Monday Market Movement – Stuck in the Friend Zone

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1409
DJIA Chart DailyI’m scared to fall, it’s always been a fear
To be stuck in here, but I don’t wanna leave
Stuck in the friendzone
Hoping that one day
You’ll come along
Join me, ’cause I’ve been slowly falling
Stuck in the friendzone” – Maro 
 
It’s not a good song but it’s one of those true things the kids like to hear.
 
Friendzone” actually comes from the first season of Friends (makes sense), when Joey said it to Ross, describing a situation in which one person in a mutual friendship wishes to enter into a romantic or sexual relationship with the other person, while the other does not. The person whose romantic advances were rejected is then said to have “entered” the friend zone, with the sense that they are stuck there – just like the S&P 500:  
 
SPX March 27 2023
See?  That is the “Friend Zone” between the 200-day moving average and the 50-day moving average and March has been a month of “Will they or won’t they?” hijinks. 

Like Ross – many investors have been stuck in the zone with the stock market. They’ve been eyeing the bargains for some time now, hoping to finally make their move and get in on the action but it never seems like quite the right time to make a move – and there’s that overwhelming fear of rejection…

just as Ross has been right in front of Rachel all along, value stocks have been right in front of these investors – they just don’t see them…

Friends - Ross and Rachel Wedding in Vegas | Friends ross and rachel, Ross  and rachel, I love my friendsAnd, like Rachel, investors are still looking for something better, waiting for the market to fall further before making their move. They are afraid to commit, fearing that they’ll fall further or miss out on a better opportunity, ignoring the value stocks that are right in front of them!  Ross eventually found his way out of the friend zone – but it was 9 years and 230 episodes later!  

The key is to have patience, keep a close eye on market trends, and be ready to act when the time is right.  

At Philstockworld, in our Live Member Chat Room last Wednesday morning, we made our initial move on 26 long positions, drawing from the Watch List we’ve had our eye on since late December.  We patiently waited an entire quarter before jumping on about half of the positions (we did have a few dates along the way). 

Hopefully it will work out and we’ll stay over the 200 dma and live happily ever after but, if not, we can work on our relationship and hopefully make it stronger and, if there are rough patches along the way, these are all stocks we’d love to buy more of if they do get cheaper.  

No banks collapsed over the weekend – that’s nice.  There’s still a lot of tension and worry out there but, as I noted on Wednsday – there’s also a lot of bailouts and stimulus and, as we’ve learned over the last 15 years, bailouts and stimulus Trump (don’t say Trump!) a crappy economy.  

Frances Fisher on Twitter: "SURRENDER DONALD You know we ...Speaking of Trump (don’t say Trump!), a lot of people think this is finally the week when they round him and his crew up and justice will finally be served – good luck with that!  At the moment, it’s a very dangerous point of contention we have to keep watch of.  

This week, we’ll get some fresh data on the US economy, as well as some insights into the housing and energy markets. Here are some of the highlights:

  • Tomorrow we’ll see the advance reports on International Trade and Retail & Wholesale Inventories for February. These will give us an idea of how the trade balance, consumer spending, and business stockpiling have been affected by the pandemic and the global recovery. We’ll also get the latest readings on Home Prices and Consumer Confidence for January and March, respectively. 
  • Wednesday we’ll check the pulse of the mortgage market with the MBA Applications Index and we’ll also see how many homes went under contract in February with the Pending Home Sales Report. Both indicators will reflect the impact of rising mortgage rates and tight inventory on the housing demand. Finally, we’ll get the weekly update on crude oil inventories from the EIA. Oil is back up to $70.50 this morning after testing $65 last week.  

