March 12 2021 Option Professor Opinions & Observations
Welcome Back Everybody!…Never a dull moment in these markets huh? This week was no different as the Transports & the Russell were not to be denied and after a rough correction tech & growth got back on their feet. The S&P took out the 3840/3860 range igniting a rally to new highs but the VALUE-BANKS-ENERGY-DIVIDEND Trade that we talked about for MONTHS continued to be a great winner for us and our readers. The Jobless Claims came in good (we expect the unemployment rate to collapse by year end) & Household net worth rose 6.9 Trillion in Q4 so you know the Wealth Effect Plus Stimulus Plus Patient Fed Plus Economy Reopening spells GDP spike. The Millennials have been opening up trading accounts in record numbers and have use option trading to leverage their opinions. Bonds area loser and if we accelerate through TLT 135…an exodus into our groups should continue. POTENTIAL big story at the end of the month (Q1) is the huge MOMENTUM FUNDS may allocate less into tech & growth and more into Energy & Banks (we’re already there)..that’s where the momentum lives. There could be years of runway ahead as the roaring 20’s actually got its legs years after the pandemic. BIG STORY…we have additions to the S&P 500 coming IN about a week or so NXP Semis, PENN, CZR, and Generac are now members OUT are Xerox, Flow Serve, SL Green & Vontier…arrivaderci guys! Earnings are expected by us to be stellar as we see the comparisons to be easy as companies have cut costs and OPERATING LEVERAGE will catch some by surprise. Real interest rates are still negative which is good for Stocks but may tell us Bonds may be in trouble (60-40 portfolios beware). The Fed’s 2 mandates are employment and stable pricing. They threw the kitchen sink at this thing to get the employment rate down (25% JUMP in money supply-OVER 20% of all dollars in circulation came in last year PLUS 12% JUMP in money supply this year PLUS a Balance Sheet that exploded as they Leverage America). When you add that to the fantastic & huge fiscal & monetary DEFICITS; one must assume that a 60′ 70’s inflation pop is in the cards. Three (3) Outcomes could be that the Fed stays behind the curve and let’s it happen OR the Fed responds to inflation and Chaos ensues OR it all plays out very orderly and without drama & volatility….a very rosy outcome Could we get a skirmish between China & the USA over Taiwan or the South China Sea? Could the EXPERIMENT of this much stimulus to a reopening economy already booming be problematic?….they are playing with fire. We have given SUBSCRIBERS a PORTFOLIO ROADMAP for the last year that included TECH & COVID Beneficiaries back in MARCH-MAY followed by a move to the bombed out EPICENTER Stocks as we got into summer and followed it up with VALUE BANKS ENERGY as we approached fall as we called for a steepening of the yield curve and that call was right on. We believe the USA will have a V Shaped reopening that outdoes China BUT we feel ultimately this is a WORLDWIDE coming out party that will lift all boats and VALUATION Overseas is compelling long term and some say the huge CORRECTION in QQQ & SMH & ARK funds has bottomed during that last sell off. Do you want to LEARN How to SUBSCRIBE to our NEWSLETTER & get the SPECIFICS on FOCUS LIST in GROWTH INCOME & SPECULATION? EMAIL [email protected] & let us know you want to get rates.
