Stock Market- Pain & A Hard Landing? Do You Really Want to Fight the Fed- Read Our Views!

September 17 2022 Option Professor Inc Opinions & Observations

Hello Everyone…We’re on our way to a week long holiday and most of what we have been saying has come to pass. Why more of you are not contacting us to glean our insight is an unsolved mystery?????

For a LONG time we have been telling investors in STOCKS about HEDGING downside risk and upside spikes. Has that been a bad idea??? For a LONG time we been telling investors who are in BONDS that a 0-24 Treasury ladder gives good INCOME and low duration risk. Has that been a bad idea?? For a long time we have warned investors that the run up in COMMODITIES in 2022 may be a top. Hs that been a bad idea??? For a long time we have told investors that the DOLLAR would be strong due to our yield advantage and strong economy. Has that been a bad idea??? For a long time we have told investors to NOT FIGHT THE FED in that their goal is lower inflation and slower growth & spending which at some point can mean lower earnings & tighter P/E ratios. Has that been a bad idea? Who’s views are better??

The truth is no NEWLETTER or FORECASTER will tell you to go to short term Treasury Bills and wait this tightening cycle out. Every time we get a bear market rally they can return to the old mantra of if you get out you’ll never get back in. Truth be told after the RIDICULOUS expansion of money and credit there is a better than even chance that 1962-1982 may repeat itself and the indexes may go net nowhere for a long time as we work off the hangover of zero interest rates which were a joke & has now been found out.

No doubt; still plenty of opportunities to be had but the game of shooting fish in a barrel is long gone!

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The Option Professor-Graduate Boston College-Trained at The Options Institute-35+yrs Knowledge-Share

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Talk Soon

The Option Professor

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 provided for informational purposes only. It is NOT advice

Stock Market- Rebound-Tank-Rebound-What Happens Between Now & Early Oct? Must Read!

September 10 2022 Option Professor Observations & Opinions

There is a lot going on but cutting to the chase we told everyone in our ALERTS that SPX 4350 area was a SELL ZONE and 3900 SPX area was a BUY ZONE and everything else is conversation! We have rate HIKES coming from all sides (Fed-Aussie-ECB- BOE -delayed in respect of The Queen’s passing and many more around the globe. The point is the WORLD is hiking to PROTECT TEIR CURRENCIES and to fight inflation which may be abating but far from going away. Energy prices rebounded, China economy slows, and interest rates yields eased a bit off their recent run up to test or exceed the highs. The US Dollar rolled over a bit but our economic strength and yield advantage makes calling a definitive top a bit dicey now.

If you have been listening to us; the GYRATIONS in the SPX have made sense and been quite easy to comprehend as the FIBONACCI retracements among other things have made the turns understandable. The front end of the yield curve (which we suggested for 2 years!) has been a great place to get ever INCREASING yield without duration risk to kill your principal. The SWITCH we suggested from GROWTH to VALUE in Nov Dec 2021 followed by a SWITCH back in May 2022 and SWITCH back in Aug 2022 has been great historically….that’s Tech to Staples/Dividends back to Tech and now back to Staples-Dividends.

When & if the Dollar has a legitimate turn (has hit our target around 110 with BP Euro Yen Decades Lows); the other markets like crypto & Gold & Silver may see a legitimate TURN-Dollar OVERBOUGHT-Gold OVERSOLD?? We told you the 2013-2019 time frame wore out commodities so we’re concerned a repeat.

The bullishness and speculation that comes out of the closet every time SPX rallies is suggestive to us that we may fail UNDER SPX 4200 and accelerate to the downside by early October. We don’t play hunches so we will see if we get price evidence supporting our suspicion. The Fed is resolute-consumers are spending

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The Option Professor

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

Stock Market- The Option Professor’s Tuesday’s Quick Alert Said It All…Now You Should Read It!

August 26 2022 Option Professor Opinions & Observations

IMPORTANT! Are YOU NEW to options-markets-READ THIS! EXPERIENCED-not happy-READ THIS!

