(THE STARS ARE ALIGNING FOR THE S&P500 AS WE STRIDE THROUGH DECEMBER AND INTO 2024)
December 4, 2023
Hello everyone,
The stock market had an extraordinary November.The S&P500 was up 8.9%, its best month since July 2022, and the fourth-best November since 1950.
The set-up for December and into early 2024 is very strong and great for investors.
We’re going into a usually strong seasonal period, with December mostly the third-best month of the year, averaging gains of 1.4%, according to the Stock Trader’s Almanac.The difference with this December is that it is a pre-election year, and December pre-election years are stronger than the other Decembers: up 2.9% on average, up 75% of the time since 1950.
So, start writing that buy list.
Historically, the first part of December is usually the weakest due to tax loss selling.The second half, however, is where most of the gains usually occur, particularly after the quarterly expiration of individual stock options, options indexes, and index futures, which happens on December 15 this year.
Quite apart from seasonals, the macro backdrop is strong too.
10-year Treasury yields have dropped from 4.9% at the start of November to 4.3%.
Inflation is continuing to moderate: October core PCE was in line with expectations at 0.2% month over month and up 3.5% year over year.A little over a year ago, in September 2022, it was 5.5%.
Solid GDP growth:third quarter GDP was raised to 5.2%.The Atlanta Fed’s GDPNow Tracker is predicting a respectable 2.1% growth in the final quarter of the year.
Moderating inflation:Solid GDP growth.Unemployment is still low.
Wall Street is bullish.Most strategists are expecting higher stock prices in 2024.
Market Update
S&P 500
According to Elliott Wave analysis, the market is still rallying to a climatic 5th Wave.However, with bullish sentiment returning to the markets, the market seems “right” for approaching another peak soon.So, we could see around 4,700 before exhaustion and a medium-term pullback.
Gold
Gold has now completed its bullish five-month Inverse Head and Shoulders continuation pattern and will probably rally to $2,210 and $2,250.Support lies at $2000 (max).
Bitcoin
The uptrend is in progress, with a target around $43,000 where we see resistance and probably a medium-term pullback.
Musk and the Cyber Truck.
We finally had the launch of the Cyber truck last week in Austin, Texas, with Musk raving about its qualities, including its towing abilities, and its race-car-like acceleration. He even showed off its bulletproof doors.
Covid’s supply chain shortages and manufacturing problems delayed production by a few years.
Once the current volatility is digested, we should see higher moves in Tesla into 2024.
Love or hate Musk, his behavior can create volatility in the stock and that can potentially be profitable.We could see a move up in Tesla in the first part of the year to around $300.
Welcome to December and the start of a new season – winter or summer, depending on where you live in the world.
Let’s get into the summary of John’s most recent webinar.
Title: Approaching the Finish Line
December 5-7 Mad Hedge Traders & Investors Summit – 9:00 to 5:00 p.m. EST
Attendance is free.$100,000 in prizes.A wide choice of trading strategies is offered.
Performance:
November 2023- +17.15
Average Annualized Return:+48.57
2023 year to date:+83.32%
Since inception:680.51%
Positions:
90% Long, 10% short.
Risk On
(MSFT) 12 /$320-$330 call spread
(NLY) 12/$15-$16 call spread.
(BRK/B) 12/$320-$330 call spread
(CCJ) 12/$35-$38 call spread
(CRM) 12/$185 - $195 call spread
(GOOGL) 12/ $110-$120 call spread
(SNOW) 12/$135-$140 call spread
(CAT) 12/ $220- $230 call spread
(XOM) 12/ $97-$100 call spread
Risk Off
(TLT) 12/$95-$98 call spread
Expiration Value:+86.17%
The Method to My Madness:
This is not the time to be buying stocks.It appears the Fed is done raising rates and markets are now discounting the first rate cut in March.
Bonds, REITs, precious metals, and financials have all responded.
We will probably continue this rally until the end of the year, but what happens in January?
The government shutdown is delayed until February – and markets have responded well to this.
Oil prices and commodities are now trading as one – selling off on a slowing economy.
After a rest, the tech market is marching higher again, which will probably continue for many years.
Go long stocks and bonds on any pullbacks in the market.
Commodities and industrials are a second-half play.
Stocks – Best in 18 months:
Just saw the fastest 10% rise in history.
Big tech leads, with financials catching up and energy suddenly cheap.
Company buybacks are about to increase, as companies race to pick up their stocks before the yearend deadline.
Apple is the top buyback stock followed by Alphabet (GOOGL) and Microsoft (MSFT)
Money is pouring into Defence ETFs, like (PPA) and (ITA), with $600 million entering the sector.
