Option Professor-Stock Market-Is the Easy Part of Earnings Over Now? A Must Read!
October 15 2021
Option Professor Inc
Opinions & Observations
Welcome Back Everybody!….Well maybe a trip to the Caribbean was the key to help with our clarity as in the last 10 days since we came back our insights have been spot on. Based on our 5yr chart and 24 SMA; we surmised the 4300 area must hold and a close above SPX 4355 and 4450 would cement the turn up fueled by a slew of reports that came out this week. First bank earning were dynamite especially BAC & GS but the rest were not too shabby. Loan growth and credit card usage for some left something to be desired. Inflation came out lower than expected and showed a accelerated decline from June albeit still at elevated levels. Jobless claims dropped and the Fed’s mandate to stabilize employment is done. Now it will turn the 2nd mandate which is stable prices and if they can stabilize food & energy that will be done as well. Biden is on top of the bottlenecks and when was the last time someone got the call from the government and that was about it on those shenanigans. We were in San Pedro last month and saw all the containers there so get someone to unload them and let’s go! Operating earnings are growing faster than other metrics due to something we told you about over 1 year ago —Corporate Operating Leverage! The Consumer is spending up a storm.. how do we know this?? Retail sales came out and were expected -.2% and came in at +.7% and the August numbers were revised Upward! Year over year was up 13.9% and consumer spending is the majority of our economic growth. With in 10 weeks we will have Thanksgiving-Christmas -New Years spending and it looks like money is burning a hole in the pockets of consumers. Oil prices have gone up +30% in 7 weeks and Natural Gas prices were up about 70% at one point in the same period. If this persists it would be a concern as well as the increase in short term rates as if they ever invert then a recession would loom. These are a couple of risk and the companies that must deliver items may disappoint on earning (FDX) if their costs have cause damage to the bottom line. Due to demand (orders) having outpaced the ability to deliver (bottlenecks); we may see a backlog of activity that may bode well for quarters ahead. Our call now is that we have a breakaway gap on SPX at 4360 and a runaway gap on SPX under 4450 so if we don’t get an exhaustion gap we could pull back to fill some gaps. Important levels to us are now SPX 4480 and 4510 which were support off the highs thus now resistance. We expect earnings in the next 3 weeks to be inspiring with a potential pause afterwards then a thrust into the holidays as the consumer ha funds and will spend them. We should be done with SPX 4200 handles unless energy and higher costs for corporations hurting margins emerge as the culprit in earnings reports. With all the buying this week.. we always ask who’s selling?? Smart money sells UNDER SPX 4550???
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Most stocks had a great week although GOOG AMZN MSFT AAPL still lagging the herd. Value & Dividend stocks are breaking out as is consumer discretionary, transports, Russell 2k, materials, and a number of other sectors. Get our detailed report on where and when we see the big opportunities. Go to optionprofessor.com today!
We told readers that we will stick to our guns on 1.75% on the 10 yr Treasury being the high until taken out so we viewed the move to 1.60%+ as a gift. Inflation numbers and economic comparisons are slowing which helps. Go to optionprofessor.com and LEARN how we attempt to slay the INCOME dragon with a variety of fixed income ideas.
US Dollar/International Markets
We feel the US Dollar (DXY) may be rolling over as we said that 95-96 is big time resistance and at this point we feel it will fail to exceed those levels. Support levels at 93 and then 92 and then 90 will see some buying but the reality of our deficits and money supply growth will come home to roost. Questions for us? Email us at [email protected] International markets have started a turn up including Europe. Emerging Markets & China and the Pacific Rim (South Korea Japan Australia)…..Do you want to know how we participate? Email questions to [email protected]!
Crude Oil Natural Gas
We told readers these markets would roar many months ago as lack of investment into new supplies and a demand surge leads to higher prices. Do you want to know where we see opportunity? Email us at [email protected]
Gold Silver Copper Crypto
We sent out a alert about the turn in Gold & Silver earlier this week but there is still more wood to chop before the all clear. Copper is the new Gold and is being bid up on tight supplies and huge demand. We told everyone that Bitcoin (GBTC-ETHE) bottomed in July months ago so new high no surprise to us. Email us at [email protected] com
Soybeans Sugar Coffee—-We went bullish on Soybeans last year at 8-10 and saw it run tp almost 17! Having no interest up there we said a pullback toward former resistance (now support at 12 would RENEW our interest. This month we went to the 12 area so we will keep you updated as this is the neighborhood it should find support and so far that has happened. We got bullish last year in Sugar on the breakout above 12.50 area…now it’s in a range between 19-21 for 90 days…we await a breakout. Coffee was a market we like on the breakout of 100 last year and now it is above 200 and about 25% above its 200 day moving average….weather market-South American market-caveat emptor!
Remember All investing involves risk and it is not right for everyone. Consult your brokerage firm/broker to determine your own suitability and risk tolerance. Past performance is not necessarily indicative of futures results. Information and opinions provide are for informational purposes only. It is NOT advice.