Stock Mkt-Stimulus?Data? Virus? R U Worried? Read On
Christmas Eve 2020 Option Professor Opinion & Observations
Happy Holiday:):):)…Just some quick notes before we await Santa & get to the really important stuff…..family & friends:)….the stimulus package is like a drunk driver…all over the road…with the people at the helm can’t agree on much and Trump certainly ha gone rogue on the GOP which they are having difficulty processing….The Dems are ok with 3X+ check going out but probably figure there’ a motive (like the Jan 5 Georgia vote)…..figure we get one but the longer it takes the more economic deterioration occurs (800K claims….consumer spending & home sales drop…3 Million household behind on rent & 25 Billion in package deals only with arrears.. Jan rents due??). The economic data comes out on the wrong side and shows slowdown. Deficits are WAY out of control…add the Fiscal & Trade deficits as a % to the GDP and we are 4 standard deviations from balanced (simply put we are not going to balance anything and an infrastructure bill is coming)..so much is piling on at some point the refs (the Bond & Gold Markets) will the throw the flag and say pull it in a notch. We had a breach of some moving averages in the S&P 500 with a move under 3600 only to recover (plunge protection team?)…..decent line in the sand to defend….but we have a huge bull lean with most investors….have your hedging tools out?
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As we told you TSLA may have a buy the rumor sell the fact vibe after it got listed and we did see a move from around 700 toward 600 then a rebound. Zoom’s another one that has been pressured from 430 to 375…maybe higher yield and steepening of the yield curve (5-30’s & 2-10’s at multi-year HIGHS) may be a precursor of valuation compression in the high fliers and more expansion in the cyclicals-value crowd. Dividends could have been also captured this week in a number of value ETF’s (MGV VOOV VOE VBR ect).. which can be worthwhile to keep an eye on. Biotechs (IBB)..Health Care (VHT)….Financials (VFH KRE)….Tech (VGT)…Ark (ARKG ARKK)…Cloud (CLOU CLDR WCLD) had pretty good legs while the Industrial & Materials basically meandered and oil seemed to slide under it own weight (demand concern). The seasonality & money flow seems to favor a year end rally toward 3800-3900 by Q1…and you can’t fight the tape or the Fed…BUT we can’t lose sight that the news is not good and optimism for buybacks & M&A activity is not a sustainable substitute for actual growth..so price out collars/married puts if things turn sour…question for us? email [email protected]
In addition to the NEGATIVE YIELDS at 1% and expected to climb further as inflation expectations are rising and the Fed is easy…we now have some acceleration in something we told you many months ago (A STEEPENING YIELD CURVE)…again the 2’s 10’s & 5’s 30’s going to multi-year highs….great for banks with buy backs ok’ed had a surge in that last few weeks. To be brief…short term corporates/intermediate munis with some juice out of preferred PFF EM Debt VWOB High Yield VWEAX and Loans FFRHX has been our sweet pot all year..question? email us [email protected]
Britain got something going on Brexit….the EU got that 2.2 trillion budget going…..Aussieland has been cooking with some decent econ numbers….and Japan ha had a great stock run so the Dollar has lost its allure…but not even below the 88-90 range yet. some say negative yields will take the dollar down 20%+in 2021..we”l see if it takes out 88-90 first or has a counter trend rally to blow out some shorts…if stocks fade-maybe a run toward the dollar? In the international markets our favorites have been Europe Asia EM Latin America & Eastern Europe..questions? email [email protected]
Crude Oil/Natural Gas
Briefly…we told you crude/oil tock were a teal in March April May and that we believe 2021 can see 50′ 60′ if we recover as anticipated…we see too much demand for supplies…we said we could see a pause/pullback in prices a the virus creating havoc on many demand zones-ergo selling has occurred we will monitor the weeks ahead and state our view on when the drop is over…natural gas (LNG) also on the defensive but we like it longer term
Gold Silver Copper BitCoin
We told you about the breakout in Gold & ilver 8 month ago and hoe the parabolic high would last for a while…also 1775 and 22 good spot to re-enter..but now we are the show me state and need 1950+ and 28+ to prove that the pullback are behind us. Copper had a good sell off but came back by week end FCX & SCCO still remain favorite but keep powder dry for dip. Bitcoin in another orbit (GBTC)..strictly a dollar cost average long term spec deal…maybe Central Banks may come up with their own unit of measure (only way out of fiat currency mess)..using block chain…rock BitCoin hard??
Soybean Sugar Coffee
We told you Soybean would rally big time 8 months ago with China buying…then we told you a break above 950 would lead us toward 12 resistance from a few years back.. we broke above 12 and now 2021 could be a banner year for beans so we look to buy all pullbacks and it look like Wheat & Corn will join the party…..Sugar still hanging in there but need a break above 1550-16 to see big bucks..and Coffee ha held 100 & 110 so stay bullish until the teal leave change….commodities are looking good Reminder-tell all-enter email at optionprofessor.com…get free 2021 updates
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