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4/16/21 Option Professor-Opinions & Observations
The Option Professor is a graduate of Boston College with decades of investment experience & instructed thousands on the Uses-Risks of Investing
Greetings!…Well we are running on all cylinders with the S&P closing on an all time high and we’re loving riding the wave. Banks made a ton as we said and more earnings out next week. Banks immediately hit the credit window with RECORD Bond sales…why? Inflation & economic data are thru the roof yet Bond yields declined ..why? Jobless Claims are dropping as we said they would & Q1 comps to last year are not sustainable. Reversion to the mean is a time tested truth in the markets so when we see the market by some models 1 standard deviation overbought & Schiller & Buffett’s valuation metrics in the ozone and the S&P near 4200 with our LT moving averages (1-2-3 yrs) @ 3550-3261-3100 PLUS up OVER 23%+ ABOVE pre- Covid high of 3393….we explore hedges. Learn How To Protect Your Portfolio & Reduce Risk
This week the big story was the banks blowout earning and Coinbase (COIN) coming direct to the market. Profits were huge due to 2 main factors trading and reversing reserves kept for bad loans….both may not be repeatable. The focus then comes to loan demand and credit card usage which both appear soft as many people and corporations pay down debt and don’t need loans as they are flush with cash. The Fed (and us) believe the GDP & Inflation spikes may be transitory and the question up here is will we revert back to the mean in both and will valuations compress. We do get inflation as we come out of crashes (2001 & 2008) which is good for tangible assets. Lumber is going nuts as there is no inventory & houses sell in days above ask (higher prices coming)…look at WFG CFPZF IFPF LPX….while the JNJ bad news is good for BNTX & PFE MRNA..and BOTZ is on a roll-Elliot mgt bought some GSX. Base metals are getting squeezed by demand so CLF X VALE have benefitted while copper is the best conductor of electricity so stocks we told subscribers about a year ago FCX SCCO benefitted from EV Solar and infrastructure front running traders. China’s on fire (GDP 18%+) as well they should be as 75% of all chips (TSM says shortage will continue) come out of there and east Asia…Beijing airport traffic +290%. OKTA deals in identity and internet security and has lots of customers an a potential long runway. Disney (DIS) is comparatively crushing NFLX in that they reached 100 Mill subscribers in 1 1/2 yrs that took NFLX a decade PLUS they have many merchandising-theme park revenue streams to offset the risk of entertainment origination. Clean energy is all the rage so watch ICLN BE FCEL & BLDP. Plug Power (PLUG) may be worth a look after it’s drop. Unusual options activity included VLO as we head into summer driving season. Finally..here’s our take on COIN….they are making money with 56 M users… but were valued at Goldman levels and for the quarter they did volume that the NASDAQ does in 1 or 2 days. Retail trading is 90% of their business with high fess & no regulation (like Fintech that window is closing). To really make it long term they need to be what Microsoft was the cloud…..they need to be to block chain…lending storage.. payments & smart contracts…… if so…a platform for life.
Yields dropped as we said they would as the sell side was way too crowded and now the pain trade is that rates drop. This shocks many but not us a s we talked of adding duration as we came off 2.55% area on the 30yr and for the most aggressive look to zero coupons (Strips). Yield stink in Asia & Europe so we have a natural buyer and our own pensions ect are taking a bite. They can hedge the currency risk and still pocket 1%. The losses in Q1 were unsustainable at that speed so this to us was a no brainer. The Fed ECB BOJ injected $8Trillion during the crisis so liquidity is not an issue. We share DIVIDEND & INCOME ideas with subscribers each week ……. you should Join us & Learn About Income Investing
US Dollar/International Markets
After a rebound rally that we called off the 88-90 area on the DXY…the greenback is skating on thin ice. at 91.53 close. The 50-200day M/A’s are at 91.58 & 91.76 so they are inverted to the downside and we closed UNDER both. The Euro & Pond are gaining steam and if the DXY breaks 91..our yield advantage may give way to our money supply growth (+25%) and our fiscal and trade deficits otherwise a reversal potentially could get us up into that 94-96 neighborhood. The international markets are fertile lands for us a s they got great valuations and are the beneficiaries of our HUGE trade deficit so we see a China/Emerging Market-Asia bounce ….a Europe/Banks pop and a Latin America -Mexico-Chile (Copper) Brazil advance. We have stocks and ETF we share with SUBSCRIBERS so Get Smart Today…Join Us
Crude Oil/ Natural Gas
Crude oil popped back up big time from the 5’s to well over 60 and the refiners are on a roll and expected to fly on demand going into summer. This is old news to our SUBSCRIBERS as we told of this 9-12 months ago! Lot a runway as we re-open with Europe and EM coming after them. We shown you a lot of opportunities from 35% yields on OXY Bonds a year ago to VDE & OIH in ETF land….we have much more to tell and update you on in the months ahead. We told you natural gas was ona floor at 2.50 & now we’re at 2.68 with LNG bottomed at 70 which hit 75 yesterday.
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Gold Silver Platinum Copper BitCoin COIN
We told you Gold $1675 was the low and $24 area for Silver Platinum $1000 area…..we said the easy lifting was done on the quick bounce and we needed proof of sustained strength…we got that in spades this week and loved the rides in GDX GDXJ SIL SILJ KGC and a whole lot more. Copper is the new oil as it is used in EV’s Solar Infrastructure and is the best conductor of electricity (remember the movie Moonstruck:)….FCX & SCCO are ones we told you about last year a peanut levels…now they’re like badmouthing Santa..a gift that keeps giving…Goldman Sachs says more to come. We told you BitCoin was going to have a monster year and to buy 30%-50% corrections which have seen and will see again..risk capital & now look to COIN when it washes out the flippers….GET OUR FOCUS LIST….real interest rates are negative and the PPI & CPI numbers are going thru the roof….a better environment for metals you will not find,,,,,
Spend a little money an GET OUR FOCUS LIST on metals and mining shares…..by the end of this year…could be huge Go to optionprofessor.com/subscribe $49 per mo $297 per yr…NOW is the time to look toward tangibles/international
Soybeans Sugar Coffee
Grains have been strong on drought concerns and demand as we told you of big potential going into planting and growing seasons dead ahead. Soybeans started to breakout we’ll look for follow through & Sugar’s correction appears over with Coffee still looking to break 140 for the big bucks….we have ETF’s we share with SUBSCRIBERS to play this…..
REMEMBER There is a substantial risk of loss in short term trading and option trading and it is not right for everyone. Consult your brokerage firm/broker/advisor to determine your own suitability. Past performance is not necessarily indicative of future results. Use Risk capital Only. Opinions & Observations are for informational purposes only.