Option Professor-S&P 4650 by EOM or Deterioration to Downside Acceleration? Must Read!
September 10 2021 Option Professor Observations & Opinions
This is the tug of war we are now now involved with in the first 2 weeks of September…..is this a 2 week dip before a big up move going into end of Q3 OR are we deteriorating our short term graphs and will test longer term MA’s? The inflation numbers came out and they are very high and much of it may stick. The talk of higher taxes has not been factored into prices nor has tapering in our view. China is tired of being lectured to by the USA as they see we have our own problems plus at $17 Trillion to our $22 Trillion…they no longer are the little kid on the block. Will they brings ships toward Guam-Japan-Philippines and cause havoc in the South China Seas & Taiwan??…Who knows-Who’s Ready? Our view is the biggest risk to the market is VALUATION in that Barron’s had a chart last week showing the differential between the 10yr Treasury yield and the P/E ratio on the S&P 500. The chart went back decades and the spread between the 2 in our summation had never been wider….we surmise that the spread will tighten and with little appetite to raise rates the logical conclusion is that P/E’s will decline. An analyst at Citi noted a few weeks back that a normal P/E with inflation running even at 3%+ would be 18 so at 200 X 18 =3600 and even 240X18=4320…just basic math. We saw today how any news can cause a sizeable reaction when AAPL got hit regarding the app store and the stock is about 10 bucks off the highs…no big deal but if 158 is not taken out by EOM and we turn lower in October it may be. Speaking for October….it has been a tricky month so if we do run up to SPX 4650 by EOM Sept…it may be wise to look to sell calls/buy puts into that stampede as the risk reward at that point may be a bit dodgy. Our monthly graphs gave us a sell at SPX 4540 and went home accelerating to the downside…our yearly graphs have support at SPX 4450..close!!
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Briefly: the market rolled over a bit (5 days down worst since June) and now is testing longer term moving averages. What sectors look best to us & how can you protect yourself against declines…GET THE DETAILED REPORT!
The ECB hinted at tapering and the Fed will announce the same on Sept 22 after an inflation report that is scary and sticky. Nothing dramatic but if they don’t stocks may fly and yields may turn-the Dollar drops and commodities roar. Remember Powell & Mnuchin were private equity guys who are no stranger to leverage & now we are 130% of GDP!! We explain how we tackle INCOME in our detailed report…Get it This Week!
US Dollar/International Markets
The Dollar is losing altitude after a nice rally…we have a view on what’s next plus Asia Pacific & EM is coming on now and we have views on that as well….Get the detailed report and gain our perspective–Get the Detailed Report
Crude Oil Natural Gas
The ENERGY markets are at a juncture that is potentially very exciting. Some say we are headed toward 80 Crude in Q4 (weeks away) and if they are correct lots of volatility ahead (but China did release reserves) & Nat Gas is zooming lately. GET Our Detailed Report and Learn where we see the opportunities!
Gold Silver Copper Crypto
Our view has been traders should avoid the precious metals until they close and maintain above the LT 1 yr MA’s. Since that has not happened no rush here. Our view since July was that BitCoin & ETHE bottomed and so far that is accurate
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Our view was bullish over a year ago in all 3 markets and we have been cool to them in that last few months. We are in the process of determining whether the bulls are gone here or more to come in Q4…Get our Detailed Report!
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