Option Professor-Stocks-Do the Trees Really Grow to the Sky?? Must Read!
August 26 2021 Option Professor Opinions & Observations
This headline is a question we must start asking ourselves because we haven’t seen a 5% dip and certainly nothing sustainable to the downside in many many months. The perfect storm is made of great earnings and operating leverage (leaner meaner companies) and ridiculous artificial interest rates (Fed buys 120 Billion with a 6% GDP-4500 S&P??). Who knows how long this could go but the next round of where consumers will get cash for spending will probably be refis on the 20-30%+ jump in their homes plus the jump in their portfolios and savings build up from being unable to spend on dining and travel like they used to do. These bottlenecks are creating a huge backlog in orders so the futures seems awfully bright. Palantir just bought $50 million in Gold for what we read was a potential Black Swan event…..since everyone is drunk at the stock market/real estate party…..what are the sober guys thinking? Some of our guesses on unknown unknowns (Grumsfeld) are that valuations could contract as with a 3% inflation rate the P/E norm is 18. The fighting in Washington and Biden’s popularity-health are risks. All SPX target have been raised some by 1000 S&P points. The distance between current SPX and our 1-2-3 YR LT moving averages are huge. Investors are all blue skies and green lights and the sideline cash is beginning to come in and may stampede after Sept 15th as we close out Q3. The Monetary base is up 9X in the last 10 yrs and has doubled in one….Fed balance sheet is way over 8 Trillion and on its way to 10 Trillion unless the taper and therein is another risk. Earnings comparisons next year will be against this pent up demand period and become tougher. We always say don’t fight the tap and don’t fight the Fed BUT if the Fed CHANGES course and throws in the towel on fighting unemployment (10 million job openings!) mand go after price stability (the other mandate)….then the road in 2022 may have far more pothole than anyone anticipates.
We have certain sectors and hedging strategies and asset allocation models we like for the year end & 2022.. submit your email to get the detailed report.
Yields rose a bit this week which sent investors looking at financials industrials value and a catch up trade in small caps and transports. We will see how the weeks ahead unfold but get our detailed report and w will share our views. A rising tide lifts all boats until the tides change so learn how your umbrella (risk reduction when appropriate) while sun rules.
This week made the 1.12% 1o yr Treasury seem like a long ago time. We still feel that until 1.75% is exceeded it remains early to jump on the we’re going to 2%+ bandwagon. Get our detailed report on how we tackle the income dilemma
US Dollar/International Markets
We told readers that the DXY bottomed in the 88-90 range when most people said the dollar was dead. Now the 50-200 day moving average is 92.50 and 90.86 so the trend is up and the Fed may help things further. We said European stocks were the next game in town 6 months ago and they have improved (their banks are dirt cheap vs USA valuations)….Asian Pacific had the bloom taken off the rose…and EM has been challenged with China’s new policies. We see a major turn coming in international stocks..get our detailed report sooner rather than later.
Crude Oil Natural Gas
We got a big rally during the week in energy markets but now can they hold water as many of the moving averages are inverted and pointing down….we were very keen on energy and the stocks are much better run with free cash flow. We will be updating our take and our positioning in the detailed report..so get it as Q4 could get wild. Can we get to 80??
Gold Silver Platinum Copper Crypto
We told traders to stay away from precious metals until they get above the 1 yr MA on our LT charts and so far that has been a good call. Copper is the new oil and we had suggested FCX around 1 before its run to 45 but China is a factor on all these commodities and it seems they are still trying to stabilize prices…FCX takes out 38-40..game on otherwise? We told everyone GBTC & ETHE bottomed in July and may run like a deer going into year end. Get our detailed report!
Soybeans Sugar Coffee
The are known as ags & softs and we were raging bulls last year but not after parabolic moves…they may just be consolidating but crop reports and weather change will be huge..stay informed with our detailed reports!
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