Stocks Hit-10yr spike-Fed Tightens BUT Q4 Earnings Coming Soon!! Ideas Now? Read It

January 8 2022 Option Professor Opinions & Observations

Welcome to the New Year Everybody:):):)….We got a blast this week from the 10yr Treasury up 25 basis points!! in a week and the Fed not only tightening but also talk of running off the $9 Trillion dollar balance sheet….not exactly what long term earnings duration (tech) wanted to hear. We were way ahead of the game because we spoke to readers of energy, dividend payers, banks, industrial metals and travel and leisure ect. BEFORE they became apparent this week. While we told investors that every time AAPL has broken a trillion mark (1-2 now 3 trillion) it has been followed by a pullback and this time was no different as it dropped off 183. We have spoke about the overvaluation of stocks for a while and spoke of a Fibonacci high point above SPX 4800…all now seem prophetic. Our support in SPX is at 4655 then 4550 then 4450 (a trendline that has been good since June 2020). Are they throwing out the baby (Semis & Tech) out with the bathwater?? Maybe …we have earnings starting next week and Taiwan Semi is on deck and if they blow it out of the park…we may be singing a different tune as some believe that a short term respite from higher yields may be dead ahead and sentiment has turned extremely bearish on companies that have enormous free cash flow huge profit margins and moats around their business. REMEMBER…as we enter earnings season corporations are sitting on $7 trillion in cash and if they don’t sit on it they could spend it on capital expenditures (mergers & acquisitions) or return of capital (dividends & buybacks) or credit (senior loans). This looks good for Energy, Banks, Dividend Growers & Payers plus ETF’s specializing in Senior Loans (short duration/high yields). We’ve been at this for Decades so we are already positioned for higher rates and have dry powder ready for Semis & Tech. Many opportunities…where are they??

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Jim Kenney

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