August 6 2021 Option Professor Opinions & Observations
We got a great jobs report and better yet we got great revisions on last month as well. BOTTOM LINE-we got about a million jobs back in each of the last 3 months and wages are going up at about 4% plus participation rate is steady. The consumer is out running up debt (RECORD $15 trillion) mostly on houses-cars-credit cards. We still have about $16 Trillion in negative yielding debt and real yields are negative here big time. BOTTOM LINE- the Bond Market is a joke as far as value which makes stock valuations less of a joke. T.I.N.A. (there is no alternative for your money) reigns supreme so new highs we continue to make. Where’s the new highs on the Transports (peaked in May) or the Russell (peaked in March w/10yr Bonds)? We always say don’t fight the tape and we don’t so we love new highs in the SPX…but we’re not stupid…we keep our eyes out for warning signs….that would be drops BELOW SPX 4225 (July lows) and a warning with a drop BELOW SPX 4360 around this weeks lows. Households have tons of money to spend and household balance sheets are screaming wit real estate & stock portfolios zooming. Now here’s the important thing….did Friday tip us off on a asset allocation acceleration? Are we fading tech a bit and buying the banks (big & regional) industrials energy value & dividend payers as the yield curve steepened after the jobs report? Industrials metals had a good week too! These next few weeks before the Fed meets in Jackson Hole are key as if we take out the lows we mentioned then an unforeseen correction may arrive OR as some suggest there is a lot of reasons to see RISK ON and a stampede ahead! Of course as we speak; there is no evidence of a correction and those who live by crystal balls are destined to eat ground glass BUT our 1yr 2yr 3 yr moving averages on the LT chart are SPX 3915-3500-3271 way BELOW SPX 4400+. We have stayed bullish the entire way since we told readers LAST YEAR that OPERATING LEVERAGE created by companies with less employees and offices would lead to super profits. We saw a valuation compression happening to the high flyers and the Value over Growth 9 months ago…..but if a fire breaks out…our readers will not be uninformed.
Here is a quick overview of all the basic sectors…to get our detailed selections in each area……simply provide an email
New highs in the SPX after the jobs report put the July potential top out the window although Fridays action on the Nasdaq SPX Transports Russell were hardly earth shattering….that’s why we say let’s see how the follow through looks. Wild trading in Robin Hood made and cost investors plenty. Using a simple moving average on the 1-day 5 day gave great signals. Implied Volatility came way in on Friday. It looks like the yield curve may be steepening so we loaded up with banks bi & regional and we think industrial metals (FCX X) plus energy could get going with a bit of follow thru if not it’s no sale. We have a car company we love and a payments company to boot. We have a list of new ideas and option ideas in the detailed report so you should check it out. Next week we have 9 stocks announcing earnings so if you want to know who they are and what stocks might move…provide your email.
The Treasury 10yr went down to about 1.12% this week and snapped back toward 1.30% by weeks end. Rates are pretty volatile which may suggest the winds of change are about to blow. The world has gone mad as junk bonds provide little extra yield for the risk involved. With GDP at 6.5%+; a Treasury paying 1.29% is a guaranteed loser after inflation. The only thing that would make sense is if stocks drop as they did after Bonds rallied into early 2020 despite a strong economy…seems if smart money knew a pandemic was coming.. what do they know now? We suggest short term corporates and tax frees as a core with preferreds, senior loans high yield EM debt to spice up yields at we feel reasonable risk. Rates should be rising and the fact that they are not suggests the risk that a hit to the head is coming. We share our ideas on getting INCOME via debt & Dividend Payers….supply your email & learn more!
US Dollar & International Markets
We called the US Dollar peak in the 100-104 area and the lows at 88-90….since then we have been clear that tyhe 90 area is support and maybe there is an outside chance to rally toward 94-96 otherwise it’s stuck in the mud. Should our rates drift higher an we need to compete against a EURO that has a dodgy ECB & possible covid problems or a Yen that has negative rates or China’s Yuan where they change the rules constantly…the Dollar looks pretty good. International markets are unfolding just as we forecast as European stocks have been rising in the last month while Asia/EM have been slipping and need more time to vaccinate (Japan Korea AUS way behind). China’s changing the tax status of Baba & others so beware but our trade deficit is going somewhere…remember the end game is global boom. We tell you exactly where to go for international exposure…get the detailed report today!
Crude Oil Natural Gas
Crude oil took a tumble but the stocks got a lift. Maybe it’s time the gap closes. Demand is good in the USA but maybe China & Japan not so much. Some oil companies are announcing monster earnings and not putting $$ into exploration. We got ideas in both the drillers and refiners & E&P crowd so get our focus list and don’t miss out Natural Gas right back thru the roof (we told readers to get bullish at 2.50 now above 4!) Lots of ideas available to you!
Gold Silver Platinum Copper Crypto
Here’s where we shine as we told you for 2 weeks that the 1yr moving average was above the markets in Gold & Silver so traders should be out (or short as we did with 10 contracts in our Collective account which trades you can get access to) and on Friday Kaching we got a tank in both metals. Copper is still the new oil and we have 2 stocks we love in that industrial group. We told EVERYONE that the LOWS ARE IN on both Ethereum & BitCoin 3 weeks ago and now we got an up move…what’s next in these markets??…get the detailed report!
Soybeans Sugar Coffee
Soybeans are hanging on for dear life after peaking awhile back..we told readers to get bullish last year at 8 to 10 BEFORE it went thru the roof on eather & China demand. Sugar and Coffee still have legs but nowhere near the bargain when we told people to hook up at 12.50 Sugar/100 Coffee..what’s next..get the detailed report!
Remember All investing involves risk and it is not right for everyone. Consult your brokerage firm/broker/advisor to determine your own suitability. Past performance is not indicative of future results. Information and opinions are for informational purpose only . It is NOT advice.