Stock Market-Year End Rally or Take the $ & Run-Read On
December 11 2020 Option Professor Opinions & Observations
Greetings!…Well here we are…the whole world is bullish (put call ratio at lowest level since 2000)…valuations are stretched….VIX hit about 20 and turned up….yields are easing off (Fed wants to stem yield rise?)…..IPO’s are going nuts (biggest year ever?)…..and Disney is trading like a tech stock as well as Starbucks (20,000 stores in 10 yrs). Moving averages on the S&P are a distant shore (50 day 3518 200 day 3175) and we broke under short term support at 3690 & 3675….do you think Mitch McConnell is going pass out anything before the Jan Georgia run off? Do you think the virus distribution will go off without a hitch? Do you think the virus is abating?…If you answered no or I don’t think so then unless we have a tremendous year end rush to position for the 2nd half of 2021 and look past some pretty lousy numbers for the next couple months (claims up 853,000)….then bumps in the road are ahead either now or in the January Effect. Now we still believe in the bull market but that feeling of I better load up or I’ll miss out quite often is followed by a sharp temporary dip especially if algos hit the market when other selling might not be present but the mood is hold but no buying. Money ultimately will be flying around the world (EU passes 2.2Trillion budget/relief) so be prepared for big advances but not in a straight line. In 2021 upside targets for S&P are a high as 4500+ and as low as 3350 and with what could hit the fan it may be wise to be prepared for both numbers. Let’s give you more insights & email us at [email protected] with ?????
Lots of action today but some thing remain the same…like AMZN MSFT NFLX NVDA all peaked in Sept…we got a Disney pike and 2 IPO’s that went nuts in Door Dash and AirBNB….both have valuations that are begging for a sell off probably in the not too distant future…to give you an idea SNOW went from about 200 to 300 back to 225 up to 425 and now it at 353….that’ the game if you want to play ….probably the better way i thru the ETF called IPO which was 20 after crash went to 68 and now 65+………PLTR ha done well and so has SFIX…TEVA ha pulled back but ADT could be worth a look & TMHC on valuation. Talk of Fannie & Freddie making a run FMCC & FNMA have stalled as Mnuchin is unclear with his plans. For us we enjoy the value stock with their juicy dividends and upside that still ha not cleared their 52 week highs. Want to know what ETF’s we think could deliver income & growth in 2021….simply email us at [email protected]
Talk is the Fed will put the the brakes on this rise in yields and we saw yields fade going into the end of the week. Of course no stimulus & virus spikes (closed NYC) and vaccine timetables can pour water on exuberance. Cutting to the chase…our view this year on getting income initially in short term corporates VSFUX…then going into Munis VWLUX…the expanding into High Yield VWEAX…Preferreds PFF and finally Emerging Market VWOB has been a very sound plan…want to talk..email The Option Professor
US Dollar-International Markets
The Dollar is hanging on to that 90-92 support zone and while we see the break ABOVE 120 on the Euro as a potential run to 130 (EU passed 2.2 Trillion budget/relief package) we are suspicious and a break UNDER 120 could reset things as positioning is very long Euro short dollar. We said last week the BP was wrestling with 134 and this week it screamed uncle and faded toward 132 as Brexit is still unresolved. Japanese Yen & Canadian Dollar remains on the defensive while the Aussie $$ (which we have been bullish since it broke 70) made new 52 week highs. All our international favorites continue to shine in Asia & Europe & EM (VEU VPL VGK VXU) BUT we caution that a correction either at year end or in Jan could happen as positioning is still very long…..sell calls-collars-put hedges??? Ask us how.
Crude oil/ Natural Gas
We have told you for month Energy stocks were a steal and you get paid big dividends (unless they cut them)…so VDE CVX COP PSX KMI OXY (who had non callable 10 year bond yielding 35% in March now yielding less than 5%) o now we must be ready for some bumps as the trees don’t grow to the sky short term but we maintain 2021 should be the return of higher oil prices. Natural Gas prices ettled around 2.59 and there has been talk that people say Hydrogen may replace some usage…our play is LNG above 50 now at 60.
Gold Silver Copper BitCoin
Our position on Gold & Silver has been clear as a bell…breakouts were 1400-1450 Gold 19-20 Silver….followed by parabolic blow off to 2100 Gold 30 Silver….WAY OVERDONE….would correct closer to 1 year moving averages in the 1700’s Gold 22 area Silver…..they did that and now we nibble using Silver 22 /Gold 1776 as get out points on trading positions and load up on closes above 1900 and 2000 Gold 26-30 Silver….not there yet..China deflates. Copper we told y you got bullish above 2.50 (now 3.50+) had a ratio to Gold that told us it would fly (trade long Copper short Gold big winner)…now w e must see if Virus new gets all markets to give back some if so Copper dips. Bitcoin continues to improve its street cred (Square/Paypal) and now a part of Fidelity will accept Bitcoin in conjunction with cash loans for institutions we read. Our buddy GBTC sold off 20% recently BUT is still up about 400% off the 52 week lows….got questions for us….email us & let’s see our ideas
Soybean Sugar Coffee
All three are in a pause to refresh mode that better get back on their bicycles soon or a more severe correction could be in the cards….Soybeans topped at 12 bucks and now is 11.61…..take out 12 and you may open big upside…Sugar can’t get above 16 now 14+…above 16 we could spike…coffee had been great technically this year…95 ( a steal) to 137 correct to 100-110 support and now at 12o..take out 125-130 and maybe 2021 will be te year of softs & grains….hey ya gotta eat & Starbucks does want 20,000 more stores in the next 10 yrs & the stuff is addicting so who knows???
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 you own suitability. Past performance is not necessarily indicative of futures results. Use Risk Capital Only.