Option Professor-Pullback Done or Rollover?-Must Read

March 5 2021 Option Professor Opinions & Observations

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Greetings!….Well we told you last week that S&P 3960 could be a top as some cyclical studies have this time frame as a period of correction that COULD take us to 3500-3600 at first blush…..followed by a rally….followed by ultimate lows for the pullback in the May-June time frame. The last few years have seen March-April a bit rocky and you all have been told the story—tech -growth valuation will COMPRESS as yields rise and a switch to VALUE-BANKS-ENERGY-DIVIDEND PAYERS will unfold-exactly what has occurred. Whether it be the ARK funds or Tesla or ZM….we have corrected. We have told you this for MONTHS. This upcoming week is potentially pivotal in that their are 1-2-3 yr MA’s on the 1 yr graph all coming in at S&P 3840-3880 area PLUS highs at S&P 3915 3940 3960…..the VIX still holding ABOVE 20…..so we are saying that if the market can take OUT those areas we will not step in front and will open are eyes to the S&P 4000-4170 potential…..but China’s talking about avoiding bubbles & Powell seems to be sanguine about rate jumps and selloffs so maybe a cooling off period BEFORE the 2nd half pop is in the cards. Growth is 2/3 of many indexes so if repriced valuations continue–hard to rally far. Long term we believe in the bull market but the road may not be as smooth as glass…we saw a selling vacuum this week on rates and a buying vacuum on a jobs report suggesting the service sector is going back. No surprise there as we anticipate a collapse in the unemployment rate by year end and a spike in GDP fueled by record household saving and personal liberation. Where are you positioned? SUBSCRIBE to get our FOCUS LISTS & Add Value.

Stock Market

Since March-May 2020; We have told readers that EARNINGS would get back to peak levels & more quickly as the speed of the decent would be matched by the speed of the ascent…WHY?…because the key OPERATING LEVERAGE would allow it as less employees & office space would pay off. We told you that the STEEPENING of the yield curve would be welcomed by the Fed and that Banks cyclicals & dividend payers (VALUE) would see a resurgence and tech & growth were way ahead of their skis (value added opinion if heeded). There is a graph on Russell Value compare to Russell Growth and it memorializing the TURN of our Opinion that a MAJOR turn has occurred and those sectors MAY be the new growth engines for many portfolios…..we still believe in the barbell approach BUT value may be the 30% of the index that gives the boost as we reopen. SHORT TERM…we consider trim and hedges on the banks & energy sector as rates may not spike further and OPEC is just waiting for the summer driving season to supply the market in our view and unanimity of bullishness is getting hot. Unusual option activity was rampant this week including INFY VWAC. Many stocks were of interest to us including ORCL CAT BUNGE ADM Senata TMUS XOM GE HP TGT ….HAL APA DVN plus LEN LEG FCX AUY NOK EUFN & more SUBSCRIBERS get our PORTFOLIO ROADMAP-email optionprofessor@gmail

Bond Market

A lot of people are LOSING MONEY in Bonds. This was something we warned about for many many months. The 10 yr Treasury made new highs in yields but are still in an area of resistance as many people are jumping on the 2% bandwagon…TLT held it’s lows @ 136… so let’s see if it wants to go to the 130 area (2017 highs)….we told readers for about a year Bonds were in trouble as the blow off high at 180 and the huge BUBBLE of debt at low yields had to end badly…and it continues as joke companies borrow at dirt yields (RECORD Junk issuance this year)….if we get growth & inflation (due to shortages & demand)….imagine the selling of people who want out….however since money market funds pay practically ZERO…corporates bonds & french pastry junk is the new money markets. PGIM thinks that after the stimulus wears off yields on 10yr back at 1%?? Next week we get auctions 10-30yrs….the better come off better than the 7yr EM debt has been tanking.. but stuff that doesn’t not have much DURATION risk have hung in their.. things we spoke of like HY/VFSUX/PFF/VMLUX and Floating Rates-FFRHX-IF we turn DEBT into a bear….they all may get nailed. Are you interested in Income…Be A SUBSCRIBER–JOIN US-get-FOCUS LIST