Fisker dives 18% after a disastrous earnings report.Companies trying to challenge TSLA are coming off second-best.
Short seller, Jim Chanos shuts down after a large short in TSLA shares blew up.His capital diving from $6 billion to $200 million.
2024 favorite sector is cyber security.Look at PANW, SNOW, and the ETF HACK.Governments are big targets for cybercriminals.
Safest Stock:Microsoft (MSFT) – ramping up efforts in AI.The future will see cancer cures with AI.
The government shutdown was delayed until February.
Bonds – Prices Taking a Break:
Government bond auctions suddenly improve, taking prices to two-month highs.
The Fed will cut interest rates as early as March – the futures market gives this a 40% probability.
Investors poured $5 billion into Bond ETFs in October.
10-year Treasury yields hit a new 16-year high, at 5.08%, then retreated to 4.33%
The whole falling interest rate and rising bond prices have been delayed for three months – hotter than expected economic growth at 4.9% for Q3 and more Fed rate rises.
Junk Bond ETFs (JNK) and (HYG) are holding up extremely well with an 8.74% yield and an 18-month high.
Buy (TLT) on the dip.
Foreign Currencies:
Sizeable pay hikes will lead to a strong Japanese Yen.
Whiskey Maker, Suntory offering 7% pay hikes.
The expectation of falling US interest rates is adding fuel to the fire.
Buy (FXY) on dips.
Bank of Japan eases grip on Bond Yields, ending its unlimited buying operation to keep interest rates down.
Japan is the last country to allow rates to rise.
Expect the Japanese yen to rise.
The 2024 story will be the US$ short.
Energy and Commodities:
Oil dropped from $96 down to $72 in less than two months as fears of an economic slowdown continued.
US Gasoline prices hit three three-year- lows, on recession fears and replacement concerns by EVs.
Energy stocks are lower and pulling down all other commodities.
There is a BUY setting up here when the global economy reaccelerates on a lower interest rates world.Watch (XOM) and (OXY).
China’s oil imports have fallen for six consecutive months, the world’s largest importer.
Biden provided a floor bid from the Strategic Petroleum Reserve at $79.
Warm weather is capping rallies in Natural Gas (UNG)
(XOM) is moving into Lithium.
(OXY) Buffett is an owner – 45% of the company.
(FCX) in buy territory – LEAPS territory soon.
Precious Metals:
The sharp drop in interest is very positive for Gold.
Goldman Sachs goes bullish on Gold:The investment bank expects the S&P GSCI, a commodities market index, to deliver a 21% return over the next 12 months.
Investors are picking up gold as a hedge for 2024 volatility.
Gold is headed for $3000 by 2025.
Falling interest rates are the accelerator.
Silver is the better play with a higher beta.
Russia and China are also stockpiling gold to sidestep international sanctions.
(GOLD) $50 is the 2024 target.
Real Estate- Hopes Abound
Pending Home Sales Plunge to 13 year-low, down 4.1% in October, on a signed contracts basis.
Sales were down 14.6% year over year.
The median price of an existing home sold in October was $391,800, an increase of 3.4% from October 2022.
These are the last poor sales numbers before the collapse in interest rates.
At the end of October, there were 1.15 million homes for sale, down 5.7% from a year earlier.
This is about half as many homes as were available for sale pre-Covid.
At the current sales pace, that represents a 3–6-month supply.
Six-month supply is considered a balanced market between buyer and seller.
Homebuilder sentiment drops, down six points to 34 in November.
Trade Sheet:
Stocks:buy the big dips at the bottom of the range.
(WE COULD SEE A SECULAR BULL MARKET FOR THE NEXT DECADE)
November 29, 2023
Hello everyone,
It’s the question on everyone’s lips – will this rally continue throughout 2024 and beyond?
One Bank seems to think so, and that bank is Deutsche.And they are not allowed in this bullish outlook.
Deutsche sees the S&P 500 rallying 11% to a record high next year and has a 2024 year-end target of 5,100 on the S&P500. It incorporates expectations of a mild, short recession that has been pulled forward.
In its most bullish case, Deutsche expects the S&P500 could climb to 5,500 or more than 20% above where the benchmark closed last.
The bank notes that the S&P 500 has been in a clear trend-up channel since the Great Financial Crisis.Jim Reid, London-based head of global economics and thematic research points out that after falling below last year, the rally in the first half this year took it back up to the bottom and it has been muddling along at the lower end since.A continued muddle through along the bottom implies 5300 by the end of 2024, while a move to the middle to 6000.
