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Friday, October 7, 2022

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Tempting Tuesday

We’re not there yet. 

As long as we are over 12,000 on the Nasdaq 100, we’re not bearish BUT as long as we’re under 4,000 on the S&P 500, we are not bullish either.  The indexes are in a tricky spot and we need to be patient and see which way they resolve themselves.  

Our expectations, as we decided yesterday in our Live Member Chat Room are for a move back to 13,000 on the Nasdaq, where we’re likely to flip bearish again and we expect 12,000 to settle down to become the middle of the NDX range – likely for the rest of the year.  

Nike (NKE) was no help last night with weak guidance but earnings were actually a beat from low expectations.  China lifted some of their lockdown restrictions again and that’s boosting everyone pre-market and remember – a 1% move on the Dow these days is over 300 points – so there’s nothing at all impressive about 100-point moves.  Oveall, this is more of a “watch and wait” kind of week – we made our bullish bets last week and, for the moment, we’re taking a breath to see how they pan out before jumping into more stocks.  

Hamburgers are going to be 36% more expensive this Holiday Weekend and that’s the data we’re going to have to contend with when we get back as inflation continues to creep into every corner of Consumers’ lives.  Going shopping for a BBQ party and getting a $300 bill at the grocery store vs $200 last year is the kind of thing that sticks in people’s minds the next time they are surveyed about their sentiment regarding the economy and their own finances.  

And it goes round and round as, for example, UAL just agreed to give pilots a 14.5% wage increase, which means the price of your plane tickets will go up to pay for it.  This is why it takes so long for inflation to settle down – there are layers upon layers of increases which feed on each other.

Oil is blasting back to $112 after President Macron was overheard telling President Biden at the G7 that the Saudis simply cannot increase their production more than a little over the next 6 months – that put the bulls right back to work – jamming up prices into the holiday in order to maximize your pain at the pump.  They never did release last week’s Petroleum Status Report so it’s tough to get a handle on our energy situation.  Hopefully tomorrow they’ll have an update – like they are supposed to.

8:30 Update:  Surging Dollar strength is taking down the indexes in early action but the effects of Dollar moves are generally short-lived on an intra-day basis so we’ll just have to wait and see what’s going to stick.

Housing Prices continue to be very hot, with April up 1.6% and we’re up 18.8% since last year.  Case-Shiller shows a 21% increase year/year into May.  That’s causing the odds of aggressive Fed hiking to climb and pushing the Dollar higher.  At the same time, Fed’s John Williams is saying he sees rates at 3.5-4% into next year adding: “We need to raise interest rates quite high this year and into next year to combat inflation  To me what matters is the path of the policy. I think 75 bps last meeting was absolutely right.” For the the next meeting 50 or 75 bp may be appropriate.”

That’s caused a brief pullback in the market but it’s still in-line with what has already been said so an over-reaction, I think.

 

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Couple people that I talked with today have already checked out, told me "I'll get to it after the 4th". 

Phil

looking for META  in butter fly

Thank You

Perhaps everyone's glued to the Jan 6 committee .. riveting stuff .. 

phil / rolling SQQQ

I assume you are rolling to SQQQ 30s doing it because you have uncovered calls. 

I have the following

24 40/70 SQQQ calls fully covered at a cost of $5.45 now $7.14
24 60/80 SQQQ calls fully covered at a cost of $3.81 now $3.12
24 40/60 TZA calls fully covered at a cost of $3.65 now $3.58

Should I make any changes? Should I add more if S&P goes to 4100 or NDX goes to 13,000?

G-7 Leaders Favor LNG Investment in U-Turn Due to Energy Crisis

I knew I should have not gone into the office today … that's a lot of red! 

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