Jim Kenney

Author Archives: Jim Kenney

Stocks-Winning Week on Wall Street- How Much Further Can We Go & How For Long? Must Read!

June 25 2020 Option Professor Opinions & Observations

We sent 2 QUICK ALERTS out this week…the first said we needed to close above SPX 3711 (LT Chart 36 SMA) AND we needed to clear SPX 3815 (A Spike Was On!) both were sage insight into market moves. For anyone who has been LISTENING…we told readers that BONDS PEAKED in 2020 and STOCKS PEAKED in 2021 and this year we expected COMMODITIES PEAK in 2022…so everyone who plowed with the grains, fertilizers & energy have been whacked. Use your common sense; that far away from averages=reversion!

This week we got a substantial move on yields (they dropped 13%)….we got a substantial drop in many commodities (some grains back to pre Covid!) & Consumer Confidence dialed back inflation expectations. If you’re oversold (SPX at 3600); this is the tonic you’ve been waiting for and the biggest movers were tech and high valued growth/innovators(the most beaten down). The opinion now is the Fed will hike .75% in July & .50% in Sept and assess….they will see the numbers rolling over and become less hawkish. Of course all the promoters of this theory are talking heads that are long and need to tell clients they are not idiots who should’ve told them to go to cash & roll shorter term T-Bills in January but failed to do so!

The data calendar is kind of light for a few weeks and we have a long holiday which sometimes sees rallies (Memorial Day) but rest assured CPI & PPI & Earnings are coming and many are hopeful that the inflation numbers will improve & sales, margins & costs risks to earnings will be avoided-upside surprise? The BANKS come out first and we will see if Net Interest Income could jump 15%-20% this year, if the losses they carry on mortgages that lost value (rates rose-bonds drop), if the loss of refi’s is being offset by commercial loans & credit card usage-BIG RISK..have we overcompensated the risk of recession losses

Being the Option Professor; we would be remiss to not mention the VIX which in the last 2 weeks had a double top at 35 and went home near 27. The bulls say we will trade 20-25 on the VIX during the 2nd half of 2022 and the market will prance back toward all time highs. The bears say that by the end of July; the VIX will be spiking and don’t take the idea of a 40 handle off the board. Realistically; we must ask if the inflation numbers will fall out of bed (gas, food, rents ect) and will rising equities fit into anything akin to UNCONDITIONAL commitment to turn 10% inflation into 2%? DEMAND DESTRUCTION is no duck walk!

We do have a number of tailwinds currently like End of Quarter/Month Window Dressing (can’t tell clients you’re all cash)….Q2 Earnings.. some Buy Backs… some Insider Buying…Russell reshuffle…& short covering CAVEAT EMPTOR-Our Work show SUBSTANTIAL RESISTANCE basis SPX at 4100-4250 and 4450..respect it!

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The Option Professor

REMEMBER All investing involves risk and it is not right for everyone. CONSULT YOUR BROKERAGE FIRM/broker to determine your own suitability & risk tolerance. Past performance is not indicative of future results. Information and opinions are provided for informational purposes only. It is NOT advice.

Stocks-Do We Get A 8%-10% Rally Off Lows Into July 4th or Do We Accelerate Into Abyss? Read It!

June 18 2022 Option Professor Opinions & Observations

We sent out 2 QUICK ALERTS this week on Tuesday & Thursday….the first brought to your attention the bigger than expected hike by the Fed of .75% and the fact that they had a lot more hike to get to their target of 2.5% to 3% in the next 3 meetings. We told readers that a combination of hot PPI numbers and the Fed trying to get in line with market rates (we even threw in the full moon) and said VOLATILITY was going tp spike. Equity risk premium is too low and so were put/call ratios were too low. We got the Fed message and then we sent out the Thursday alert outlining how the Fed has been all over the road with forecasts and expectations and the Fed was chasing inflation like the horses chasing Secretariat in ’73:):)! This rosy forecast on inflation and unemployment is just silly as to get to the Fed target of 2% inflation without unemployment rising is aspirational at best. We have a strong dollar which hurts most big firms that get 50% or more of their revenues overseas. We have Food & Energy price that backed off this week but a blip is not a trend. Central Banks tightening into DEBT TO GDP +300 AND contracting economies. Credit Spreads are starting to blow out to 500 BPS while Ron Baron says we are at generational bargains.