Deutsche expects markets have already priced in concerns around higher interest rates and geopolitical risks and argued that any sell-off from a possible recession would be short-lived and mild.
Historically, equities typically rally in the aftermath of a U.S. presidential election, set for next November.Reid expects a sizeable potential upside risk from tight labor markets may bolster productivity by encouraging the adoption of new technologies such as generative artificial intelligence.
The German bank remains neutral on mega-cap growth and technology stocks, citing elevated valuations after their rally this year.Going forward, the bank recommends overweight positions in financials and consumer cyclicals (AMZN, HD, TSLA, MCD, AAPL) that could bounce back after their recent weakness and remain neutral on energy while turning overweight on materials.It remains underweight in defensive stocks until it sees falling bond yields coupled with recession fears
Deutsche Bank sees the rally this year continuing into 2024 and beyond and makes bold 2024 year-end targets.
According to RBC technical analyst Robert Sluymer.
The stock market has surged nearly 20% this year, but the rally could be part of a larger secular bull market cycle that sends the S&P 500 to 14,000 by 2034.
Sluymer maintains and argues that the long-term secular trend for US equity markets remains positive with an underlying 16-to-18-year cycle supportive of further upside into the mid-2030s, potentially to S&P 14,000.
Sluymer’s forecast for the S&P 500 to trade as high as 14,000 by 2034 represents a potential upside of 209% from current levels or an average annualized gain of just under 10% over the next 11 years.
Sluymer looked at a long-term chart of the S&P 500 going back to the Great Depression in 1929.Since then, there have only been two secular bull markets, with one occurring during the 1950s and 1960s, and another occurring during the 1980s and 1990s.
Both generated total returns of about 2,300%.
Sluymer points out that if the current cycle generates a similar rally of +2000% the S&P could move toward 14,000 by 2034 which is when we expect the current 16-to-18-year secular bull cycle to peak.
Between now and 2034, Sluymer advises long-term oriented investors to lean bullish and view selloffs in the stock market as opportunities to increase exposure to secular and cyclical growth stocks, including industrials.
In a nutshell, Sluymer recommends long-term investors stay the course and remain optimistic.
(THE MARKETS AHEAD AND A COUPLE OF STOCKS FOR YOUR CHRISTMAS STOCKING)
November 27, 2023
Hello everyone,
Welcome to the last week of November.In the Northern hemisphere, you are heading into winter and in the southern hemisphere, we are heading into a hot summer.Bushfires have already been experienced in four states, including New South Wales, Western Australia, Queensland, and Victoria.And on top of the cost-of-living crisis in Australia, we are now going through our eighth Covid wave, with many deaths being recorded.
Economic Calendar
Markets will have one hurdle to clear in the week ahead.On Thursday, investors will get the October personal consumption expenditures reading, which is the Federal Reserve’s preferred inflation gauge.It’s set to show a rise of 0.2%, down from the 0.7% rise in the prior month, according to FactSet consensus estimates.
In a nutshell, if the number is hotter than expected, it could call into question whether the Fed is done tightening.So, in other words, it could be negative for the markets if the number comes in worse than expected.
Several retailers are also set to report.Here’s a summary.
Earnings:Costco Wholesale, Synopsys, Dollar Tree, Hormel Foods
Thursday, Nov 30
8:30 a.m. Continuing Jobless Claims (11/18)
8:30 a.m. Initial Claims (11/25)
8:30 a.m. PCE Deflator (October)
8:30 a.m. Personal Consumption Expenditure (October)
8:30 a.m. Personal Income (October)
9:45 a.m. Chicago PMI (November)
10 a.m. Pending Home Sales Index (October)
Earnings:Ulta Beauty, Salesforce, Kroger
Friday, Dec. 1
9:45 a.m. Markit PMI Manufacturing final (November)
10 a.m. Construction Spending (October)
10 a.m. ISM Manufacturing (November)
Earnings:Dominion Energy, Cboe Global Markets, Cardinal Health, Gartner
Market Update:
Wall Street looks set to wrap up a strong month this week as stocks head for new highs heading into the year-end.The major averages have rallied after cooler inflation reports appeared to confirm the Federal Reserve is done hiking, raising hopes it can start cutting next year.The Nasdaq Composite is on pace to close out the month with a double-digit advance, up 10%.
Historically, the market has done well in the final quarter of a pre-election year, and even better for a first-term president seeking re-election, according to CFRA’s Stovall.Since World War II, the market has risen 6% on a total return basis and has never dropped.
Some analysts consider the market overbought now, and they are expecting the market to start to slow going into this week.We will have to wait and see who has called this market correctly.