Being summertime and what is occurring is what we have told investors about all year long; we will be as Jay Powell said brief and to the point. The inflation rate must decline as far as the Fed mandate is truly concerned( do you really think we can sustain an economy with prices on homes, gas, food, jobs going nuts ad infinitum?). DON”T FIGHT THE FED…so this week when we went toward the 200 day moving average AND hawkish Powell was a slam dunk…we reminded investors that the first attempt to break it FAILS and we have retrace OVER 250 SPX points off the highs in 3 DAYS! The Treasury rates are JUMPING and the FED as usual is playing catch up to market rates. BULLS say this is a dip to be bought as inflation will tank and jobs will be lost and the Fed will slow to a snails pace after September. Hey…anything can happen BUT as you go around and see prices up everywhere…who’s gonna cut unless forced to? It used to be lower for longer when the Fed was easing…so since they’re draining the balance sheet and halting the money supply is it so hard to understand it will be higher for longer & Jobs lost-possible profits hit?? We told you Tues that the VALUATIONS had jumped to about 19X on SPX and 27X on Nasdaq of 15 & 21. NOW you have higher rates potentially hitting P/E’s and a demand hit desired by the Fed hitting Earnings! RIGHT NOW! A trade range may develop (4350-3950) until Sept 21-if the Fed sez pace to slow-stocks ok. HOWEVER! If we get EARNINGS cut in Sept AND we test take out 3.50% on 10 yr Treasuries-more “pain”!

We are looking where the opportunities may be in energy (shortages) food (drought) & China (stimulus)

You should contact us an get our PDF Reports so you can LEARN about hedging & market direction views

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The Option Professor

REMEMBER All investing involve the risk of loss and it is not right for all investors. CONSULT YOUR BROKEAGE FIRM/broker to determine your own risk tolerance and suitability. Past performance is not indicative of future results. Information & opinions provided for informational purposes It is NOT advice.

Stock Market-Stocks Rollover? In January to June Perception Became Reality-Again? Read More…..

August 20 2022 Option Professor Opinions & Observations

In the movie Wall Street; there is a scene with an insightful quote by Gordon Gekko talking to Bud Fox when describing how he made money on his painting. He says the Illusion (perception) has become Reality and the more real it becomes the more they will pay. In the first half of the year the Illusion or perception was that rates would rise substantially and valuations would compress. As the first half of 2022 unfolded; the perception or illusion became more and more real and the more real it became the more selling and shorting occurred. This was a classic case of the aforementioned happening on the downside.

In June; the FED hiked 75 basis points and Powell made a comment that “at some point the Fed would slow the pace of rate hikes” which he probably said so that markets would some hope and not panic while the Fed took 7 weeks off and cause systemic problems. However; that is not the perceptive result. The Market’s perception in the last 2 months has been the Fed is about done and inflation a year out will be close to 2% and the terminal rate for fed funds is about 3.25%. We are about to see if that is reality.

THIS WEEK we got retail sales which were up .7% ex gas prices BUT were UP 2.8% in online sales and we all know that’s where a lot of shopping is done…so the consumer spends. We also saw the jobs numbers are still in line with a strong jobs market so consumers have money to spend and even if they don’t we see from credit card data they are running up quite the tab there as well. Where’s the DEMAND faltering?

In the NEXT 4 WEEKS; we will have Jackson Hole and the next Fed hike. The hikes that the Fed has done so far has NOT yielded the expected result IN FACT monetary conditions have loosened (HY spreads tighten, asset values UP 20%++, Wages up, spending up, and inflation still in the 8%-9% range-a loser.

The perception that began on a Fed comment was becoming real due to the fact the Fed was on hiatus and stocks have been bid up because of it & short covering at the 3rd highest level in 10 years (GS data)

In the next 4 weeks; we will see if that PERCEPTION will turn to the perception of the first half of 2022 and if it does the SPX 4350-4400 and VIX 19 range could turn to selling as that perception becomes more real

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The Option Professor

Stock Market-Prices Explode to the UPSIDE on Sigh of Relief-Throw Caution to Wind? Read It!