The VIX hit 35 which when that happened in Jan, Feb-March, April-May lead to nice bear market rallies. There was a feel of panic selling volume this week and put/call ratios did get elevated. There are gaps above the market that could get filled. Stocks like MSFT AAPL GOOGL AMZN fared better than many. The Big IF… Bond Yields & Oil PEAKED this week…pre-holiday, pre-Q3 earnings, EOM Q2 Window dressing plus the Russell realignment and maybe some corporate buys could aid a rally toward SPX 3900-4150. Our long term charts have a rising moving average at SPX 3711….if you’re bullish…above that level good.

The Fed is committed to get inflation down and they have been dealt a bad hand (oil-food-war). On Friday; interest rate sensitive markets (ARKK Travel Cyber Cloud China Solar) moved up.. but next week??

At the end of the day….we’re UNDER most important Moving Averages and most are pointing down. Yes….we are oversold by some measures but the risk of huge UP or DOWN moves are as great as ever!!

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The Option Professor [email protected]

Remeber All investing involves risk of loss and it is not right for everyone. CONSULT YOUR BROKERAGE FIRM/broker to determine your own risk tolerance and suitability. Past performance is not necessarily indicative of futures results. Information & opinions provided for information purpose only. It is NOT advice

Stocks-The Option Professor Warned You & Encouraged HEDGING for a Year! Read More!

June 11 2022 Option Professor Observations & Opinions

The stock market got whacked in the last 2 days for about 5% of it’s values. The CPI came in hot and prices are rising on just about everything. On Wednesday we wrote a QUICK ALERT to our readers that a turnaround Thursday & Blackish Friday may be in the cards (especially if we remained UNDER SPX 4180!). This idea of a Fed pause (the balance sheet and Fed rates haven’t even budged) we said was aspirational. As far as inflation peaking and a swift decent; that also was concocted by people who desperately need a rally not those who realize….inflation is persistent and the economy/earnings will be slowing/P/E’s tighter. We are humble around here but we are from the Show Me State (Mo.)…break above SPX 4180 & we’ll see. The idea is you can’t get to Boston from NYC without going thru Connecticut…so let’s catch the bus there. The last time we had headline inflation (8.6%) and Core inflation (6%) at this differential (2.6%) was in the 1970’s into 1980 and we had a thing called Stag-Flation-stubborn prices/fading growth-sounds like NOW!

We have been barking about the P/E ratios for a couple of years and rather than the boy who cried wolf-all you needed was to be a little patient AFTER the Fed did a pivot in Nov 2021…then HEDGE or GET OUT! Where’s the bottom? What a silly question…nobody knows….but we do know the trend is down and we know inflation is persistent and we know inventories are rising & hiring is slowing and margins are tighter. We know P/E ratios overshoot to 14X-16X and earnings are 2.35 on SPX this year and 2023 needs a shave. Why is the Fed so slow on hiking (balance sheet hasn’t budged & Fed funs is 3/4%!)? Our view is they are PETRIFIED the asset bubbles they created ( stocks-bonds-real estate) would COLLAPSE with normal rates! We actually agree with them. The STOCKS & BONDS are off to their worst start in decades w/ 3/4 Fed rate

We told reader BEFORE the drop in stocks & bonds that this was the year of the Will Rogers theory which is you should be interested on the return of your money not the return on your money. We Can Help!

Get the OPTION PROFESSOR PDF REPORT “How to HEDGE Against Downside RISK & Upside SURPRISES” Get the OPTION PROFESSOR “BEST IDEAS for the Current Market in STOCKS-INCOME-ENERGY-GOLD ect. LEARN How a 1 on 1 30+ Minute Q& A with the OPTION PROFESSOR-Review Your Ideas- Get Our Views!

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The Option Professor

Stock Market-In the Next 4 Weeks-We Will See Push Come to Shove-Are You Ready! Must Read!