I still see the S&P 500 rallying up towards 4,700 to 4,800 and I am looking for a double top in the Nasdaq before the market starts to pull back.
Gold is displaying a developing inverse Head and Shoulders continuation pattern. A sustained break above neckline resistance at $2,017 completes this bullish structure, yielding an upside target of $2,210 over the coming weeks.
The uptrend is still in progress in Bitcoin with a target of around $43,000.
What should you have in your portfolio for the long term?
Wall Street loves many of Warren Buffett’s stock picks.
These are two I would recommend.
Amazon (AMZN)
84% of Wall Street analysts rate this stock as a buy.Analysts argue that there is still a 22% upside from current prices.The company recently solidified a deal with Snap that allows users of the platform to purchase Amazon products without leaving the Snapchat application.
Snowflake (SNOW)
56% of Wall Street analysts rate SNOW as a buy with price targets giving the stock upside of 19% from current levels.The company is still in the early innings of growth.
The market has just closed 100 points higher today.Our year-end rally continues.You may ask “What’s next after the end of the year?”Short term, may be some volatility; long term, the market is looking good.
Retailers are hard at work endeavoring to attract customers to Thanksgiving sales.Some people will always part with their money for what they think is a bargain.Others are more conscious of their spending and where their money is going.With all that being said, some items are worth a look – especially electronic items.
Bitcoin rose to a new high for the year on Friday – above $38,000.As I have said before, if you hold it, think about taking half off the table.It could come down to $20,000 or even lower before eventually rallying to new highs.
Don’t rule out a retest of 1900 in Gold before moving higher.Certainly, we could well test the 1940 to 1960 area.Within the next five years, Gold could move to around 2,800.
Be mindful that we could get another retest of the higher levels in yields.If the yield on the 10-year Treasury note begins to move above 4.55%, that could put some pressure on the equity market.
“Edge AI” will be the trend going forward in artificial intelligence.This theme involves running AI algorithms directly on a user’s device, be it a smartphone, laptop, or wearable, among other things.Morgan Stanley argues that 2023 has been all about Generative AI, cloud, GPUs, and hyperscales, and they will remain core to the secular machine learning trend.Edge AI can help save costs and reduce latency (or lag time), among many other benefits.Everyday examples of Edge AI include facial recognition on smartphones and voice recognition in smart speakers.Morgan Stanley points out that with the advent of Generative AI, the impetus for device upgrades to enable greater computational power natively on consumer hardware is accelerating and spanning beyond often narrowly used smart speakers.The bank goes on to say that such AI-driven consumer use cases will become integrated into everyday devices – presenting several opportunities for investors.
The bank named four companies that are set to be key beneficiaries of this trend and likely to outperform in 2024 and 2025.
Apple – well-positioned to expand all facets of Edge AI.The consumer trust in Apple’s data gathering and large user base gives Apple another leg up in using Edge AI applications to harness and apply new data.Price target - $210 or a potential upside of around 10%.
Dell – best positioned to capitalize on both the cyclical rebound in hardware markets and the long-term growth of AI-related infrastructure (PCs, Servers, Storage) over the next two years.Dell is expected to launch new AI-enabled laptops and workstations in the next 12 months. The price target is $89 or a potential upside of nearly 21%.(Watch for some volatility in this stock in the next few months).
MediaTek – the largest chip design house in Asia is gearing up for Edge AI. Price target is 1,000 New Taiwan dollars ($31.70) or a potential upside of 6%
STMicroelectronics – The key attribute of this stock will be its energy-efficient computing. Long-term value in its efficiency in automotive, mobile, healthcare, and industrial IoT.Price target of 48 euros ($52) or potential upside of nearly 16%.
The $50 billion travel trailer industry is playing catch-up.
As more Americans move to electric cars, the trailer industry must evolve because the towing runs down the battery quickly.The drag on battery power can make towing an RV long distances with an RV prohibitive.
Pebble Mobility, a California-based start-up, has invented a self-propelled, self-powered, remote-controlled trailer.The 25-foot vehicle sleeps four and has its own electric motor.It propels itself, saving on the power needed by the car dragging it.
The trailer has an EV battery on board and an integrated solar array over the rooftop of the travel trailer – making the most of renewable energy from the sun and powering the entire vehicle.
Yang, who helped build the iPhone, uses that knowledge to enhance the RV experience.
The user can use Pebble’s app to maneuver the trailer on its own, which helps in tight spaces.There is a generational shift in RV use from the baby boomers to millennials, and this group of consumers is more tech-forward.They are tech-savvy, and they want a better experience.