August 12 2022 Option Professor Opinions & Observations

Since we hit the lows in the stock market in mid June; there has been NO LIQUIDITY on the offer (sell) side of the market…..Why would there be?….if you held you stocks….you were underwater and living the mantra “NEVER GET OUT”…..if you were out of the market…..you had NOTHING TO SELL….if you were a trader….you were probably SHORT the stock market (particularly ARKK-Tech companies). Since the middle of June; we got Q2 EARNINGS which by no means were world beaters (some the polar opposite). BUT they were NOT HORRIFIC and everybody’ working and making money and spending on goods AND services. We then got INFLATION DATA that showed Inflation was “SLOWING” on both the consumer side (CPI) and the wholesale side (PPI) which was received like the Second Coming! In the last 8 WEEKS; we have cleaned out the shorts, got sideline money mobilized (VIX UNDER 25 breeds confidence), and put smiles back on investors faces replacing panic and frowns. A classic “FACE RIPPER” bear market rally fueled on technicals and a SIGH of RELIEF that any recession will be in 2023 (EARNINGS OK), the Fed will SLOW HIKES, the break in Inflation will ACCELERATE, and the JOBS market is BULLETPROOF. All BULLISH!

Is it Time to THROW CAUTION to the WIND? The funny thing about markets is they tend to SURPRISE Us! From January to June; stock prices tanked as investor hope was lost. July-August; Investors hope is back

Here’s the rub….

#1. The 200 day moving averages are pointing DOWN on both the S&P 500 (SPX) and the Nasdaq (QQQ)…..they also LOOM ABOVE at SPX 4350 area (also a Fibonacci retracement of SPX 4800 to 3630 or 1170 points X 61.8% or 723 + 3630 =4353). The QQQ 200 day moving average is at 343 area ( a Fibonacci retracement of 408 to 269 = 355). These may be DIFFICULT LEVELS to exceed and should be MONITORED

#2. The VIX is UNDER 20 which has occurred a number of times in the last 9 months and did not end well. In late December/early January; the VIX was about 16 and the SPX was about 4800….within a months we saw SPX near 4200. In late March/early April; the VIX hit about 18 and the SPX was 4600 and the next month we saw SPX 3800. In early June (after Memorial day rally); the VIX about 24 and SPX 4200…later that month VIX hit 35 and SPX saw 3630. RIGHT NOW-VIX 19 and SPX into 4250-4400 Zone…next month?

#3. Everybody is speaking for the Fed and seem to know that all waves will break their way. Somehow with a $5 Trillion rally in asset prices, full employment, 8% to 9% INFLATION….slower hikes & cuts loom?? The Fed plans: DRAINING LIQUIDITY (QT) & do a RATE HIKE in September…thin/volatile markets follow?Anything can happen…but if there is an Achilles heel for the bulls…this belief of the Fed is done is risky.

#4 BUYBACKS by corporations; in our view, can be at times where they should be the LEAST confident. In 2018; they bought back $1.1 Trillion (last Fed tightening) followed by $918 Billion-2019 right before DROP In 2021; there was RECORD $1.2 Trillion in Buybacks and this Year 2022 the plans are already OVER $800B! What does that mean for 2023? Maybe nothing…but it does seem their boat legs can lead to rough seas:):

The next month SEPTEMBER may be a wild one for EITHER Up or Down Markets so Caveat Emptor-Ready

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All the Best,

The Option Professor

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

It is NOT advice.

Stocks-Everyone Is Working & Everyone Is Spending-SPX 4350 or Fed Stops It? Read It!

August `6 2022 Option Professor Opinions & Observations

We’re 6 weeks away from the next Fed decision but a couple of things are becoming more obvious. The “neutral” is way ABOVE the 2.25%-2.50% the Fed said it was and to curb this kind of price/wage spiral; the Fed has to go to near 4% and maybe far beyond as we said before PUTTING ON A TRADE (adding $5 Trillion to the balance sheet) is a lot easier than the UNWIND ($90 billion a month way too slow). This week we heard ISM services was supposed to be decline to 53 and came in about 57. This told us the JOBS number would be an UPSIDE surprise as if services demand is huge they will need more people. So rather than 250K jobs it came in at MORE than TWO TIMES at 528K and the prior month was revised UP!! No need to candy coat it…3.5% rate…wages YOY up OVER 5%…participation dropped…where’s the Slack??

