Update 119: Stock Market-Sell Off Soon or VIX -20 Rally-Read More
November 13th 2020 Option Professor Opinion & Observations
Welcome Back!…..This week we saw the market continue to go where we told you we are already positioned..Value-Dividends-Industrials-Materials-Banks-Energy- Epicenter (hotels-travel- leisure) A VERY GOOD WEEK indeed So what do we see NOW??…Well we told you Sept-Oct Nov would see BIG TIME volatility and we did (VIX 40-22 range)….we aid we would get a BIG 2 WEEK BOUNCE in the first 2 weeks of Nov..we just did…the RISK of another TURNDOWN in prices is most probable between NOW & the end of the year. Monday looked and felt like a BLOW OFF top (SP 3670/RSI 85+) and we have a ton of EARNINGS coming this week (retailers) which could either support the market or REPEAT the price action we told you to PREPARE for when Tech Earnings came out (BUY THE RUMOR SELL THE FACT). Some example of that recently was Bezos SELLING $3 Billion in AMZN going into the election & the PFE CEO selling EXACTLY when they had good news Pfizer announced within earshot of 42 (now 38). The Virus is taking off big time…stimulus is no where to be found….JPM credit card data shows spending is slowing….restaurant sales which had recaptured 70% of pre Covid Sept-Oct also slipping NYC shuts down at 10PM can’t help. Also the VIX has a TRIPLE bottom around 22 so if that takes off next week then look out. Should we break UNDER 3550-3520 SP next week then the bloom may be coming off the rose. HOWEVER…..there are 2 sides to every flap jack and there are 2 FACTORS that could pull us up BIG TIME…the VIX sub 20 and stable and the US DOLLAR breaking 90-92…….should this happen the sideline money and bond market money should come poring in and shock the market. We should have a pretty good idea by next Friday and we will report be all over it as usual….OUR VIEW-if SP 3670 holds–selloff is coming.
Stock Market
Next week we have earnings that will give a glimpse at the consumer starting with Palo Alto WMT Kohls HD TGT TJX L Brands NVDA ROST BJ & foot locker to name a few. DIS & CSCO came out with good stuff this week…no surprise to our readers as we told you about the value of CSCO and the future of DIS. We had great moves in CVX PSX VDE in energy and BA ULTA LI (10x volume)DE EA AXP JPM CMG PLTR GRWG SONO to name a few. The vaccine stocks PFE JNJ PFE NUAX MRNA (3X normal activity) all are getting volatility…but it was airlines hotels cruises rent a cars that also were the big dogs this week. AS WE TOLD YOU…higher yield affects the Valuations & tech have a tougher time….throw in tax rate changes and there you go. Banks love the yield curve (C JPM MS BAC WFC USB PFC KRE) that is steepening…Going into the holidays look to AMZN WMT TGT ROST TJX ULTA DG for some upside as well as BBY NKE and others. Last but not least keep an eye on V Visa as they believe only a 6% market penetration on tap & pay will explode and increase credit card usage which of course ups profits.
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Bond Market
Our readers knowwe told you that a historic bottom in yields happened in March and the yield curve will and has steepened….we also told you to play TLT from the long side to get a bounce and stop under the 154 lows..this week that paid off handsomely. Munis are catching a bid as states are in better shape than thought and after tax yields are attractive. We told you bout EMERGING MKT debt and we saw VWOB rally nicely while yielding OVER 4%…..preferred PFF have done well yielding OVER 5% and HYG has done well too. Anotherarea for yields are banks energy and utilities all caught good bids this week…Muni funds VWLUX MAYHX NHMRX have been viewed as potentially beneficial vehicles. CPI was flat but PPI was up .3% or annualized 3.6% so we could get higher prices or compressed margins.
We follow fixed income…want to learn more email us at [email protected]
US Dollar/International Markets
We told you of the dollar decline from DXY 103 to 92 area and now we had a dead cat bounce but it could fall under itss own weight ($284 Billion MONTHLY DEFICIT/last year $3+ Trl Deficit/pre Covid $1 Tril annual deficit. You see Donny was good at cutting taxes (revenues) but he’s lousy at creating revenues which we said was EXACTLY what he has done in his business throughout the years ergo bankruptcies…..probably not the guy to tell we print money and you can borrow & spend to infinity. He’s gone but his tab stays with us and his structural no taxes/high spending platform keeps bond holders (inflation/bad currency) up at night. You want international…we told you for a while Japan & Emerging markets are the way to go. Europe is cheap but their unemployment picture is whacked. Brazil sounds bad but the etf is ok so far…the whole world oid jumping from India to Mexico INDA EWW and the rest of the Pacific Rim..throw a dart.
INternational questions…email [email protected]
Crude Oil Natural Gas
Rig counts jumped at Baker Hughes for the last 8 weeks and OPEC is worried about Covid demand fears. Having said that XLE & others had their BEST WEEK EVER.,..we been all over the CVX COP PSX VLO VDE SUN high yielding stocks for a LONG TIME..we believe in the sector..a bit ahead of its skis maybe but long term..we’re sticking to our bull outlook into 2021. Natural Gas still above 3..we got bullish at 2 and LNG ahs got legs now needs to sustain the advance and build on it to keep us interested.
Ideas on how to play energy?…email us at [email protected]
Gold Silver Copper BitCoin
Nothing to report here as our views on Gold & Silver remain range bound with additional DOWNSIDE risk….HOWEVER close ABOVE $2000 Gold and $@^ Silver would turn us into much friskier bulls…GDX GDXJ SIL SILJ ect all need new fuel…get the Dollar to break 90 and now we’re talking upmoves. Copper to Gold Ratio is Above its 200 day average(copper outperforming Gold)..so jump on the FCX train if you like but it’s a train we’ve been on since it at HALF the current price…we’ve been riding BITCOIN thru GBTC and BitWise and VERY happy with our results…again it’s like a early tech stock (Total $300 Billion Market) so lots growth big players (PYPL letting millions of merchants use it)….and the year after halving has been good.
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Soybeans Sugar Cofee
Checking in on the 3 Amigos…soybeans pulled back and has trouble at 12 bucks but may have further China demand and help from South America with supply demand dynamic…Sugar was brought to you at the breakout point of 12.30 but until we clear 16 the land of milk & honey os beyond our reach…..Coffee was our baby earlier this year at 100 then ran to 137…bye bye at 100-110 we say take a shot….closed at 112 and traded to 113..not bad
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