Stock Market-Liquidity Providers Win Again! Did You Get Our Best Strategy This Week? Must Read!

May 13 2022 Option Professor Observations & Opinions

IMPORTANT! Before we get into the updates this week….we feel it is important that we REMIND everyone about the QUICK ALERT sent to everyone on THURSDAY this week AND the LEARNING OPPORTUNITY. Within the ALERT; we said it was time to understand the CALL SPREAD RISK REVERSAL options strategy. In short; the trader SELLS an out of the money PUT (cash secured) and RECEIVES the premium for agreeing to buy the stock at a discount (lower strike price than current price). The trader uses that premium and BUYS a Call Spread above current prices. In the last 48 hours; this has been an outstanding idea so far. The risk of loss is the stock trades UNDER your put strike price which in turn is your cost basis if put stock

IMPORTANT-There is no option strategy that is right for everyone. You need to LEARN & UNDERSTAND. The OPTION PROFESSOR has a 30 minute one on one Q & A SESSION where you can GET EDUCATED!

Let’s get into what happening now. WHY DON”T THEY TELL YOU TO SELL? Not too many people in the investment world have a vested interest in having investors roll 90 day Treasury Bills or limit your sectors. Whether it be TV stations wanting your eyeballs every day, investment firms wanting your accounts and fees or newsletter writers who have charged an arm and a leg for information that is losing you money.

This has been our view; The BOND market peaked in March 2020 and after we broke 1.75% on 10 yr Treasuries we have been off to the races for higher yields (that was November 2021 also when the Fed PIVOTED to fighting inflation). The Fed is no longer buying Treasuries & Mortgages (mortgages up 50%+ from the 3’s to the 5’s). More concerning; the corporate and municipal bond markets are dealer markets which means companies that provide liquidity are now responsible to provide liquidity in the event of an avalanche of selling should a chunk of debt issued in the last 12 years of low interest want out as they see their coupon is low and their principal is going in the tank. Junk Bonds, EM Debt, Munis, Preferred’s, Short Term Bank Loans and others could have issues if the Fed normalized rates to an inflation rate of 5% to 8%. Do you think an economy with this tight labor market and consumer balance sheet will need just a 2-2.5% fed funds rate to slow it down? Do you think the Fed is kidding about getting cooling demand & labor? In this environment rolling a 0-24 month Treasury ladder or Ultra Short Term (1 yr duration) made sense.

Our view on most of the STOCK MARKET has been that SPX PEAKED in 2021 essentially and with cheap money GONE and inflation UP; VALUATIONS were coming DOWN. They certainly have done that and we noted that during inflationary times the P/E ratios can be 14X-16X and the 25 yr LT average is about 15. AS we said; SPX earnings expected $2.30 this year so at 17X =3910 (we’re here!) 16X =3680 14X=3220. Some sharp people believe the LOWS come when we get capitulation (VIX 40-50+) followed by news (Fed rescue or something?) followed by bad earnings that see the stocks rise afterward….a lot missing here? Our view has been the Energy, Food, Staples Utilities, and Dividend Payers has been the best places to be. RECESSION RISK- Here’s the rub.. we hear recession risk is 30% for ’23 BUT historically when we have seen Unemployment Rates UNDER 4% and Inflation ABOVE 4%…historically Recession Risk could be like 100%! Rising Tides can lift all boats but an iceberg can be tough to negotiate.. the 2nd half of ’22 could be great IF Inflation DECLINES & the Fed has to do less not more…..if it breaks bad…LEARN how hedging works!

We are on the look out for a COMMODITIES PEAK in 2022 as a slower economy and changes in the supply demand dynamic could leave some people holding the bag. Right Now; there is talk of shortages of oil (Russia-refineries), shortages of agriculture (War-Weather-Fertilizers-Stockpiles), Industrial Metals and the prices are very high. BUT we have noticed the Goldman Sachs Commodity Index high point (2008) in intact and some stock in agriculture (CF ADM MOS) made their highs in April and in Oil (HAL SLB XOM) they did as well. The metals (CLF X NEM) also saw their best days in April so unless a parabolic hyper inflationary prices lies ahead & we will then see if Commodities are also a Fed tightening casualty.