Truth is the Q2 earn and revenues are LOWER than 1 year ago but hardly the fall out of bed once feared. Here in lies the key to the future. We’re at 2.28 on SPX this year which puts us at about 18.5 X P/E. Next year is expected 2.45 X 18.5 =SPX 4410. The BULLS cite that the 10 yr Treasury will stay at 2.70% (33 P/E) and therefore SPX 20X P/E is ok value and that the employment pictures underwrites the earning forecast. Here’s the rub…if the Fed wants 2% inflation the 10 yr Treasury will go way past 2.70% (now at about 2.85%) and as the savings are depleted and credit cards are maxed (EOY); the consumer spending abates. Should this occur; repricing occurs. The Fed has picked a GREAT time to play HARDBALL. The deficits are LOW and the JOBS are HIGH…we got a rally restoring asset values….so hit it hard NOW while it’s sunny !

Being the OPTION PROFESSOR; we’ve kept our eyes on the VIX which BROKEDOWN on the break UNDER 25 and has now approached 20. We believe a mover OVER 25 VIX and AAPL UNDER 160-155=a rollover. The BULLS say that it’s all priced in, everybody’s in cash, earnings hold up, retail is out…UP UP & AWAY!? The BEARS say the parents (FED) are coming home in 6 weeks; even if we see SPX 4200-4400..it won’t last!

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Remember All investing involves risk of loss and it is not right for everyone. CONSULT YOUR BROKERAGR FIRM/broker to determine your own suitability and risk tolerance. Past performance is not indicative of future results. Information and opinions are provided for informational purpose only.

It is NOT advice.

Stock Market-Fed Leaves Town-No Sellers-Big Question Now-How Long Does It Last? Read It!

July 30 2022 Option Professor Opinions & Observations

We told you 54% of the S&P was reporting this week and the Fed meets and GDP & PCE & ECI was coming out……so expecting smooth sailing was foolhardy….and WOW! did we get fireworks galore!

Our VIEW has been that SPX breaking ABOVE resistance at 3790-3850 set the stage for this HUGE rally COMBINED with the VIX breaking UNDER 24-22 which both occurred. We targeted SPX 4085-4150-4295 and 4400 as most likely points where the rally ends. –In fact; the VIX & AAPL may very well tell us when the coffee (FED) shows up at this drunks party. If we see the VIX (Volatility Index) sustaining ABOVE 25+ reading COMBINED with AAPL sustaining a price UNDER 159; the stampede we saw this week may fade.

There were TWO (2) MAJOR catalysts for this weeks rally & BOTH may be the fruit of MISCALCULATIONS.

  1. The Federal Reserve (Powell) announced a 75 basis point hike (2 in a row & most since Volker ‘s 1980’s). He followed up with a “pivot” in that the Fed will be meeting to meeting data dependent rather than aggressively raising rates and “at some point” they will pause. He said the Fed Funds rate is now at “Neutral” at 2.25%-2.50% which means it is NEITHER restrictive nor accommodative policy.

OUR VIEW- Powell made it CLEAR that INFLATION & the LABOR MARKET were TOO HIGH & TOO TIGHT. He said their MANDATE was to get INFLATION DOWN to 2% and that LABOR Rates must ease as they try to get “SLACK” in the economy by DEMAND DESTRUCTION. The median INCOME in the USA is 51K a year which means that those people and those BELOW the median are SQUEEZED by Gas-Food and Rents Ect. The Fed’s been TERRIBLE AT FORECASTING so they threw in the towel after their “TRANSITORY” debacle. Unfortunately; we feel their NEW TERRIBLE FORECAST is that 2.25%-2.50% on Fed Funds is NEUTRAL. The CPI (Consumer Price Index), ECI (Employment Cost Index), PCE Index (Personal Consumption Price Index) are ALL so far ABOVE 2.25%-2.5% that to call that number NEUTRAL is LAUGHABLE:) In Fact; the Fed’s favorite is PCE which rose 1% in June was 6.8% (up from prior month) is at a 40YEAR HIGH (1982)! The Fed Funds rate @ 2.25%-2.50% is ACCOMMODATIVE and the likelihood rates will go well ABOVE neutral is almost certainty. The Fed did NOT want to leave for 8 WEEKS with financial markets in a PANIC so they threw out the “at some point we will pause” line so investors getting wiped out in June have some hope & the long held belief by advisors that you should NEVER get out of your stocks would have plausibility. Of course; at some point they will pause….at some point the Knicks will win the NBA title…maybe sooner:)