US Dollar-International Markets

We have told you for awhile that the DXY 88-90 area was support for the Dollar and the whole world was short…leading us to a counter trend rally that if it could take out 92 may wipe out some short but NOT put us in a sustainable uptrend. We peaked thru 92 BUT closed under so if the breakout of 91.50 hold we still could see further strength as our YIELD ADVANTAGE has returned…one of many reasons we tanked from 104. The Japanese Yen has been firm (our thirst for their products) but the European currencies (Euro-Pound Sterling) plus the Canadian & Australian currencies have lost altitude. In World Stock Markets; China-Asia-Emerging Markets Brasil-Mexico have been losing ground while Europe is hanging on by the skin of their teeth……while their VALUATIONS are compelling; we have a Dollar rising & the ECB is pulling back plus their Covid Exodus has not been a rocket ship at all. One country on the upswing is Chile (ECH)-up 5+% so far China has a meeting going over their 5 year plan to cover EV’s, HK elections, tech independence, carbon emissions, wide bodied aircraft, AI Robotics-components, digital currency, bio-pharma, advanced medical devices ect. With our PORTFOLIO ROADMAP; we share our ideas with SUBSCRIBERS

Crude Oil Natural Gas

Everyone was shocked this week when OPEC decided NOT to increase production & west Canadian oil sand cut production as well….let’s put our common sense hats on for a minute….would you hike production now BEFORE Covid ends & the summer driving season or would you squeeze prices further creating higher prices going into the DEMAND period and then hit the market when prices are good & buyers are prevalent?? So be careful at 70 & above on WTI as Texas has thawed and summer is ahead. We did have a RECORD drop in supplies so like MANY markets the SUPPLY CHAINS are choked but that is not a permanent calamity….be aware of that. We have been bulls since last March (-37 a barrel) and our FOCUS LIST has been a true All-Star but are monitoring this run as we have come a long way fast. We told you Natural Gas has lost its legs lately BUT not out standard LNG who made new 52 week highs Friday (up almost 3oo% from lows) but hit almost a 40% premium to the 200 day….maybe time to protect. SUBSCRIBERS are updated with our PORTFOLIO ROADMAP…..email to join

Gold Silver Copper Platinum BitCoin

Gold & Silver hit the skids again this week….no surprise to our reader as we told you since the run up to Gold $2100 & Silver $30 that they were way OVERBOUGHT and would take a period to work of excesses & AVOID THEM ….exactly what has gone gone on…..NOW we are becoming more interested as we are closer (broke some) of the MA’s and we MEASURED the GOLD rise from $1040 to $2063 and took a 38.2% correction…..we get $1675….Friday we got close to that neighborhood and bounced….GDX around $30 was our target so we are sniffing around and like Silver ABOVE 22-24 & PLATINUM $850-$1100 as a potential lows. Next week we’ll get more important price evidence….while we still believe there could be a future in precious metals.. our concerns that inflation is transitory/safe havens lost luster/higher yields could mean higher dollar/and remember the last time Gold spiked (2012) it took 8 yrs to get your money back..believe true breakout is above 1850-1950 Copper bounced this week after tanking on news of supplies hitting China. We warned that our favorite FCX which has been on our FOCUS LIST for over a year was getting into rarified air so trim/hedge was in order. BitCoin which we use GBTC as a proxy for has ben very volatile and while we were very BULLISH at 10-20 (10000-20000)…we told readers avoid buying on strength and WAIT for inevitable DROPS of 30-50% which we’ve had 2 this year already…..very ILLIQUID as finite supply in the hands of a small % and therefore risk capital dollar cost averaging has been out mantra…adoption is growing and some say 100K by EOY is still ok in the year after halving. SUBSCIBERS get FOCUS LIST in these….email us at optionprofessor@gmail

Soybeans Sugar Coffee

We have told readers about these three markets for the last year & the three Amigos have been very very good this last year as demand has trumped supplies and all three still have shown legs in the last month. HOWEVER we see that all three are substantially above their LT MA’s which opened the door for pullbacks. Soybeans got great news out of Brasil that weather was killing their crop…let’s see if it takes out 14.50 or fails under 13.75. Sugar is above 16 (former resistance) and maybe the weather in South America will help while Coffee needs to break above 140 to see a possible spike and this week it faded. LEARN MORE..email optionprofessor@ gmail.com & JOIN US!

REMEMBER There is a substantial risk of loss in short term trading & option trading and it is not right for everyone. Consult your brokerage firm and your 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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Donald Newman - March 6, 2021

Like your updates.
still use your option disc.s got from your years ago.
Kept up the good work.


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