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Remember All investing involves a risk of loss and is not right for everyone. CONSULT YOUR BROKERAGE FIRM /broker to determine your own risk tolerance and suitability. Past performance is not indicative of futures results. Information & Opinions are for information purposes only It is NOT advice

Stock Market-How to Survive the REPRICING Due to Liquidity Removal By the Fed? MUST READ!

May 7 2022 Option Professor Opinions & Observations

Well…It’s the First Saturday in May….so the good news is we get the “Most Exciting 2 Minutes in Sports” as today is the running of the 148th Kentucky Derby…….so pour yourself a Mint Julep and Enjoy Yourself:):)

We also have had 19 Bear Markets in the stock market over the last 140 years lasting an average of 290 days and an average of about a 37% decline…..we’ll see how number 20 plays out. The Fed came out this week and did their telegraphed 1/2 point hike but Powell had a senior moment and said the 3/4 point hike was not presently being considered which gave us a multi trillion dollar whipsaw in the markets. He stated accurately and was confirmed in the jobs report that the labor market is white hot (2x the jobs available to job seekers plus participation rates and quits remain high). This puts labor in the control position and assures us that inflation will be stubbornly high. The market know has known since the 10 yr Treasury got ABOVE 1.75% LAST YEAR that the destination of interest rates is Higher if demand is to weaken a is taking the Fed’s slow boat to China approach but rather is saying Let’s Get on With It!!

If you’ve read these updates for the last couple years…..you know our position on the markets and what we have suggested as a reasonable anticipated outcome. From 2008 to Nov 2021; the Fed gave us Free Money and we had Low Inflation and High Valuations. We warned investors that VALUATIONS were unsustainable and would contract and the SPX & QQQ ect. were so far ABOVE their moving averages that a REVERSION to the MEAN was inevitable. We said the Bond Market peaked on 2020 which is exactly when the Commodity Markets BOTTOMED (remember -$37dollars Crude Oil & OXY ect on the verge of bankruptcy!). We told everyone who’s listen that with no drilling and demand strong where else would prices go? We said that 2022 was the year where Will Rogers investment philosophy would prevail “I’m more interested of the return OF my money more than the return ON my money”.

Will the stock market stage a bear market rally by the end of May?…..Maybe?…should SPX hold 4037 and start closing above SPX 4220 a bear spike to SPX 4350-4450 may occur due to positioning and relief rally.

Our view since last year has been encouraging investors to Learn how to HEDGE Downside Risk and UPSIDE surprise via Replacement trades and many of you have thanked us for the information. We also have said that if you want to stabilize accounts…a short term (0-24 month) Treasury ladder since January would do the trick. Should an investor want to navigate this environment….staples, utilities and solid dividend paying stocks along with Energy Agriculture & Industrial Metals were the ways to go. Right On!

If you are looking at stock & bond salesman on TV or advisors in the brokerage firm to tell you to go to cash and wait out this repricing….you will be waiting for Godot….never happen…..no eyeballs for TV and no revenue for the brokerage firms. Truth be told….that is exactly where most investors should have been.

The SPX has support at about 4000 and 3700 so it is possible most of the decline may be behind us if 2 things happen in the 2nd half of 2022…Inflation rolls over & the Labor market softens…either not for sure

The OPTION PROFESSOR invites you to get the PDF REPORT How to Hedge Downside Risk & Upside Surprises. Also a PDF REPORT on How to Protect the Cost Basis of Stocks & PDF REPORT-Technical Signals

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Remember All investing involves risk of loss and is not right for everyone. CONSULT YOUR BROKERAGE FIRM/broker to determine your own risk tolerance and suitability. Past performance is not indicative of future results. Information & opinions are for informational purposes only. It is NOT advice.

Stock Market-There’s A Reason We’ve Encouraged Learning to Hedge-Must Read!

