Stock Market-Goldilocks & A Merry Christmas? Read On

December 4 2020 Option Professor Opinions & Observations

Welcome Back!….Everything is working so far this month after a great November…..record records records…from RUT & DJTA to S&P we are zooming to the upside…..everything we told you about ROTATION has come true like Social Index VFTAX —–International Growth VWIGX—Energy VDE—Financials VFH—-Mega Cap Value MGV—-Mid Cap Value VOE—Russell Value VONV—S&P 500 Value VOOV—-Small Cap Value VBR—-Wells Fargo WFC–Copper FCX and now we are looking at the Gold & Silver stocks GDX GDXJ SIL SILJ AUY NEM and so much more. Sure we are overbought on many measures (RSI, A-D Line, VIX, Distance away from moving averages ect) but the seasonality and the combination of vaccine & stimulus exuberance is hard to step in front of now…we told you closes under SP 3600 would signal a pause to refresh & still will but we don’t have that yet and some ay 3800 is our next stop before year end. CAUTION- Unstable Unemployment (700k+claims-only 245k jobs-61% participation-6.7% rate but u-6 suggests really 12% & 20 Million on some form of dole) means stimulus here BEFORE Christmas. HOWEVER…will it be enough/will vaccine distribution go off without a glitch/hard shut downs coming…how long can companies borrow to pay debt..these are potential flies in the proverbial ointment….and with this level of giddy bulls…hedge?? Post Pandemic-The bottom line is contemporary data is very ugly but the market are trading on growth coming….operating leverage (lower costs on decent revenues) will drive prices and re rating (higher valuations) may be the norm on value stocks and credit markets are functioning (liquid-spreads tight) and finally there is no competitors to airlines, theme parks, hotels-destinations-cruise lines and when people go back they will have reduced overheads to a point where their profitability may shock the naysayers….if you or friends have questions for us on sectors or balanced asset allocations in our opinions or what we like and like less simply contact us at [email protected] Thanks!

Stock Market

Big deal this week with CRM and lack ass they try to compete with MSFT but 27 Billion and 24X forward sales may be a bit pricey…we’ll see.. cloud stock got some legs OKTA ZS CRWD SNOW 9=49% for the month with CRM & Buffett as big investors) up between 8-15%. Next week keep an eye on Toll Bros TOL as they announce earnings and our opinion is we could see a surprise…also LEN PHM KBH plus the etf’s could be interesting aftr their dips as 2nd home buyer are jumping and inventories are low while the mortgage rates are at 2.70% area.Pot stocks got a boost fro the House decriminalizing pot but good luck getting that passed by Mitch McConnell (definitely not a pothead:)… trulieve cresco labs green thumb and others may benefit. EV stocks like TSLA Fisker Lordstrom Workhorse NIO and others are front & center with the biotech companies getting interesting again via IBB on the break above 145…watch BIIB was 360 down to 220 now 245..wild ride…PFE getting some legs too. Unusual option activity included TSM in the Dec options and Zynga in the Jan calls….look at covered calls. Watch out for new issues in AIRBNB & DoorDash…one look great post pandemic the other maybe not so much as competition return in dining. If you have any questions on our radar list email optionprofes[email protected]

Bond Market

Getting active this week…we told you in these updates since the bloww off top and the FED printing that the yield curve would steepen and growth & inflation fears would dominate the conversation…well we are there right now…..also going out on the risk spectrum could pay off in EM VWOB…in High Yield VWEAX…in preferreds PFF and even muni VWLUX…all have behaved well…we also told you value stocks to replace income would be good as they pay good dividends and now we tell you to consider covered calls to create cash flow and you may see a rising principal along with your income unlike Treasuries. The Fed may extend maturities and definitely buy Treasuries as an avalanche of supplies will come with the deficit spending binge….want to ask questions..email [email protected]

US Dollar/International Markets

Big New here is that the entire planet is bearish the Dollar as the Euro break 120 on the upside.. the British Pound wrestles with 134..the Aussie $$ stays above 69-72 support and the Yen fails to surpass 105-107 resistance ..China’s currency has also appreciated to a level where intervention is not off the table…If we hold 90 and the news swings….positioning is very short ..As far as International Markets we have told you for months Europe Asia China are all good places to diversify VEU VPL VXUS KWEB VWO VGK to name a few..we said BABA hit a low at 253 and so far we’re right so if you or friends have any questions email option professor…hear our side of things

Crude Oil/Natural Gas

Oil tock are coming on big time EXACTLY what we told you on these page MONTH ago and we’ve collected great dividends to boot…OPEC seems to be under control o far so we remain constructive in 2021 (45-60+) as jet fuel demand and consumers get going again….VDE VLO CVX COP PSX SLB and much more…..Natural Gass has been all over the place but essentially up since we got bullish sub 2.00 and our baby LNG above 50 has now broke 60 this week..want to know more…email us at [email protected]

Gold Silver Copper BitCoin

We told you that Gold would down UNDER 1800 an oz and then we may be interested and we did EXACTLY that ass we broke 1770 and snapped back nicely….time to nibble on GDX GDXJ SIL SILJ AUY NEM ect….look like it ass the 1-2-3 year moving averages still suggest higher price ahead BUT getting ABOVE 1860 and 1980 or Silver ABOVE 26 & 30 needed to make the big bucks…also no more frightened public & we told you it was a crowded trade at 2100 & 30 bucks ….when crowded it can go the other way BUT Gold is the 3rd biggest asset held by Central Banks BUT we told you they were net SELLERS in Q3 setting up the bargain in Q4 so far….although many other commodities are fading lately. Copper ha been huge for us this year ass we got bullish at 2.50 and we broke 3.50 and our 2 buddies FCX CCO have been rainmakers this year….time to write calls/hedge gains/trim/replace calls??? Bitcoin seems to be running out of steam in the short term (GBTC is our vehicle of choice) ass GBTC has gone from 5 to 24 in the last 52 wks and some say the year after halving (2016?) is big upside but Dalio was just confronting the bulls with comments about the volatility and usability and govt displeasure if it gets too big as potential pitfalls…we’ll see by 2021…. There are many ways we approach these markets-email us to learn more

Soybeans Sugar Coffee

These markets have rolled over to the downside and may be entering a decent correction phase. Certainly 12 beans 6.40 Wheat 16 Sugar and 130-142 Coffee have become insurmountable levels and until taken out maybe the short side is where the money will be made….that’s our gut talking.

REMEMBER There is a substantial risk of loss in short term trading and option trading and it s 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.

Jim Kenney
 

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