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June 4 2022 Option Professor Opinions & Observations

The stock market has been like Milford Sound New Zealand where they say if it’s not raining…it will be:):) After the pre holiday panic; this week we lost some ground….last week we made ground—-WHAT NOW?

PUSH WILL COME TO SHOVE is a possibility as we have nothing but variables ahead-HEAR BOTH SIDES!

The BULL side is that the markets have DISCOUNTED much of the Fed action and VALUATION repricing. The Jobs Report we got will be viewed as the last great one (postings are slower). Inflation will ROLLOVER due to a build in inventories (discounting) and once consumers see discounts on cars, furniture, durable goods, and housing…inflation will back like the lead horses in this years Kentucky Derby:). Labor will ease as more come back and a freeze on hiring and projects occur. A couple of helpful things like a drop in oil and resolution in the War (13 weeks old) wouldn’t hurt either. China coming back online (Starbucks just reopened stores). Positioning is near record lows & bearish sentiment is great & recession fears unfound. Corporate buybacks expected to be $1.2 trillion annualized and rebalancing of stock indexes and ETF portfolios plus EOQ window dressing. The Fed will see fruits of tightening & pivot/pause after Labor Day. WOW…that’s quite a story to compete with…it’s the story of those long stocks & SPX EOY goal 4800-5100.

A pancake always has 2 sides….let’s check out the BEAR side and see what they have to say. Let’s start with INFLATION that’s 8%+ (really…rents-food-gas-car prices-housing-travel & leisure ect up 8%..where?). There is so much demand acceleration (JOBS at best level 50 yrs-INFLATION highest in 40yrs and the LARGEST Fed Balance Sheet EVER by about $4 trillion bucks!). Do you think the Fed can get the inflation rate down WITHOUT the unemployment rate jumping, shrinking the balance sheet (remove liquidity), slowing GDP? There is a structural shortage of oil (despite add by OPEC) and food as well—inflationary! The VALUATION argument is as follows…..higher interest rates/lower valuations…so at 2.30 earnings on SPX at 18X = 4140 (we’re here!)….at 16X = 3680…at 14X = 3220…do get the idea??…What if earnings get CUT and valuations CONTRACT?? What if China’s reopen & the War break badly? Credit Card usage indicates maybe consumers have gone thru their cash and maybe sentiment bearish but have they sold?

There you go 10 lines for each view (whatya expect I’m a Libra:)….so how do you make sense of all this??? OUR VIEW- The MAY LOWS in QQQ (Tech) was 280….must hold 290…..IWM (small caps) LOW was 170 must hold 182….SPX LOW was 3800…must hold 3720…BEST CASE we get that & close ABOVE May’s highs and we continue higher albeit choppy toward resistance at SPX 4450 then 4631 then 4800…..HAPPY DAYS! WORST CASE…the unwinding of the balance sheet and getting DEMAND DESTRUCTION is painful which leads us to a break of SPX 3800 & interest rates spiking & EARNINGS revisions & VALUATION contraction.

We spoke in JANUARY 2022 of these BEST & WORST scenarios.. things change in life–the bulls hope so:)

The OPTION PROFESSOR offers a PDF REPORT “How to HEDGE Downside Risk & Upside SURPRISES” We also offer a 30-45 minute 1 on 1 SESSION to review your investing problems, dreams and goals.

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The Option Professor

Remember All investing involve risk of loss and it is not right for everyone. CONSULT YOUR BROKERAGE FIRM/broker to determine you own suitability and risk tolerance. Past performance is not indicative of future results. Information and opinions are for informational purposes only. It is NOT advice.

Stock Market-Why Such A Big Rally? Positioning & Liquidity…Trust It & What’s Ahead? Read This!

CLICK HERE TO DOWNLOAD THE FULL PDF OF THIS UPDATE

May 28 2022 Option Professor Opinions & Observations

We just got the biggest rally this week in a long long time. We told readers that when the 10 yr Treasury backed off its extreme overbought condition at 3.20%…we got the green light for the pre holiday rally. If you use your common sense; you can see that the extreme rally followed 8 weeks of extreme selling. With the high volume selling that occurred when the 10 yr Treasury yield was making new highs and the SPX was making new lows; anyone who has been around the block knew that if rates ease; a rally ensues.