FULL PDF: HERE

April 30 2022 Option Professor Opinions & Observations

There’s really not a whole lot to add to our basic message that BONDS PEAKED in 2020 and STOCKS PEAKED in 2021 and we expecting COMMODITIES PEAK in 2022 ( Oil Metals Grains). We spoke of these to our readers for a long time and this week we got more evidence of a slowing economy (GDP contracted). We also got more evidence of either slower earnings (AMZN Operating Income off 58%-$8.9 Billion to $3.7 Billion) and concerning guidance (AAPL- supply chains and almost 60% of business from China-Europe-Japan-Asia….all with dodgy economic outlooks). The bloom has come off the rose a bit in the commodity oriented stocks like Energy (CVX BKR) and Metals (NEM CLF) and Agriculture (ADM CF MOS) which have seen recent pull backs and depending upon how things shake out in the weeks ahead may be creating the price evidence of exhaustion in what could be peaking commodity prices this year.

As we have stated; the Fed is REMOVING LIQUIDITY and markets are in the process of REPRICING that reality. Questions abound…are the banks dropping because their is risk to the mortgages and refis that they did when rates were low now that the Fed is not buying mortgages? Have they done mortgages with loans to values that will be problematic if real estate prices buckle? Will the consumer spend up a storm or succumb to higher cost of living? Is the inflation more structural (rents, wages, PCE Index 60% HIGHER than LT Average ect) and therefore difficult to suppress? The Treasury yields continue to JUMP into new high territory for the move this month (is their a credit crisis ahead?) Defaults on HY have been near nil & that’s not exactly normal. If rates remain elevated; rolling over that debt is tough.

Here’s some numbers we are watching on the major indexes as TECHNICAL LONG TERM Support and Resistance…SPX Resistance 4434 and Support at 4000 and 3650…..QQQ Resistance 326 & 363 Support 280….IWM Resistance 215 and 196 Support 180…..SMH Resistance 270 & 233 Support 197….AAPL Support 155 135 110 AMZN Resistance 2745 3170…. MSFT Resistance 298 Support 258 222 IYT Resistance 260 Support 234 216 ….we suspect Q2 much of the repricing seen

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Remember All investing involves risk of loss and is not right for everyone. CONSULT YOUR BROKERAGE FIRM to determine your own risk tolerance and suitability. Past performance is not indicative of future results. Information and Opinions are for informational purposes only. It is NOT advice.

Stocks-We’ve Urged Investors Learn About Hedging-Now You Know Why-Read Now!!!

April 23 2022 Option Professor Opinions & Observations

We spoke of a BOND MARKET TOP in March 2020 and the market prices have gone DOWNHILL ever since. We spoke of a STOCK MARKET TOP in December 2021 and the market prices have gone DOWNHILL overall ever since. W have spoke about a COMMODITY MARKET TOP in 2022 and we monitor what we suspect is a TOP during this year.

Due to that FACT; our opinions have been to prepare for LOWER prices; the Urging to LEARN HEDGING of Downside RISK and Upside SURPRISES has been…to put it lightly….a good idea. On top of all that…we said FULL MOON Sat 4/16:):

Some people say that the Nasdaq drop like this historically has been followed by a rally in the subsequent months. maybe but what we know is the Fed is REMOVING LIQUIDITY in BOTH Treasuries & Mortgages which has been bring ASSET VALUES down (look at stocks and real estate sales). Why are companies that announce great earnings going down? In our view because something we told you about LAST YEAR is coming true….VALUATIONS are going LOWER and must if the Fed has a snow ball’s chance in hell of succeeding in the fight on INFLATION. We Said BASIC MATH SPX earns $2.30 this year X PE 20 =SPX 4600 or X 18 PE =SPX 4140 or X PE 16 = SPX 3680 or X 15 PE = SPX 3450!!! The FED’S biggest problem is they have been TOO SLOW…we said the 2yr Treasury is pushing 3%…what’s 1/4 point hike….some kind of a joke??….Where’s the INTRA MEETING HIKE…that we said was OBVIOUS?? NOW Tail Wags Dog!! Prices went up since 2008 as RATES were at ZERO & NO INFLATION….Stock DIVIDENDS were 4% ABOVE Treasuries BUT now they are EVEN so Bye Bye YIELD ADVANTAGE!! The IDEA is to DUMP Stocks and START LOOKING to lock in YIELDS if you believe we will see a SLOW DOWN minimum or a RECESSION Ultimately. We been doing this investment thing for Decades…It’s not our first rodeo:):). If you think the stuff that went on in 20202 and 2021…no earnings, high valuations, meme stocks, quit jobs/trade stocks ect is returning soon.. meet us Starbucks-we’ll get you a cup of coffee:)