The trailer price starts at $109,000 without the self-propelling motor.Potential tax credits could bring that price down.The version with the motor starts at $125,000, which is comparable to other RVs.Different products are on the horizon to cater to the different needs of consumers.
With the solar and battery power, the Pebble makers say it can live off the grid for seven days, without propane or a generator required.The kitchen appliances, lights, AC, and everything else are fully electric.
Pebble aims to deliver the first models in 2024.
Why being bored can be a good thing.
I talked about this just recently in a Post, how just daydreaming and looking into thin air and giving your brain a rest can be very useful.It seems counterintuitive, I know, but when we are constantly expected to be on task, we are decreasing our level of productive output.
When we let the brain go into “default mode” – i.e. when we are folding the laundry or walking to or catching the train, this is when the brain gets busy; we are allowing the brain to connect disparate ideas – we can solve some of our most pressing problems.
We unconsciously dive into a path of autobiographic planning – we look back at our lives, take note of big moments and not so big, create a personal narrative, and then set goals and work out what steps we need to take to reach them.
Today we are often doing four or five tasks at once and switching our attention every few minutes, which is not productive.In fact, it creates higher levels of cortisol and reduces productivity.It essentially depletes our brain, exhausts it, and makes it less efficient.So, multitasking – talking to friends, checking social media, and working on a project all at the same time can lead to a lack of focus, loss of energy, confusion about priorities, and even a decline in cognitive function.
Try daydreaming to give your brain a rest.
You are actually being your most productive and creative self by doing nothing for short periods.
This is a reminder to please take money off the table if you have a healthy profit.
In McDonald's, you are at maximum profit in both positions.
McDonalds (MCD)
250/260 Dec. 2023 vertical bull call spread
250/270 Dec. 2023 vertical bull call spread
Digital Ocean (DOCN)
25/27.50 January 19, 2024, vertical bull call spread
27.50/30.00 January 19, 2024, vertical bull call spread
Palo Alto Networks (PANW)
250/260 December 15, 2023, vertical bull call spread
260/270 June 21, 2024, vertical bull call spread
Market Update:
S&P 500
The U.S. stock market is rallying to new highs.From an Elliott Wave perspective, it is charging towards its 5th Wave, which lies at about 4,700 – 4,800.After the market reaches Wave 5, we may be in for a healthy correction between December 2023 and April 2024.
Gold
Gold’s Daily Chart shows a developing 5-month Inverse Head & Shoulders continuation pattern. A sustained break above $2,009 resistance will yield an Upside Target of $2,210 over the coming weeks/months.
Brent Crude Oil
There is a downside risk here. There is a classical Head & Shoulders pattern on the Daily Chart. The downside target could be around $70.00.
Bitcoin
The uptrend is in progress.Resistance is found just above $43,000.Profits should be taken between $37,000 and $40,000.
Click here for the October 31 monthly Zoom recording.Apologies for the delay in sending this out.
November Zoom meeting will be next week.
Canada is looking attractive for talented tech workers.
There is a shift going on now, and I’m not talking about our transition to AI.I’m talking about the great exodus of talented and skilled people, particularly in technology jobs, who are moving out of the U.S. to Canada.
As of last month, the Canadian government says more than 6,000 U.S. H-1B visa holders have arrived in Canada so far this year.That’s after massive layoffs left high-skilled foreign H-1B holders in limbo in the U.S.
U.S. Senator, Sheldon Whitehouse has argued that “if two million more immigrants came to the U.S. each year, we could reverse our predicted population and productivity decline.”
Canada has launched a new initiative to attract skilled workers, as well as digital nomads, and skilled American workers.
Why is the U.S. losing these workers?
How did a country with the biggest tech companies lose thousands of workers to Canada?
The bureaucratic visa process pushes workers into Canada.It is not straightforward, and there are queues and queues.
The H1-B is a non-immigrant work visa that allows U.S. employers to hire foreign workers in specialty occupations.
They must have an area of expertise, a Bachelor of Arts, or equivalent.Many of these visa holders work as teachers or in technology.
Since its creation in 1990 Congress has limited the number of H-1B visas each year.
The current cap is 65,000.
An additional 20,000 visas are available for graduates of an American university.
Because the visa is sponsored by an employer, employees who lose their jobs will only have 60 days to find a new job or face deportation.
In the 2024 draw, of the 258 thousand people who applied only 188 thousand were selected for the final random draw.
So, only 25% received a visa and thousands were turned away.
Once an applicant receives a visa, they face several restrictions.They do not have the same rights as a citizen and a person with a Green Card.
The spouse of a holder of a visa cannot apply for work without applying for employment authorization.
