Stock Market-When Listening to “Experts” Be Smart-Always Consider the Source! Must Read!
July16 2022 Option Professor Observations & Opinions
Sometimes we wonder if we are on the same planet as some of the “experts”. Most people you hear from are LONG stocks and LOST a very large amount of money at best on paper. The Fed has made it about as clear as a bell that they want INFLATION at 2% and last report has CPI at 9%+ and the PPI at 11%+! Unemployment is still at a mid 3% level. How’s that going to happen if stocks are going to roar back to their highs (wealth effect) & the Fed is DONE in September & will start to pivot.. Where’s the EVIDENCE? We are more than willing to get BULLISH but SPX 4000-4200-4400 are formidable opponents for now.
Every Report that comes out is cherry picked to put it in the best possible light (CPI PPI Retail Sales ect). We see the Core still way up in the inflation numbers and if you back out Gasoline prices & Food and adjust for inflation…retail sales are suspect. With the inversion in the yield curve; we’ve seen companies RAISE prices as to front run the slowdown and get the money from consumers BEFORE savings and credit dries up (did you see reserves for losses at the banks?). This consumer sentiment and future inflationary expectations (U of M) is at best stable at low levels and who made this survey the end all and be all. Our view has been that SPX either has bottomed at 3600 (soft landing) or 2800-3200 (hard landing). Everyone who is on TV or writes pricey newsletters or main street brokerage firms won’t be saying we were dead wrong, shoulda sold in Jan, and 20%+ to go! BEST DEAL was simple rolling short term T-bills-Tril$$ Saved!
Old adage; if you don’t get the joke…it’s probably on you. Who knows if the market is going to SPX 4800 or 2800? We do know that many moving averages (intermediate/long term are pointing DOWN and we are very far from the Fed’s inflation mandate. If you were ever going to front load hikes….now’s the time with jobs still plentiful, household & Corp balance sheets green,& a consumer that hasn’t screamed uncle! Things take time and to unwind 12 years of printing money and a balance sheet 2X pre covid..Patience! If a stock goes from 10 to 2 and then jumps to 3; you could say it’s up 50% but for most that is misleading.
RIGHT NOW! SPX needs to stay ABOVE 3720 & NO CLOSES UNDER 3740 BEST CASE RALLY 4100-4350. The QQQ needs to Get ABOVE 293 with BEST CASE RALLY 335-350. IWM ABOVE 182 BEST CASE 200-205. The Reality is the longer the markets stay UNDER the BEST CASE targets… the more likely we see a BREAK! With the Central Banks having printed so much money; it feels you need Marco Polo for price discovery:):)
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Remember All investing involves risk of loss and it is not right for everyone. Past Performance is not indicative of future results. Information & opinions are for informational purposes only. It is NOT advice.