When the market indicators are constantly being compared to 2000 as far as we haven’t seen VALUATIONS like this ever or since 2000 and that was a massive TOP. When they keep referring to INFLATION rates and Volker and the early 1980’s when rates went to 16%+….then maybe we shouldn’t be too shocked when STOCKS & BONDS come DOWN:):)

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Stocks-Has the Punchbowl Been Removed? The Odds Are Starting to Lean–Must Read!

April 15 2022 Option Professor Opinions & Observations

We closed out this week with stocks running for cover like an Oklahoma twister was heading its way. After another big rally (like the one that went to SPX 4630)..whatever happened Wed was reversed and then some on Thursday. We’re not going to give a long diatribe but rather get to the point. The Fed KNOWS its in serious trouble with excessive accommodative policy and INFLATION. The market KNOW what’s coming (10yr Treasury beaks ABOVE 2.80%) so now the only question is will markets pull back and give cover to an oversold debt market (worst start to a year EVER).

The Fed is REMOVING LIQUIDITY to the system and since when did that make price go UP?? The OPTION PROFESSOR is on RECORD with a call that BONDS PEAKED in 2020..STOCKS peaked in 2021 and COMMODITIES will PEAK in 2022. Certainly most of the stocks that peaked in 2021 have probably seen their highs for a long time…and forget about a 1/2% 10yr Treasury….and SOON 100-150 Crude…17-20 Soybeans…$5 Copper may be something to tell your grandkids.

Unless we are going to HYPERINFLATION…the Fed will succeed and HOUSING…COMMODITIES…and LABOR will EASE! The economic numbers are good and the earnings on some banks were good (except where marking down mortgage loans that have DECLINED due to Mortgage Rates RISING). We told you to be careful with EARNINGS SEASON if you see earnings beats (GS) and then prices fall. Everyone who owns stocks have been told “Fear Not Earnings Will Rescue” Obviously; that could occur OR the FAILURE of EVERY RALLY may be telling us something of Q2 Earnings & THE TREND

We are now from Missouri the “SHOW ME” state and if SPX close ABOVE 4450–4550–4650 we will start believing the LOW in FEBRUARY may be the lows…otherwise we are still KEEPING THE LIGHT ON for a possible SPX 3600-4000 print This week we will hear from Fed folk and get more earnings PLUS a Full Moon Saturday Night! Somethin’s Gotta Give!

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Stock Market- Bear Market Bounce Ended 10 Days Ago-What Did You Do? Must Read!

April 8 2022 Option Professor Opinions & Observation

As we went into an OVERSOLD SPX into early March; we spoke of a rally after the Fed announcement in Mid March as a sell the rumor buy the fact scenario was unfolding. After the run to SPX 4630 (albeit about 30 pts more than we ever expected); the reality of tighter monetary conditions and Fed Balance sheet run off put the bears very much in charge. The BOND market saw yield spike UP big time this week in a market that is a bit OVERSOLD but broken nonetheless. RECESSION talk is mounting albeit not for this year as it take time for the Fed to hike & consumers to run out of cash. The Fed has a goal & they generally accomplish their goals (this one is to slow inflation (i.e. growth-stocks-real estate) We didn’t mind not fighting them on the way up (2008-2021) when they put $9 Trillion on the Balance Sheet-rates at 0! Somehow investors are more than happy to fight the Fed on the way down (2021 to present). Sorta Strange but typical.