It is amusing to us (decades of knowledge & experience) to hear that these companies are now great, the Fed is going to pivot/pause (they haven’t even hiked yet:):), and inflation has peaked and we’re roaring. Do you know what’s happening in the month of June??? The Fed is hiking interest rates and doing QUANTATIVE TIGHTENING and the CPI is coming out. One of the Fed guys (Bostic who DOES NOT even VOTE) says he thinks we should pause in September….What does he know and what authority…NOTHING!

Powell has made it clear that they want INFLATION to go down toward 2% from 8%-15% where it is now. Do you think the stock market going to new highs, household saving declining back to 2008 levels (spending) and credit card usage-availability & exploding retail sales off the charts helps the Fed’s goals?

Short covering, high frequency trading, and spec buying, end of month window dressing (are you going to tell your boss you are in cash as the SPX rallies 350 POINTS!!) has its limits will take us only so far up. The SPX has technical resistance at 4177 and then 4270 and 4396 and 4450 so the hurdles are waiting. As we saw when we got that suckers rally to SPX 4631…the market can break thru resistance sometimes but if it is a FUGAZZI RALLY..down it comes..if not..is the Fed is for real (who knows?)…their mandate is cooked

THIS TUESDAY MAY 31st…the OPTION PROFESSOR invites Investors to a FREE LEARNING WEBINAR!!

LEARN our views on Stocks Bonds-Income Growth Value International Markets Energy Gold Ags Crypto LEARN—USES & RISKS of OPTION STRATEGIES from Spreads to Writing to Rolling to Hedging & MORE!

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Option Professor

Remember All investing involves risk ect.

Stock Market-What Do You Know About Downside & Upside Risk Management? Read

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May 20 2022 Option Professor Opinions & Observations

IMPORTANT-Go to optionprofessor.com and get “How to Hedge Downside RISK & Upside SURPRISES”

Another week in stocks and more new lows to boot. We’ve told readers for such a very long time (pivot was Nov 2021) that when the Fed REMOVES LIQUIDITY that things don’t go up in VALUATION and when you throw in INFLATION we see PROFIT MARGINS get hit (WMT TGT). You can get a headache and LOSE A LOT OF MONEY listening to TV touts, investment firm fronts, and newsletter perma bulls keep talking of bounces and bottoms to keep your attention or your money. With us…….you can’t snow the snowman:):):)

GOOD NEWS THIS WEEK- we have created a LINE IN THE SAND in the INTEREST RATE MARKET which is the US Treasury 10 year yield at 3.25% (closed UNDER 2.80%). Why is this good news?….because it MAY put a TEMPOARY FLOOR at SPX 3800 and help the interest rate/duration-earnings damaged TECH SECTOR (28% of indexes) stabilize and at least create a TRADING RANGE before the realities of high inflation, tight labor market, energy & food, more valuation compression slap the market once again. We have said BONDS peaked in 2020…STOCKS peaked in 2021…and we look for COMMODITIES peak in 2022!

In case nobody told you…..the CREDIT MARKETS rule the economy, valuations and much more. Do you think your stocks, your house and everything else dealing with BORROWED MONEY would have risen from 2008 to 2021 without near ZERO interest rates, an EXPLODING money supply and low inflation? Well, Pancho & Cisco (low rates & low inflation) have left the building. When will the markets bottom??

The truthful answer–no one knows–BUT has staying on the Titanic because one day they will dredge it off the bottom to resurface one day been sage insight? We’ve ENCOURAGED you to LEARN HEDGING!! Do we see any TV guys, investment firms, newsletter guys tell us about UP-DOWN RISK MANAGEMENT?