A 9 million backlog for American visas deepens the labor crunch.
71% of people on H-1B visas are born in India.The highly educated foreign national is at the mercy of the U.S. employer.
Big tech companies account for a lot of H-1B visa approvals.These include Amazon, Google, Apple, and Meta.They had 60,000 applicants in the last two years, but most of these companies laid off workers last year leaving H-1B visa holders in limbo.
On June 27, 2023, Canada stepped in.Sean Fraser, Minister of Immigration announced a new program.On July 16, visa applications for a pilot program became available, allowing up to 10,000 H-1B visa holders to apply for a three-year work permit in Canada.
The program reached 10,000 on the first day.
Canada is boosting its tech talent at the expense of the U.S.
Canada’s tech market has grown 15.7% since 2020.This growth has outpaced the U.S. tech market which grew at 11.4%.
Toronto and Vancouver rank inside the 10 top tech cities in the U.S. and Canada.
Canada is also home to Shopify, and Dell, Intel, Microsoft, and Amazon all have a presence in Canada.
Unlike the H-1B visa, people do not need to have a job lined up before moving to Canada. And unlike the U.S. system, visa selection in Canada is not based on where the applicant comes from.
There is a shortage of qualified labor everywhere.More people choose to go to Canada, Europe, and Australia rather than the U.S.
If the U.S. wants to attract and keep talented workers, it must streamline and reform the visa program.
The Fed may be finally done raising rates and the movement in the markets represents an expectation that the first-rate cut may be in May 2024.
All sectors closely tied to interest rates react – including bonds, REITS, precious metals, and financials.
The year-end rally is here, but there is still a question mark about what happens in January.
The government shutdown is on, but markets are nonplussed.
Oil prices and commodities are now trading as one, selling off on a slowing economy.
The tech bull market is back, and John believes it will continue for years.
The time is now to go aggressively long stocks and bonds.
Commodities and industrials are a second-half play.
THE GLOBAL ECONOMY - COOLING
CPI is unchanged at a cool 3.2%.
Nonfarm Payroll report fades to 150,000 in October, well below expectations.
The unemployment rate rose to 3.9%, the highest level since January 2022.(bad news is often good news for the market)
John believes a soft landing is now more likely.Inflation is falling and could lead to Fed interest rate cuts in H2 2024.Stocks and bonds party on the news/expectation.
Fed Leaves rates unchanged.
Weekly Jobless Claims drop 3,000 to 217,000.Unusually low.Hiring slowed in October as the economy slowed.
Tax cuts are on the table, thanks to inflation driving bracket creep for deductions.
China lent $1.34 trillion for the Belt and Road initiative from 2000 to 2001 to dominate Asian and African infrastructure.
STOCKS – OFF TO THE RACES
Most 2023 stock gains happened in 8 days, up some 14% since January 1.
If you are invested in Day Trading, you probably missed this.
Stocks are up 113 days vs. down 102 days.
Only seven stocks accounted for most of the increase.
Hedge Funds were crushed in last week’s monster rally – the biggest in 31/2 years.
The government shutdown is delayed.
IWM – small caps lead
John is holding back on TESLA because of the price war.
CAT- a great buy – domestic play.Long-term hold.
FCX- waiting for the EV price war to end.
BLK – Bitcoin ETF coming out soon.
BRK/B – LEAPS territory – great buy.
Emerging markets are ready to take off from the impact of a weak dollar.
BONDS
Moody’s rating service downgrades the U.S. citing deteriorating fiscal conditions and worsening chaos in Washington.
However, it maintained its AAA Rating.
Investors poured $5 billion into Bond ETFs in October.
10-year Treasury yields hit a new 16-year high, at 5.0%, then retreated to 4.45%
John states that the whole falling interest rate and rising bond price trade has been delayed for three months – hotter than expected economic growth at 4.9% for Q3 and more Fed rate rises.
Junk Bond ETFs (JNK) and (HYG) are holding up extremely well with an 8.74% yield and an 18-month high.
Buy (TLT) on dips.
Yields down to around 31/2% sometime next year.Look for around 99 in TLT.
FOREIGN CURRENCIES – LEVELLING OFF AT THE HIGHS.
Bank of Japan eases grip on Bond Yields – ending its unlimited buying operation to keep interest rates down.
Japan is the last country to allow rates to rise.Expect the Japanese yen to take off like a rocket.
The collapse of the U.S.$ is a 2024 event, and falling interest rates will control this narrative.
The Aussie dollar improving on a slowly recovering Chinese economy.
Buy (FXE), (FXB), (FXA), (FXY)
ENERGY & COMMODITIES
The sector hits a four-month low at $75 a barrel, down 4% as the shine comes off the energy sector.