We are aware EARNING SEASON starts this week and the bar is pretty low. BANKS start us off and it will be interesting if a collapse in IPO’s SPAC’s, Trading, Mortgage Applications and Deposits are offset by addition Free Cash Flow. Stocks that have free cash flow (profits) & pay dividends are certainly in favor so we hope for the best with the first reporters. CPI is out Tuesday, Earnings on Wed PLUS PPI followed by Thurs Retail Sales, Biz Inventories & Indust. Prod. on Friday. We have a 3 day holiday weekend and we’ll throw in a Full Moon on April 16th….if all breaks well…big hikes+ in May! We for one do not believe the Fed is kidding (Stocks do- but why not hike intra meeting?)….and will achieve their goals.

As we get further into Q2: we will know how corporate earnings are going, maybe progress in the war, if wage & price inflation abates as we switch from goods to services spending, GDP slows and supply chains/freight rates loosen. We will also see if the Feb LOWS HOLD on SPX (about 4100) & QQQ (about 320). Dow Transports tested them THIS WEEK! Should we get all those thing to occur by EOM June (10 weeks away); the Fed drama could fade and open up Q3 & Q4.

One thing we believe is that INVESTORS holding most BONDS & STOCKS have seen their Portfolios DECLINE in Value.

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Stocks-Bulls vs Bears-The Big Question is Who Wins the Fight in Q2? Must Read!

April 1 2022 Option Professor Opinions & Observations

Well in Q1 both Bulls & Bears could lay claim to some victory as the Bears saw the SPX do a nice a nice tank job from 4800 to 4100 (15% drop) and finished down for the quarter BUT the Bulls took solace in a positive March and a face ripper rally from Mid March! Positioning and a slow on the uptake Fed (why are they not hiking intra meeting when the 2 yr Treasury is already at 2.5%??). It remind me of why there was not pre-emptive action taken in Ukraine when Russia put 100,000 troops around their border weeks if not months before invasion?? Outside our expertise & pay grade but…

Earnings season is dead ahead and we expect a spotty season potentially and that is because of yields rising, inflation, demand pull forward, margins pinched, no IPO’s or SPACS ergo no huge profit center plus a market drop. If you come out bad (RH) you’ll get whacked and if you come out good (LULU) you may rally but roll over afterwards. The shipping numbers got dodgy this week and the Transports fell out of bed big time. If we can clear SPX 4630 area; we could take a shot at the highs of 4700-4800 setting up a reverse head and shoulders BUT if we take out SPX 4500 a move to even further support of SPX 4400 may be probable. The oversold metrics have reversed to an extent–we need new tailwinds

April is historically a good month but Inflation, Fed talk, War, Valuations, potential margin pressure may be headwinds. Should we see a .3% to .5%+ move up in the Jobless rate…recession may follow…certainly not discounted in prices. When we hear people opine on soft landing or hard landing of the economy.. we tend to ask…Do we even have a pilot? Let’s see if tech, biotech, innovation can rally or if it’s back to energy, metals, dividends, value, utilities, staples & banks. We view Key SPX levels this week including RESISTANCE at 4680-4750-4810 and SUPPORT at 4510-4410-4160 areas. Money is out there and rates are still negative after inflation….both bullish…climb the wall of worry or bear market rally?

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Remember All investing involves risk and it is not right for everyone. Consult your brokerage firm/broker to determine your risk tolerance and suitability. Past performance is not indicative of future results. Information and opinions provided are for informational purposes only. It is NOT advice.

Stock Market-Bonds Say Slowdown & Stocks Say Boom! Who’s Right? Read It!