IMPORTANT!-Our view is that a parabolic VIX, News Event, Fed interceding would be present at BOTTOMS IMPORTANT!- We have DATA on an INTEREST RATE DIFFERENTIAL that was present at the LOWS around 1975, 1982, 2002, 2008, 2016, 2020 that we believe we may have to see RISE prior to a STOCK BOTTOM

Go to: FREE WEBINAR- May 31st…….GET the LINK at optionprofessor.com…..submit email and valid phone Topics will includes HEDGING…STOCKS…OPTION STRATEGIES…INCOME…Oil, Metals, Ag-Fertilizers, Bitcoin! The OPTION PROFESSOR has Decades of Knowledge to share and has Educated Thousands Worldwide!

Remember All investing involves risk of loss and it is not right for everyone. CONSULT YOUR BROKERAGE FIRM/broker 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.

Stock Market-Liquidity Providers Win Again! Did You Get Our Best Strategy This Week? Must Read!

May 13 2022 Option Professor Observations & Opinions

IMPORTANT! Before we get into the updates this week….we feel it is important that we REMIND everyone about the QUICK ALERT sent to everyone on THURSDAY this week AND the LEARNING OPPORTUNITY. Within the ALERT; we said it was time to understand the CALL SPREAD RISK REVERSAL options strategy. In short; the trader SELLS an out of the money PUT (cash secured) and RECEIVES the premium for agreeing to buy the stock at a discount (lower strike price than current price). The trader uses that premium and BUYS a Call Spread above current prices. In the last 48 hours; this has been an outstanding idea so far. The risk of loss is the stock trades UNDER your put strike price which in turn is your cost basis if put stock

IMPORTANT-There is no option strategy that is right for everyone. You need to LEARN & UNDERSTAND. The OPTION PROFESSOR has a 30 minute one on one Q & A SESSION where you can GET EDUCATED!

Let’s get into what happening now. WHY DON”T THEY TELL YOU TO SELL? Not too many people in the investment world have a vested interest in having investors roll 90 day Treasury Bills or limit your sectors. Whether it be TV stations wanting your eyeballs every day, investment firms wanting your accounts and fees or newsletter writers who have charged an arm and a leg for information that is losing you money.

This has been our view; The BOND market peaked in March 2020 and after we broke 1.75% on 10 yr Treasuries we have been off to the races for higher yields (that was November 2021 also when the Fed PIVOTED to fighting inflation). The Fed is no longer buying Treasuries & Mortgages (mortgages up 50%+ from the 3’s to the 5’s). More concerning; the corporate and municipal bond markets are dealer markets which means companies that provide liquidity are now responsible to provide liquidity in the event of an avalanche of selling should a chunk of debt issued in the last 12 years of low interest want out as they see their coupon is low and their principal is going in the tank. Junk Bonds, EM Debt, Munis, Preferred’s, Short Term Bank Loans and others could have issues if the Fed normalized rates to an inflation rate of 5% to 8%. Do you think an economy with this tight labor market and consumer balance sheet will need just a 2-2.5% fed funds rate to slow it down? Do you think the Fed is kidding about getting cooling demand & labor? In this environment rolling a 0-24 month Treasury ladder or Ultra Short Term (1 yr duration) made sense.

Our view on most of the STOCK MARKET has been that SPX PEAKED in 2021 essentially and with cheap money GONE and inflation UP; VALUATIONS were coming DOWN. They certainly have done that and we noted that during inflationary times the P/E ratios can be 14X-16X and the 25 yr LT average is about 15. AS we said; SPX earnings expected $2.30 this year so at 17X =3910 (we’re here!) 16X =3680 14X=3220. Some sharp people believe the LOWS come when we get capitulation (VIX 40-50+) followed by news (Fed rescue or something?) followed by bad earnings that see the stocks rise afterward….a lot missing here? Our view has been the Energy, Food, Staples Utilities, and Dividend Payers has been the best places to be. RECESSION RISK- Here’s the rub.. we hear recession risk is 30% for ’23 BUT historically when we have seen Unemployment Rates UNDER 4% and Inflation ABOVE 4%…historically Recession Risk could be like 100%! Rising Tides can lift all boats but an iceberg can be tough to negotiate.. the 2nd half of ’22 could be great IF Inflation DECLINES & the Fed has to do less not more…..if it breaks bad…LEARN how hedging works!