2. EARNINGS are being touted as “surprising on the upside especially with AMZN & AAPL which is almost 20% of Nasdaq. OBVIOUSLY; at SPX 3600-3800, TOO MUCH WEAKNESS was discounted as consumers continue to spend (now using credit cards apparently). Stocks with high valuations (ROKU/ServiceNow) got clobbered. Margins were a problem for some (QCOM) and ad sales for others (SNAP META). As far as AMZN’s earnings operating cash flow DECREASED 40% for the trailing 12 months, free cash flow DECREASED for the trailing 12 months, while sales INCREASED which probably relates to HIKING prices. Finally; operating income DECREASED in Q2 vs, Q2 2021 and there was a NET LOSS was $2 Billion in Q2! AAPL’s revenue was UP 2% in Q2 COMPARED to 36% GROWTH in Q2 2021. Earnings per share (EPS) was DOWN 8% YOY, I-Phone & Services revenue was UP 3%/12% YOY but DOWN was revenue in other products, Mac, I-Pad. Growth is SLOWING at BOTH companies…they’re optimistic…does that make it so?

OUR VIEW is that last year 2021 was a banner year for cheap money, valuations, asset values and NOW we are faced with earnings and profits that are at best slowing which could be a prelude to declining IF the Fed is truthful to their MANDATE of inflation fighting and creating slack in the economy. If the Fed is NOT truthful…well we saw it this week…stocks will go thru the roof…commodities too…their dilemma is more like the 70’s stagflation where they never finished the antibiotic schedule and the illness returned.

As always; The OPTION PROFESSOR has been ECOURAGING YOU to get the 2 PDF Reports and set up a REVIEW of the Markets where YOU take RISK Now Using OUR INDICATORS and OUR Views & Opinions.

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OPTION PROFESSOR-Graduate of Boston College, Trained at The Options Institute CBOE, 35+ Yrs Exp.

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All the Best!

The Option Professor [email protected]

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

Stocks- Big Week Ahead-BUT What Happens After Q2 Earnings? Boom-Bust Aug. Must Read!

July 23 2022 Option Professor Observations & Opinions

We just came off a wild week where the SPX was up 2x more than where it closed on Friday. Earnings first told us that while misses on revenue & Margins could be overlooked for growth (TSLA) BUT missing on ad sales & guidance was unforgivable (SNAP). The news this week is kind of all over the place with the ECB hiking for the first time since 2011 (50 basis points) to a grain deal from Ukraine and Russia albeit thru that trustworthy country Turkey:):). Aggregate demand in the world has pushed past the breaking point so inflation is here to stay. The money supply has come to an abrupt has and the Fed run off the balance sheet is getting its boat legs. The S&P came out with a report that the Services sector contracted to 47 (slowdown) BUT so far XLY (consumer discretionary has been fairly stable) which means investors think it’s not as reliable as ISM numbers or all hell will break lose next week. Speaking of NEXT WEEK; we have big tech AAPL AMZN GOOGL MSFT META all coming out with earnings (and a HUGE number of more companies) BUT the big boys will shed light on how the Dollar, Enterprise Spending, and dodgy Ad Spending will affect multinational & ad supported tech businesses state their present & guide the future.

We told you our position was that BONDS topped in 2020, STOCKS topped in 2021 and COMMODITIES top may be in 2022 (Goldman Sachs Commodity Index DIVED from the 800’s to the 600’s-Looks Good! NEXT UP from the OPTION PROFESSOR….A TOP in the US Dollar that may start to develop-We’re On It!