March 25 2022 Option Professor Opinions & Observations

We had a very enjoyable trip to Jamaica (with a 1500 to 1 exchange rate; we got a birds eye view of why Digital could be the answer for currency challenged countries). There has been a Sea Change in the last 2 weeks so it’s time to opine

First Off; the Fed has DOUBLED it’s dot plot of how many hikes and the idea of 1/2 point hikes are looking very certain. HOWEVER; this week we saw the yield jump 16% in a week! Obviously; the market is WAY AHEAD of the Fed’s itinerary. It seems that HALTING INFLATION is job one and EMPLOYMENT is secondary (recent stats show jobless rates are LOW and in 12 states they are at RECORD lows. The CPI number comes out April 12 followed by a Fed meeting April 16. The Treasury markets have sold off far UNDER their 1-2-3yr moving averages that we could see a sell rumor/buy fact deal. We told readers that the Bond Market cyclical peak was March 2020..now in a bear market…so selloff no surprise here. Much of what the Fed has in mind is being discounted as we speak UNLESS they decide to go VOLKER on us and raise rates ABOVE the inflation rate to put the genie back in the bottle….not likely…but will 2% or 4% even do the job with the kind of job market, household/corporate balance sheets, demographics, and ex-Covid demand being unleashed??? There may be OPPORTUNITIES in High Yield and Municipal Bonds being created by the mass exodus from funds and ETF’s where the managers must sell to meet redemptions (when was a mass exodus not a bargain hunters best time?) Always dangerous to catch falling knives but a maturity date, reliable issuer, and attractive yield is the Triple Crown.

Second Off; Stocks obviously took the Fed talk and determined that this economy can handle a cautious Fed, a war, inflation and a disease (Covid) without skipping a beat. We told readers that the Growth to Value Ratio peaked in Dec 2021 BUT had run too far too fast opening up the door for a face ripper rally in tech-growth- semis and high fliers. We saw that in spades in the last 2 weeks BUT now we are into neighborhoods and dates that could be more troublesome. Some news we found amusing were things like luggage sales are DOUBLE y/o/y and home sale are declining 4 months in a row blamed on inventory but maybe it’s affordability. We saw report that 50% of millennials live paycheck to paycheck (worker revolts via unionization (Starbucks) and demand better treatment (Amazon). We are seeing cash outs on REFINANCES at levels not seen since mid 2000 bubble. TECHNICALLY; the SPX have gotten OVER much of the levels of resistance we spoke of in early March (4280-4380-4440-4510) which may be support BUT the Feb HIGHS at 4600 area combined with an post EOM exhale and profit taking going into the CPI report & Fed Meeting is a short term risk.

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Remember All investing involves risk of loss and it is not right for everyone. Consult your brokerage firm/broker to determine your own suitability and risk tolerance. Past performance is not indicative of future results. Opinions and information provided is for informational purposes only. It is NOT advice.

Stocks-Where is the SUPPORT & Where Is The RESISTANCE-Who WINS? Read More!

March 15 2022 Option Professor Opinions & Observations

CLICK HERE TO DOWNLOAD THE FULL PDF

There is a huge Tug of War going on between the Bulls & the Bears in the stock market as conflicting signs are all over the place plus the number of unknowns are about a many as you can get. One way or seeing which side will prevail short term and longer term is to consider moving averages and relative strength as a guideline on trend and power.

The BULLS look toward household spending balance sheets and corporate balance sheets suggesting a liquidity level that does not jibe with recession nor defaults. Operating leverage (which we told readers would send stock soaring after the crash of 2020) is still strong and some say the Fed will move so slow on rates that the tightening of valuations will actually see expansion in the 2nd half of 2022. Oil and bottlenecks will ease and inflation will crack (PPI had things in the report UNDER estimates). Headwinds could turn to tailwinds as spring turns to summer…Great! Any Price Proof??

Here’s the SUSTAINED PRICE PROOF we’d be looking for basis SPX…Closes ABOVE 4275 then 4400 then 4527 and 4600 PLUS get the RSI ABOVE 50! The QQQ needs to sustain ABOVE 333 then 353 then 360+ and get RSI’s ABOVE 50??

The BEARS look toward most short term and intermediate moving averages having crossed downward ( although some say when the “death cross” occurs and consumer sentiment is this low-double digit upside follows?). The inflation will sap consumers excess reserves and no more free stimulus to fall back on. In a slower growth slower earnings/tight margins environment you could see 16 or 15 PE ratios on $2.40 earnings could spell SPX at 3600 with a PE of 15! The SPX has support at 4100-3900 and then 3600 with QQQ support around 320 and 280 or reversion to 36 SMA 20 year.

