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February 26th 2021 Option Professor Opinions & Observations

Greetings Everybody—The Winds of Change were blowing on Wall Street this week as the rapidity of the increase in interest rates gave sellers legs. BEFORE we provide our insight This Week….we want to REVIEW & ASK you a couple of things. STOCK MARKET- 1. We were bullish coming off the panic March Lows as we said OPERATING LEVERAGE would make earnings zoom. 2. We initially told you that Tech & Covid stocks (PTON ZM TDOC) would lead. 3. We then told you to start switching to VALUE (Banks-Energy-Retail -Industrials) as the yield curve would steepen & consumers were flush with money as their leisure expenses were eliminated & transfer pay arrived. 3. We recently said that the end of Feb and up thru June could see a selloff as the PMI’s & ISM numbers may roll over (leading indicator of spending). interest rates were rising (GDP-Stimulus-Inflation) plus many technical indicators suggested markets were way overbought (moving averages-valuations-rampant speculation-margin debt). 4. We told you the Gold run up was parabolic and would not hold up and we would see months of back & forth action to work off excesses. We told you Copper was going to fly and BitCoin was going to have a huge move up as the year after halving is great. 5. We told you to avoid long dated bonds and the Dollar would fall but temporarily hold 88-90 on the Index. We said early in the year Europe, Asia & Emerging Markets would have a good run because of that U.S. Dollar weakness and our thirst for imported goods. 6. We told you Crude Oil was going higher since we had a capitulation at -$37 a barrel and due to lower rig counts, no private equity-fracking and a return of better demand. 7. We told you that Soybeans were a steal at $8-$9 as China was on the horizon as a huge buyer, also that Sugar was a bargain at 12.30 and Coffee above 100-110 represented a large opportunity…..Readers said to us & we believe we have ADDED VALUE to your research through our timely opinions & observations. NOW we Invite you to become a SUBSCRIBER so that we can share SPECIFIC ideas via our FOCUS LIST….NOW we ASK you email us today at [email protected] & get the Special Monthly/Yearly Rates. There are a number of ways to SUBSCRIBE so Learn How to Join Up Today!

The two operative words we would use regarding the markets right now are PERSPECTIVE & MODERATION. Interest Rates have risen sharply (some compare it to Scuba as when you come up faster than your bubbles you get the bends). HOWEVER it is important to note that REAL YIELDS after we can adjust for inflation are still VERY LOW. The sell off we have seen in Stocks Bonds & Commodities and the valuation compression due to higher rates should see prices MODERATE in the months to come as Inflation is unlikely to surge much past 2 1/2% as structurally we are set up as in the past. Inventory build up and Constraints on oil supply may be transitory in Q2. Copper supplies are increasing to China, Texas refineries are rushing to open to get in on spreads & applications for home buying may be leveling off while inflation hedges sold off like Gold (-$46 Friday) & BitCoin (GBTC lost 22% a it traded at a Discount rather than a Premium), TSLA & the ARK funds also lost ground. IF we see S&P UNDER 3800 and VIX readings ABOVE 25-30 it is reasonable that we may NOT see a move to SP 4000 before a slide. We anticipated the year end rally & the January Effect but now & for awhile have felt collars-married puts-replacement calls have made a lot of sense. We explain to subscribers the mechanics of these hedging techniques.

Stock Market

Lots of data came out this week with claims showing a drop, durable goods (large ticket items) jumping 8% though food & services numbers were weaker. The Consumer is spending +2.4% (biggest increase in 7 months) and personal income up the most in 9 months. Inflation was up to 1.5% annualized with a big jump over the last 2 months but still below the Feed target of 2-2 1/2%. One concern is Virus Variants which some believe may pour cold water on recent improvements in Covid numbers.. we’ll see. Some of the stocks we’ll discuss are ORCL LPX QCOM KEY CME TWTR WSR UBA and GS PNC MET MMC-banks tech energy & Mid Caps and many more. Our VALUE stocks outperformed Growth in February the most in decades.