Gaza boost is gone, which never delivered a supply cut-off despite many threats.
Fears of a global economic slowdown are mounting.
China’s oil imports have fallen for six consecutive months, the world’s largest importer.
Strategic Petroleum Reserve at $79 provides a floor bid.
Warm weather is capping rallies in natural gas (UNG).
Copper Bull predicts an 80% gain in the coming decade.
PRECIOUS METALS
Gold is the new hedge for 2024 market volatility.
Goldman Sachs bets on a 21% gain in gold for 2024.
Gold is headed for $3000 by 2025.
Drivers:soon-to-fall interest rates.
Silver is the better play with a higher beta.
Russia and China are also stockpiling gold to sidestep international sanctions.
REAL ESTATE - STALLED
Real Estate Commissions are about to drop sharply, the outcome of a court decision against the National Coalition of Realtors.
It’s estimated that the $100 billion paid in real-estate commissions annually could be cut by 30%, with as many as 1.6 million agents lowing their source of income.
Buyers are pouring into ARMs, or adjustable-rate mortgages – at 6.77% last week.
Fixed Rate mortgages around 8.00%.
Median home price for existing homes rose to 1.9% according to the National Association of Realtors (NAR).
The robust housing market suggests that while some buyers pulled out due to high borrowing costs, demand continues to outweigh supply.
The Ai Pin is here. Anyone for a wearable AI this Christmas?
Start-Up Company Name: Humane
Price:$699 + $24 monthly data subscription to T-Mobile.Subscription includes a cell phone number, unlimited talk, text, and data.
When available:Orders can start from November 16.
Founders:Imran Chaudhri and Bethany Bongiorno (former Apple designers).
Design:Smartphone alternative, but it doesn’t have a screen.
Choice of three colors: eclipse (black), equinox (black and white), and lunar (white).
Two-piece design – main computer and a battery booster – magnetically connected and can be powered through clothing.
Features:make calls, send texts, access information through voice controls.
The Laser display can project information such as time and date onto the user’s palm.
Built-in speaker and camera.Double-tap on the device to take a photo or video.View them on Humane’s web app.
Can translate spoken English and Spanish conversations.
Collaboration:Humane has collaborated with companies such as Microsoft.
Launch statement:Open AI “gives the AI Pin access to some of the world’s most powerful AI models and platforms.”
ROBOTS TO THE RESCUE ON THE REEF
An Australian scientist is using the power of robots to regrow the threatened Great Barrier Reef, which is in a lot of trouble because of climate change.
50% of corals have been lost worldwide and the outlook appears grim.70%-90% could be lost under climate change.
Dr. Taryn Foster, a marine biologist is cultivating coral from limestone, which is coral’s natural skeleton.Fragments of coral harvested from the ocean are glued onto plugs, which are then inserted into the limestone base.The whole skeleton is then planted in the ocean.Foster argues that this process bypasses several years of calcification to get to adult size by providing them with a premade skeleton.
Foster’s company Coral Maker has teamed up with AI business Autodesk.Robots will be doing the repetitive tasks.Foster’s goal is to mass-produce millions or tens of millions of corals every year to restore threatened reefs right across the world.
More coral bleaching is predicted in Australia this coming summer.Foster points out that more than 800,000 species are supported by coral reefs.Letting them disappear is not an option in Foster’s mind.
If you ever visit Australia, make sure the Great Barrier Reef is on your list of sights to see.The islands dotted off the coast of Australia in this area are truly stunning and deserve to be added to your travel schedule.The natural beauty of the landscape, the crystal-clear warm waters, the warm sunshine, and the welcoming locals are all a treat just waiting for you to enjoy.
Great Barrier Reef suffered the worst coral die-off on record in 2016.
(WHICH NOISE IS THE MARKET LISTENING TO:WARS IN EUROPE & THE MIDDLE EAST OR THE RECESSION DRUMS?)
November 13, 2023
Hello everyone,
Welcome to Monday.
It’s another earnings week, but this time much of the focus will be on retail.
Among the companies scheduled to post their earnings are Target, Walmart, and Home Depot.
The third-quarter earnings season has mostly exceeded expectations.More than 90% of S&P companies have already reported.Of those names, 80% have posted better-than-forecast results.
The earnings/economic agenda for this week:
Monday, November 13, 2023
Australia Consumer Confidence chg.