We are on the look out for a COMMODITIES PEAK in 2022 as a slower economy and changes in the supply demand dynamic could leave some people holding the bag. Right Now; there is talk of shortages of oil (Russia-refineries), shortages of agriculture (War-Weather-Fertilizers-Stockpiles), Industrial Metals and the prices are very high. BUT we have noticed the Goldman Sachs Commodity Index high point (2008) in intact and some stock in agriculture (CF ADM MOS) made their highs in April and in Oil (HAL SLB XOM) they did as well. The metals (CLF X NEM) also saw their best days in April so unless a parabolic hyper inflationary prices lies ahead & we will then see if Commodities are also a Fed tightening casualty.

The OPTION PROFESSOR Created PDF REPORTS “How to HEDGE Market Declines & Upside SURPRISES” AVAILABLE NOW! Have an EASY 30 minute one on one Q&A Session with the Option Professor where you LEARN MORE–Option Strategies, Indicators, REVIEW your strategies/what choices/questions & MORE!

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The Option Professor

Remember All investing involves a risk of loss and is not right for everyone. CONSULT YOUR BROKERAGE FIRM /broker to determine your own risk tolerance and suitability. Past performance is not indicative of futures results. Information & Opinions are for information purposes only It is NOT advice

Stock Market-How to Survive the REPRICING Due to Liquidity Removal By the Fed? MUST READ!

May 7 2022 Option Professor Opinions & Observations

Well…It’s the First Saturday in May….so the good news is we get the “Most Exciting 2 Minutes in Sports” as today is the running of the 148th Kentucky Derby…….so pour yourself a Mint Julep and Enjoy Yourself:):)

We also have had 19 Bear Markets in the stock market over the last 140 years lasting an average of 290 days and an average of about a 37% decline…..we’ll see how number 20 plays out. The Fed came out this week and did their telegraphed 1/2 point hike but Powell had a senior moment and said the 3/4 point hike was not presently being considered which gave us a multi trillion dollar whipsaw in the markets. He stated accurately and was confirmed in the jobs report that the labor market is white hot (2x the jobs available to job seekers plus participation rates and quits remain high). This puts labor in the control position and assures us that inflation will be stubbornly high. The market know has known since the 10 yr Treasury got ABOVE 1.75% LAST YEAR that the destination of interest rates is Higher if demand is to weaken a is taking the Fed’s slow boat to China approach but rather is saying Let’s Get on With It!!

If you’ve read these updates for the last couple years…..you know our position on the markets and what we have suggested as a reasonable anticipated outcome. From 2008 to Nov 2021; the Fed gave us Free Money and we had Low Inflation and High Valuations. We warned investors that VALUATIONS were unsustainable and would contract and the SPX & QQQ ect. were so far ABOVE their moving averages that a REVERSION to the MEAN was inevitable. We said the Bond Market peaked on 2020 which is exactly when the Commodity Markets BOTTOMED (remember -$37dollars Crude Oil & OXY ect on the verge of bankruptcy!). We told everyone who’s listen that with no drilling and demand strong where else would prices go? We said that 2022 was the year where Will Rogers investment philosophy would prevail “I’m more interested of the return OF my money more than the return ON my money”.

Will the stock market stage a bear market rally by the end of May?…..Maybe?…should SPX hold 4037 and start closing above SPX 4220 a bear spike to SPX 4350-4450 may occur due to positioning and relief rally.

Our view since last year has been encouraging investors to Learn how to HEDGE Downside Risk and UPSIDE surprise via Replacement trades and many of you have thanked us for the information. We also have said that if you want to stabilize accounts…a short term (0-24 month) Treasury ladder since January would do the trick. Should an investor want to navigate this environment….staples, utilities and solid dividend paying stocks along with Energy Agriculture & Industrial Metals were the ways to go. Right On!

If you are looking at stock & bond salesman on TV or advisors in the brokerage firm to tell you to go to cash and wait out this repricing….you will be waiting for Godot….never happen…..no eyeballs for TV and no revenue for the brokerage firms. Truth be told….that is exactly where most investors should have been.