The wild card on this in our mind is Russia & China in that both these countries have economies that are in trouble and both could cause further geo-political problems. Russia looks to be in a depression and China is shutting down cities that have supply chains and they also are working thru a real estate debacle while crushing their tech sector. With China; you could throw in sanctions and they want to walk out the winner in the Russia Ukraine conflict by getting cheap Russian Oil and Wheat/ag products. BABA has gone from 320 to 76 bucks! These countries are very dangerous.

We’ll see how the cards come out BUT in the meantime… it would be a great idea to EDUCATE YOURSELF NOW! We have Decades of Knowledge & Experience to share to help Beginning, Intermediate or Advanced Investors!

GET YOURS! The Option Professor PDF REPORT about PROTECTING PORFOLIOS From DOWNSIDE & UPSIDE RISK! Contact Us at [email protected] or Call Us 702-873-8038 or Visit Us at optionprofessor.com TODAY!

Do You Understand How to Protect Stocks-Both Declines & Upside Surprises? Read On!

March 11 2022 Option Professor Opinions & Observations

Well another week another whipsaw as the SPX started the week ABOVE 4300 the dropped to UNDER 4160 the rallied to 4300 and went home Friday with its tail between its legs at 4200. This is not surprising to us as we have said that 2022 was a REVERSION to the MEAN year which had levels on SPX around 4400 then 3850 then 3600. We are OVERSOLD basis a VIX that almost hit 40 so throw back rallies on any news highlight algos & illiquidity. The BEST place to be since we said STOCKS TOPPED in 2021 and BONDS topped in 2020 would be rolling a SHORT TERM LADDER in Treasuries (0-24 mos) and put stock exposure to ENERGY & METALS….but the financial industry would never be so bold The one thing we brought to readers attention was the GROWTH to VALUE Ratio which TOPPED in December 2021 and since that time relative performance has favored value. If we get a dovish Fed statement & ceasefire…growth may spike We have INDICATORS on our SHORT TERM (1 month) charts that when they turn; we will respect that but so far no sale.

Inflation is global as Italy is looking at 40% and Brazil 10%+ as examples. Can the Fed stop STRUCTURAL INFLATION with 1/4 point hikes? We may rally after the Fed , End of the Quarter (Q1) book squaring, and frontrunning earnings in April; but getting ABOVE both SPX 4400 and 4600 RESISTENCE may take a lot of things breaking very well; we’re ready!

Here’s your questions….Will the consumer (70% of economic growth) keep spending? Will the Fed get to 1% Fed Funds by June (3 months+)? Will Q1 earnings stay strong? Will valuations tighten further? Is the SPX 4100 low AND the VIX 39 high the end of it OR is there a CAPITUALTION to SPX 3600-3800 with the VIX spike thru 40/put call ratios spike?

Yellen’s talking about persistent inflation and if the Fed does basic math; interest rates could move more than is priced in and growth could be slower than forecast. The most POPULAR theme is that the 2nd half of the year is the land of milk & honey as we re-open, supply chains loosen, Russia’s resolved, oil comes to market, inflation slows-sounds good Since there are more accounts trading stocks than ever; most people wish to believe this dream of joy turns into reality.

We SEE our LONG TERM CHARTS & INDICATORS on SPX are still UNDER the current market prices and are RISING which is BULLISH albeit the support from those indicators are as much as 10% to 15% UNDER current SPX prices. We believe COMMODITIES will TOP in 2022 and we monitor the GOLDMAN SACHS COMMODITY INDEX high points from 2008 to see if we TEST or slightly EXCEED and then turn down as additional supplies of oil, grains & metals materialize. People thought it crazy when we said in March 2020 that we may never see those RATES again much like 40 years earlier the sharps said we’d never see a 16% long term Treasury YIELDS again. When people said VALUATIONS in 2001 were off the charts UNSUSTAINABLE; they were scorned like those who said in 2021 (20 yrs later) it was BUBBLE REDUX

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