WATCH if support zone on the S&P at 3900-3850 holds & REMEMBER LT MA’s remain about 500-700 SP points UNDER current levels. We follow a WIDE RANGE of markets in our NEWSLETTER so we will give you some examples that are always EVOLVING…E-commerce winners IYT FDX UPS ect…Homebuilders LEN DHI ..Payments IPAY V PYPL ect Theatres AMC CRK IMAX,…NEW issues RBLX CPNG ect….Insurance MET MMC TRV ect. Travel/Leisure PEJ BJK DKNG PENN TRIP EXPE BMBL ect …Industrials BA HON ect Banks KRE XLF EUFN ect. Energy XLE COP CVX MUR MRO SLB ect EV NIO TSLA ect Reddit NOK BB SNDL AMC Tech NVDA SMH QQQ ARK ect….Infrastructure PAVE CLF X URI ect…Growth Fallen Angels Shopify Spotify ZM DOCU TDOC TWLO Fastley Cloudfare MRNA PTON ROKU Pinterest Zscaler Splunk ect Cyber Security/Cloud/Metals & a lot more. SUBSCRIBE Today by Email Your Interest to [email protected]
The auctions went OK this week but prices finished the week with their tails between their legs. We said for so many months that this is one of the BIG BUBBLES in the world and a mistake here of excessive dollar decline, inflation spike or GDP growth spike could sound the sell out alarm bell with a liquidity issue that we don’t believe the Fed or Central Bakers have EVER seen. Having said that, we told SUBSCRIBERS & readers alike to AVOID duration and if you want to spice up your income through HY and Secured Loans and Preferred you could look that way as most are relatively short duration and the default risk currently is acceptable. Concerns that our spike in rates (fastest pace since Volker in early 80’s) and the Dollar strength will damage Overseas & EM debt abound. Treasury Dealers off loaded $64 Billion and are now down to $185 Billion–lowest since 2018. High Yield spreads at 325 are tight & some say will get tighter. Still we have negative real yields so monetary conditions are easy…TLT hangs by skin of its teeth. Fed meets next week…we look for doves with admission of growth upgrade. First they fix unemployment & after prices get out of hand they fix that too. JOIN US and email [email protected] FOCUS LIST for INCOME
US Dollar/International Markets
At the risk of repeating ourselves…the Dollar has held the 88-90 support and with the yield advantage back we have a shot at a rally toward 95 if we can sustain 92+. We were dollar bears from 104-100 to the lows as our rates skid At some point the commodity currencies (Canada/Aussie) will have their day PLUS Japan & Euro/BP may shine when they reopen..for now USD firm. International Markets rebounded a bit…China had their convention with plans to grow & make HK a subsidiary with “patriotic” candidates only. China’s exports are screaming & Japan’s GDP thru the roof. NIKKEI still way up there but China stocks still BABA KWEB still recovering (ANT says no sub 18 yrs old can take out loans & spec on stocks..wow what reform:):)..Brazil’s having an inflation problem among others +5.2%!! EM & Europe popping off selloff…would use this months lows as a line in the sand. JMIA stock (the AMZN of Africa) got a lot of options action this week as did AMD. For our SUBSCRIBERS…we have a FOCUS LIST on these markets…email us-JOIN US!
Crude Oil/Natural Gas
For the LAST YEAR….We have been on this and SHARING with our readers that supplies would be tight (no cap ex/rigs/fracking OPEC) and that USA demand would rebound strongly sending ENERGY stocks back up very substantially which is EXACTLY what occurred. HOWEVER we see we are way above the 50-200 day MA’s and so if either demand of supply hiccups a correction is not off the table……Baker Hughes rig count is about 50% lower than a year ago & PE & Cap Ex seems to remain absent. Look to the COP-PSX SLB XOM & refineries (MRO VLO MUR) to benefit from the price gap as we go into summer driving season (daylight savings time this weekend!). Natural Gas still on the defensive as we said it would be as it tests the 50-200 day MA’s at 2.60/2.40…our favorite has remained firm LNG-$20 over 200 Day GET OUR FOCUS LIST on Energy & Financials-email us-check our rate deals!
Gold Silver Copper Platinum-BitCoin
We told you Gold & Silver were a no sale since $2100 Gold & $30 Silver as they went up too far too fast on a fear trade…parabolic the the LT MA’s. Last week we told you that Gold hit a Fibonacci retracement at about $1675 where we bounced $50 bucks….. while Silver and Platinum hit $25 & $1100. Mining shares like GDX GDXJ SIL SILJ AUY KGC & more are discounted and may be ready to show some legs…..so we will update you because the Fed printing press/consumer spending/Covid constraints on supplies could spell sunnier days for precious metals IF IF they can hold their LOWS. We got bullish Copper at 2.50 & FCX & SCCO a Long Time Ago!! Hard to come into markets when they are miles above their 200 day MA’s so while China is getting supplies & LEN DHI ect are cooking….recent lows as lines in the sand We have told readers about GBTC to play BitCoin since it was 10 bucks,,,we also said use 30% to 50% corrections to get in and use 100K as potential target as institutions warm up to the digital block chain craze. Risk Capital We have our FOCUS LIST on Metals & Mining too SUBSCRIBE TODAY!
Soybeans Sugar Coffee
Soybeans appear to be topping out here a bit UNDER 15 per bushel but time will tell as South America had some weather issues hurting supplies. The MA’s LT are in the 10-12 neighborhood so we got bullish months ago at 8-9..would prefer a better entry or play breakout of 1450-1475 on news. Sugar has been our pal since 12.30 and we remain bullish on pullbacks but LT MA is around 14. Coffee is another bull market since it broke above 100-110 and as long as it remains ABOVE that level we remain positive although supplies are tight..the big crop of 2020 may still be adequate..ABOVE 140 Kaching! There are ETF’s that let you paly this JOIN US TODAY!–GET OUR FOCUS LIST
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