The SPX has support at about 4000 and 3700 so it is possible most of the decline may be behind us if 2 things happen in the 2nd half of 2022…Inflation rolls over & the Labor market softens…either not for sure

The OPTION PROFESSOR invites you to get the PDF REPORT How to Hedge Downside Risk & Upside Surprises. Also a PDF REPORT on How to Protect the Cost Basis of Stocks & PDF REPORT-Technical Signals

GO TO..optionprofessor.com & Submit your email & Valid Phone & learn how to get these in your INBOX The winds of change are blowing in the STOCK-BOND-COMMODITIES Markets….Educate Yourself Today!!

Thanks!

The Option Professor

Would you like our opinion/or have a question? Email us [email protected]

Remember All investing involves risk of loss and is not right for everyone. CONSULT YOUR BROKERAGE FIRM/broker to determine your own risk tolerance and suitability. Past performance is not indicative of future results. Information & opinions are for informational purposes only. It is NOT advice.

Stock Market-There’s A Reason We’ve Encouraged Learning to Hedge-Must Read!

FULL PDF: HERE

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

The OPTION PROFESSOR Created PDF REPORTS the help EDUCATE Investors-How to Hedge Downside & Upside Risks and How to Protect the Cost Basis with Covered Calls….Collars & Married Puts and Replacement Trades & Much More!

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The Option Professor

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.

Stocks-We’ve Urged Investors Learn About Hedging-Now You Know Why-Read Now!!!

April 23 2022 Option Professor Opinions & Observations

We spoke of a BOND MARKET TOP in March 2020 and the market prices have gone DOWNHILL ever since. We spoke of a STOCK MARKET TOP in December 2021 and the market prices have gone DOWNHILL overall ever since. W have spoke about a COMMODITY MARKET TOP in 2022 and we monitor what we suspect is a TOP during this year.

Due to that FACT; our opinions have been to prepare for LOWER prices; the Urging to LEARN HEDGING of Downside RISK and Upside SURPRISES has been…to put it lightly….a good idea. On top of all that…we said FULL MOON Sat 4/16:):

Some people say that the Nasdaq drop like this historically has been followed by a rally in the subsequent months. maybe but what we know is the Fed is REMOVING LIQUIDITY in BOTH Treasuries & Mortgages which has been bring ASSET VALUES down (look at stocks and real estate sales). Why are companies that announce great earnings going down? In our view because something we told you about LAST YEAR is coming true….VALUATIONS are going LOWER and must if the Fed has a snow ball’s chance in hell of succeeding in the fight on INFLATION. We Said BASIC MATH SPX earns $2.30 this year X PE 20 =SPX 4600 or X 18 PE =SPX 4140 or X PE 16 = SPX 3680 or X 15 PE = SPX 3450!!! The FED’S biggest problem is they have been TOO SLOW…we said the 2yr Treasury is pushing 3%…what’s 1/4 point hike….some kind of a joke??….Where’s the INTRA MEETING HIKE…that we said was OBVIOUS?? NOW Tail Wags Dog!! Prices went up since 2008 as RATES were at ZERO & NO INFLATION….Stock DIVIDENDS were 4% ABOVE Treasuries BUT now they are EVEN so Bye Bye YIELD ADVANTAGE!! The IDEA is to DUMP Stocks and START LOOKING to lock in YIELDS if you believe we will see a SLOW DOWN minimum or a RECESSION Ultimately. We been doing this investment thing for Decades…It’s not our first rodeo:):). If you think the stuff that went on in 20202 and 2021…no earnings, high valuations, meme stocks, quit jobs/trade stocks ect is returning soon.. meet us Starbucks-we’ll get you a cup of coffee:)

When the market indicators are constantly being compared to 2000 as far as we haven’t seen VALUATIONS like this ever or since 2000 and that was a massive TOP. When they keep referring to INFLATION rates and Volker and the early 1980’s when rates went to 16%+….then maybe we shouldn’t be too shocked when STOCKS & BONDS come DOWN:):)

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The Option Professor [email protected]

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