The OPTION PROFESSOR gives a lot of our INSIGHTS away for free BUT there is a way to take advantage of more detailed information. First! Get the PDF Reports on HEDGING Against DECLINES and Upside SURPRISES in the markets. Second! Use OUR Insights & Indicators to Look at All the Markets Where YOU take RISK NOW and Get an INDEPENDENT View to COMPARE to Any INFORMATION that may be BIASED.

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The Option Professor [email protected]

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

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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The Option Professor [email protected]

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.

Stock Market-Questions? The Lows In? Fade It?Earnings Start Next Week? Our Views-Must Read!

July 9 2022 Option Professor Observations & Opinions

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This Week the stock market had some gains with SPX up1.94%, the Nasdaq up 4.6% and its best run in quite awhile. We got the Jobs Report but there seems to be an almost desperate need to try to read bad things into where there is none. For instance: earnings were down a shade and many suggested this was the big turn….for heavens sake we still have 11+ MILION Job Openings!! The Fed is DEFINITELY going 75 basis points in a few weeks and the CPI next week should still be elevated with whispers of a 9 handle! The Fed is still WAY behind the market rates as the 2 yr Treasury went UP 27 basis points this week! The recession may be delayed BUT if everyone’s earning and revolving credit is accelerating (low & middle incomes)….How can the Fed get inflation to their targets. They want DEMAND to decline and truth be known they probably wants stocks & shelter to drop as well as in the 1980’s the Debt to GDP ratio was 30% and now it is way OVER 100! Substantially higher rates would drive debt servicing to crippling levels! They need help with Gasoline (only 3.9% of CPI), Food, and the Index of Inflation Expectations ( comes out quarterly out this Friday) to break to the downside. With the sad news of Abe’s assassination in Japan; some compare the run up we saw here in the USA (SPX 4800) to Japan’s run in 1990 where it was we saw it followed by slow growth (30 years to get back near the highs)…debt explodes & Govt prints/buys own debt with explosion in money supply..let’s hope not! We never saw more premature talk of a Fed pivot…this is NOT 2008 or 2020..we got huge inflation and everyone’s got a job with 11 million more to spare…the Fed is hiking until sustained evidence of lower inflation and lower consumer demand…period!

EARNINGS kick off next week wit JPM, C, WFC, UNH DAL, PEP getting us started. We will see if revenues are up due to interest revenue (banks) and higher pass throughs (UNH DAL) and we will see if margins have been pinched by higher costs and if any guidance is given. The health care sector did see 3 stocks hit new highs in Cigna, Humana and LLY. Q2 expected to see 4.1% average earnings growth rate and 10.1% average sales growth (and the Fed is going to pivot soon??). Q3 expected 10.5% earning growth and Q4 9.7% earnings growth so full year anticipated at 10.2% earnings growth…if true…Fed Hikes++++

The first half of the year was the WORST for stocks in 50+ years! we got Inflation, War, Treasury Yields Spike, Economic Slowdown. Will there be a light at the end of the tunnel and a 2nd half BULL RUN? We are seeing some signs of slowdown (Grains, Oil- Nat Gas, Lumber Industrial Metals all big sell offs) housing & rents stabilizing or fading a little bit AND history tells us AFTER a 15%+drop in a Quarter SPX has been UP 6.2% in the next quarter, UP 15.5% in the next 6 months, and UP 26% in the next year! These are Lovely Statistics based on past performance which is NOT indicative of future results. We will monitor prices and follow them where they lead. We TOLD READERS in our ALERTS that SPX had to stay ABOVE 3720-3740 ( our RISING long term averages) which it did BUT we need CLOSES ABOVE SPX 3925-3995 to keep it going. Our 12 SMA is pointing DOWN at SPX 4344 other resistance is at 4000-4200-4400 areas. The FED could pivot IF STRONG EVIDENCE slowing consumption, investment demand, labor turnover, vacancies and other factors ACROSS THE BOARD but for now no change in Fed plans a RATES are too low, inflation risk is persistent, and a soft landing still seems to be a long shot. Soft Landing? Very Complicated

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