CL March 27 2023

  • Thursday we’ll start the day with Weekly Jobless Claims, which has been steadily declining for several weeks and that is NOT what the Fed wants to see – so try to get yourself fired to make Powell happy… We’ll also get the final estimate of GDP growth and inflation for the fourth quarter of 2022. These will confirm how the economy performed at the end of last year and set the stage for the first quarter of 2023. We’ll also see how much natural gas was stored in the US last week with the EIA report.  I will also be curious to see how much the Fed Balance Sheet has expanded.  
  • Friday we’ll end the week with some key reports on Personal Income and Spending, as well as core PCE inflation for February. We’ll also get reports on Chicago PMI and Consumer Sentiment for March. These will provide some clues about the state of manufacturing and consumer confidence in two major regions of the country.

We have 6 scheduled Fed speakers scheduled this week, but two are Barr – though they don’t seem to follow a schedule in the past month.  If we get through all that, there’s not much to worry about next week until Non-Farm Payrolls next Friday.  

Calendar March 27 2023

 
 
 
 
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Good Morning.

Phil, looks like /ES has repeatedly failed 4030 over the last few weeks. Can you post shorting targets for all the indices for futures play.

Phil, I have a question. I know you believe we are roughly at fair value with regard to the S&P and Nasdaq, given present conditions. I am wondering how much credence you give to someone like John Hussman, who believes that corporate profit margins will mean revert over the completion of the present business cycle and who beleives the expected return over the next ten years of the S&P is close to zero. He believes, based on some very reliable looking math, that the S&P will have to plunge something like 60% to restore it to a point where an investor would expect to earn 10% a year.
I know you are in the market a long time so I am kind of assuming you have read his stuff. I could write more about what he believes, and based on what, but first I thought I would ask whether you think that kind of mean reversion has to take place? I know the hedges that you have put on are intended to handle that kind of a downdraft, so I know you are prepared for that situation. Do you have any objections to Hussman’s line of thinking?

https://www.hussmanfunds.com/comment/mc230221/

well, that’s a hell of an answer. thanks.

MTB. if anyone is interested, I was reading that the MTB bank ceo was smart enough to very deliberately avoid loading up on AFS securities during 2020 and 2021. i haven’t bought any, but if anyone is looking for a well run medium size bank to look at, this might be one.

MTB, without doing any fundamental analysis, if you zoom out to the monthly chart $102 looks like a decent floor. So, doing a buy-write and selling the December $120 calls for $16.80 plus collecting the 4.5% dividend looks pretty safe… not Huntsman safe but not bad. The 102 level held in 2013 , 2016, and roughly in 2020.

that is a sweet idea.

Phil, You are absolutely right.

ET did an accretive acquisition today. We talked about them a while back. Options go out to June 2025 but there’s not a lot of premium. They were $10 in October. Worth it now at $11.85 or just wait.

hmmm…don’t make post a link to your own NYCB top trade alert.

if i want to buy small bank value i would probably just put on the KRE trade you suggested.

Phil –

Natural Gas May futures — did you enter last Thursday? Are you still in?

Happy Monday everyone. , was PayPal PYPL considered for The Watchlist (https://www.philstockworld.com/2022/12/28/watchlist-wednesday-our-top-stocks-for-2023/)? If yes, do you recall why you rejected them?

Phil/Yodi/IBM Based on our prev IBM chatter, I now have:

30 IBM ’25 $120c @ $16.95
-20 IBM ’25 $140c @ $10.22
-10 IBM July $115p @ $3.65

You had suggested:

  • Buy 30 of the 2025 $120 calls at $17 ($51,000)
  • Sell 25 of the 2025 $140 calls at $8.50 ($21,250) 
  • Sell 10 June $130 calls at $3.60 ($3,600).      
  • Sell 10 July $115 puts for $3.40 ($3,400)

Am I right that with the pop today you might now sell something different than the 10 June $130 calls ($5.60)?

(Still have my original ’24 30 $100/140 spread)

TIA from sunny Mex!

Phil/TUP
I have 40 Jan 24 5/10 BCS that cost me net $1.20. Any suggestions here? They appear to be getting worse and worse.

Thanks Phil. For some reason I’m consistently missing when you’re closing positions. It’s probably just me but do you keep track of this anywhere?