Bond Market

The story here is one we have told you about for many many months. TLT topped out at 180 on a blow off possibly generational top…when it broke 155 it cemented the next move down…we said to stay with short term corporates and avoid duration like the plague. In fact Jamie Dimon said months ago he would not touch 10 yr Treasuries with a 10 foot pole. We are oversold so a rally is always possible but we have ideas on ways to generate income so join up and check out our Focus List. High Yield is ok because the average duration is only 3 1/2 yrs and credit risk has not been an issue,, speaking of issues we saw $84 Billion already come out in high yield 2021. The 7 year Treasury auction was a disaster as it had the worst bid to cover ratio ever…no rest for the wicked as there is a 10 yr auction March 10 and a 30 yr auction March 11….hope there’s ink in that Fed printing machine. Investment grade has a average duration of 8 1/2 yrs so caveat emptor.

US Dollar/International Markets

As we told you recently the Dollar Index has been holding the 88-90 area and a move above 92 may instigate a blow out the shorts kind of rally. The yield advantage we enjoyed over Asia & Europe has returned so hence the positive spin but the fact that no one wanted our 7 yr Treasuries is trouble. The International markets were on our focus list all last year a the Dollar tanked but we have been fading it lately…the right thing to do. Brazil is in the tank but Mexico is hanging in there so far buoyed by our import lust. Subscribers get a look at our focus list in this arena so join up today.

Crude Oil/ Natural Gas

We been positive on oil for about a year but now we are concerned that Texas refineries are rushing to get back & Saudi & Russia may want to pump. Supplies dropped 8% in 2020 (something we told you would happen with all the supply constraints) as this was the first time in 4yrs for a drop. Later we should see further upside but hedging was a good idea EOM. Natural gas prices tanked in the last 10 days and we told you our favorite LNG was ripe for a pause to refresh….we do maintain a Focus List here too.

Gold Silver Copper Platinum BitCoin

Listening to our view on precious metals has saved people from getting whacked in Silver & Gold as priced retreated in both bit more so in Gold which of no surprise to us is still working off that absurd run to $2100 last year….but we do believe in it long term and now that we have lots of dry powder because we didn’t chase prices.. we will look for an entry point. Platinum has started the year off well and as long as 800-1000 holds up we believe the re-opening of car production could cause a catalytic converter squeeze on supplies. Copper is seeing supplies being sent to China causing a selloff which we told you would come as prices are way above moving averages and our stocks that we brought to your attention many months ago FCX SCCO hit nosebleed levels. BitCoin may have seen the bloom come off the rose as GBTC got hit for 22% while Bitcoin itself fell 17% due to a loss of premium in GBTC as it traded at a discount suggesting mass exodus. We told you Bitcoin is illiquid but finite supplied so EXPECT 30%-50%+ declines and use risk capital and dollar cost averaging if you want to play ball. We have a Focus List for metals-mining-crypto… so email us & Join Us Today!

Soybeans Sugar Coffee

These three markets have been great for us all year but we are concerned that Soybean prices are far from their moving averages (overbought) and we hear some grains (Corn) may be seeing demand back off due to high prices…we’ll see….a drop under 13 could spell correction. Sugar has been our buddy since 12.30 and recently hit a high of 17.52..not bad…but like soybeans..prices are far from moving averages but staying above 16 still sets up well but the 200 day is in the 13’s. Coffee has held 100-110 but has had trouble with 140 resistance.. the real money is on the other side. We’ll see if a stronger dollar and higher interest rates are catalyst to close the gap between current prices and 50-200 day MA’s. We keep up a Focus List here.

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REMEMBER There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Consult you 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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EB - February 28, 2021

I have sent numerous emails to you in order to know about your Subscription’s rate, unfortunately never received any reply!


    Jim Kenney - April 3, 2021

    Hi…did you get our email?..go to optionprofessor.com/subscribe and hit monthly if that’s your wish
    new report coming out this weekend!


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