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April 30 2022 Option Professor Opinions & Observations
There’s really not a whole lot to add to our basic message that BONDS PEAKED in 2020 and STOCKS PEAKED in 2021 and we expecting COMMODITIES PEAK in 2022 ( Oil Metals Grains). We spoke of these to our readers for a long time and this week we got more evidence of a slowing economy (GDP contracted). We also got more evidence of either slower earnings (AMZN Operating Income off 58%-$8.9 Billion to $3.7 Billion) and concerning guidance (AAPL- supply chains and almost 60% of business from China-Europe-Japan-Asia….all with dodgy economic outlooks). The bloom has come off the rose a bit in the commodity oriented stocks like Energy (CVX BKR) and Metals (NEM CLF) and Agriculture (ADM CF MOS) which have seen recent pull backs and depending upon how things shake out in the weeks ahead may be creating the price evidence of exhaustion in what could be peaking commodity prices this year.
As we have stated; the Fed is REMOVING LIQUIDITY and markets are in the process of REPRICING that reality. Questions abound…are the banks dropping because their is risk to the mortgages and refis that they did when rates were low now that the Fed is not buying mortgages? Have they done mortgages with loans to values that will be problematic if real estate prices buckle? Will the consumer spend up a storm or succumb to higher cost of living? Is the inflation more structural (rents, wages, PCE Index 60% HIGHER than LT Average ect) and therefore difficult to suppress? The Treasury yields continue to JUMP into new high territory for the move this month (is their a credit crisis ahead?) Defaults on HY have been near nil & that’s not exactly normal. If rates remain elevated; rolling over that debt is tough.
Here’s some numbers we are watching on the major indexes as TECHNICAL LONG TERM Support and Resistance…SPX Resistance 4434 and Support at 4000 and 3650…..QQQ Resistance 326 & 363 Support 280….IWM Resistance 215 and 196 Support 180…..SMH Resistance 270 & 233 Support 197….AAPL Support 155 135 110 AMZN Resistance 2745 3170…. MSFT Resistance 298 Support 258 222 IYT Resistance 260 Support 234 216 ….we suspect Q2 much of the repricing seen
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Remember All investing involves risk of loss and is not right for everyone. CONSULT YOUR BROKERAGE FIRM to determine your own risk tolerance and suitability. Past performance is not indicative of future results. Information and Opinions are for informational purposes only. It is NOT advice.