necessarily indicative of future results.

Episode #56: OptionProfessor Market Update

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

Episode #55: OptionProfessor Market Update

This is a text only update:

Stock Market…Stocks continue to have a volatile week and while it is remains possible the short term highs are in place; the current support in the 5% -10% correction territories remain intact.
Bond Market….yields continued to fall this week and high yield (HYG) gave way earlier in the week but recovered by week’s end
US Dollar….the dollar (DXY) has certainly come off its highs in recent weeks but was essentially stable at elevated levels.
Gold-Silver…..Gold & Silver soared earlier this week with talk of devaluations worldwide but faded off the highs by weeks end.
Crude Oil….earlier this week oil prices sold off flirting with the key $ 50 per barrel price support while ending the week with a rally regaining about half the lost ground.
Soybeans…strong week for the beansof about 40 cents off the lows by weeks end.
MY VIEWS & OBSERVATIONS
Stock Market….S&P 500 entered my red zone (2950-3100) wherein my belief lightening up/hedging made sense. I’ve said a break under 2950/VIX +17 could see an acceleration of prices to the downside which is exactly what we saw. The snap back rally should have resistance between the 2950 and 3000 area. The longer the trade war goes on…downward pressure on rates and rethinking corporate profits and valuation may continue…..2800 area (200 day M/A) and May lows (2700 area) could arrive if news doesn’t change….Volatility’s back! As I’ve said RUT & DJTA no making new highs and momentum fading is not bullish Up sectors this week REITS/Utilities, Health Care KO & MCD CHV while down moves in Tech & Financials CAT INTC PFE IBM 3M. Looking for yields & safety??
EMAIL [email protected] with any questions.
Bond Market…..yield fell precipitously this week and snapped up abit by weeks end. The RSI is way up & TLT failed to exceed 144. Both those things make me believe that the highs in price and the low in yields (10-year @ 1.59%) maybe temporary turning points if not exceeded this coming week. Never can I recall when an administration & the markets bullied a Fed into policy…Stay Tuned!
US Dollar….I have said for many months the basic range for DXY is 98-99 nad 94-95 nad should that range break and hold we may be able to decide where we are going. Where’s your alternative? The Euro is dealing with negative yield, political unrest, Brexit among other things…while in Asia Japan amy be slowing & fighting with Korea. Our economic numbers ain’t bad and the yield advantage is great. Trump wants rates & the Dollar lower…one out of 2 is not bad!…Still Rangebound
Gold- Silver….big bull trend on it’s way but short term we have overstretched RSI and resistance between 1520-1580 where the market broke from year ago. So if you wanted to look at taking something off the table or hedging…that’s the neighborhood I would look at. However; the mantra of lower rates lower dollar higher inflation is all music to the metals ears so it could just go parabolic. Ther are many metals stocks and leasing of metals that I follow who have had very strong runs with potentially more runway if we can keep the metals running. Gold-Silver ratio has tightened somewhat to th high 80’s…some see more moves.
EMAIL [email protected] with any questions
Crude Oil…..pressure contines on prices albeit a reprieve at weeks end. Will it break 50 and accelerate to the downside or will it take out 60-65 and get on thye bicycle??..If it’s the latter…RDS.a, CVX, BP, and many other could be interesting on a yield and valuation basis.
Soybeans….came roaring back this week but still don’t trust it until we can sustain 9+ nad clear 9.50. If we get a China deal…maybe demand could strip supply and we could get a run…it’s been awhile since we could say soybeans an a big run
EMAIL [email protected]
Remember past performance is not necessarily indicative of future results. There is a substantial risk of loss in options and short term trading and it is not right for everyone. Talk to your clearing firm, broker and any advisor you may have to determine your suitability. Use risk capital.

1 … 18 19 20 21 22 … 24