Option Professor- We Told You the TOP of the rally is S&P 4600-4675-So Far We’re RIGHT ON!

August 12, 2023


We said the market would sell off from S&P 4600-4675 zone (the high was 4631) and we have had a very nice drop of as much as 170 S&P points which means HEDGING above 4600 was a great idea at this point

We are seeing some RSI divergences so if we hold 4460, it is possible to see a rally but until price proven otherwise, respect the top at 4600-4675 and remember the 200 day moving averages are still WAY under current prices so the REVERSION risk that has begun still has an air pocket underneath current prices.

They got AAPL & MSFT to break their trendlines and if they get Meta & Google plus AMZN to give it up, a correction of size could be in the cards in the next 10 weeks. Be fearful when people are greedy and the AI panic smacked of greed. The Fed is done mantra could bite investors in the butt as 4.7% core (they had gas dropping 20+%-where are they filling up?) means that a Fed Funds ABOVE 5% is a very sticky reality.

We know the 10 yr Treasury COULD REVERT to the longer term moving averages at 3.5% to 2.5% BUT we see that only if accompanied with a big hit to inflation and the jobs market. Oil went from 65-84=no dice The Fed rate hikes kill the banks, commercial real estate and the Federal Cost of Debt Service BUT is not a big hit on the 70%+ part of the economy known as services and consumer spending. Probably won’t last

The Goldman Sachs Commodity Index turned UP in April like we told you from 528 (after dropping from 850!). The Energy sector is about 505, Metals & Grains dominate the other half. We saw Energy share rally AFTER we told you of this AND MOS DE CF have also been on a run (agriculture). Are the metals next?

We noticed 2 other developments that no one seems to have seen BUT are HUGE in our view on prices.

#1 The M2 Money Supply Growth versus Inflation TURNED UP in April (Could we see a REVERSION in M2) #2 WE told you we’ve seen a TURN in the Growth versus Value Ratio & it’s Value that’s outperforming.

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Jim Kenney

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