Previous:2.9%
Time: 6:30 pm ET
Tuesday, November 14, 2023
Home Depot
Time:before the open
Nu Holdings
US Core Inflation Rate
Previous:4.1%
Time: 8:30 am ET
Wednesday November 15, 2023
Target
Time:premarket
Palo Alto Networks
Time:after the close
UK Inflation Rate
Previous: 6.7%
Thursday November 16, 2023
US Export Prices
Previous: 0.7%
Time: 8:30 am ET
Walmart
Time: premarket
Friday, November 17, 2023
UK Retail Sales
Previous: -0.9%
Time: 2:00 am ET
Trade Idea: Palo Alto Networks (PANW)$253.51
(Stand aside if you don’t wish to trade during earnings.)
You can choose to trade the short-term trade or the long-term trade or skip the trade completely.
Last quarter:PANW posted earnings that exceeded analyst expectations, sending the stock higher.
This quarter:FactSet data shows analysts expect the network company’s earnings to have jumped 40% year over year.The company has surged 81% this year.History shows that PANW beats earnings estimates 93% of the time, per Bespoke data.The stock also does well on earnings days, averaging a 2.1% gain.
Palo Alto Networks (PANW)
The company has been rapidly introducing new products – 74 in fiscal 2023.
PANW has an 11.22% upside potential based on the analysts’ average price target.
Consensus rating of Strong Buy which is based on 33 buy ratings.
The company has grown sales at an incredible rate over the last 10 years and is expected to maintain strong continued growth.
Trade Idea – PANW $253.51
1/
Buy 1 Dec 15, 2023, PANW 250 call.
Sell 1 Dec 15, 2023, PANW 260 call.
Net Debit:$5.00
Max Profit:$500
Don’t pay more than $5.15.
2/
(Aggressive – 2024 out of the money position)
Buy 1 June 21, 2024, PANW 260 out of the money call.
Sell 1 June 21, 2024, PANW 270 out of the money call.
Net debit @ $4.60.
Max Profit: $540
Max Loss: 460
Don’t pay any more than $4.80.
Keep in mind that these figures may have moved a lot by the time you receive this trade idea.Do your trade research and make sure the risk/reward is in your favor.Also remember if the market pulls back, you may get a better price/entry point.
Update on the market:
S&P 500
The market has rallied nicely.From an Elliott Wave perspective after undergoing a Wave 4 correction, the market is undergoing a climatic 5th Wave advance onto the 4,700’s over coming weeks.The recent rally from the October 27th low of 4,104 is now overbought and any break of 4,350 area would likely trigger a corrective reaction back toward the mid-200’s, before the uptrend resumes.
Gold
Gold’s daily chart shows a developing 5-month inverse head and shoulders continuation pattern.Support lies at around $1910 ($1890 max) for a rally toward key $2,009 resistance (Oct. 27 high).Sustained break above $2,009 will yield an upside target of around $2,200 over the coming weeks/months.
Brent Crude Oil
Resistance is in focus.Unless Brent can clear $84.00 resistance, greater emphasis will be placed on Crude’s classical charting structure, which shows a completed 3-month head and shoulders reversal pattern, with a downside target of around $70.00.
Bitcoin
For all the crypto fans out there, here are my ideas about Bitcoin.
Bitcoin is in a bullish wave structure and could target $40,000/$43,000 over the coming weeks.Support lies around $36,000.My advice would be to take all or some profits as we get toward the 40k handle.After that target has been reached Bitcoin could slide down into the mid-teens – around $16,000.
What’s going on with Oil?
Oil has taken a pounding in the last few weeks.Brent crude was down 3.7% last week and WTI futures lost nearly 4%.These moves come during a shift in focus from immediate fears of the broader Middle East war to worries that the global economy is on the verge of a slowdown. (The stock market obviously didn’t get that memo and has cut through all the noise to rally strongly.)Mixed Chinese data and a rising dollar also gave bears more ammunition to pounce on the crude oil bulls.Additionally, the labor market is slowing, and consumer spending is declining as savings become sparse.
The problem is also one of supply and demand.Saudi Arabia, Russia, and other oil-producing nations have opted to extend their coordinated cuts, but that’s been offset by greater supply elsewhere, particularly in the U.S., where crude oil production hit a record 13.2 million barrels a day in October, according to the Department of Energy data.Higher domestic production weakens the impact of supply disruptions halfway around the world.
We could see $70 in Brent Crude before the selling pressure eases.
On the other side of the coin, some analysts argue that the selling pressure is overdone.
Phil Flynn, an energy market analyst at Price Futures Group said virtually everyone in the market right now is short oil futures.He added that “we’re probably the most oversold in a year in the market.”
Flynn points out that there is still a real risk of disruption from the war.Iranian Foreign Minister Hossein Amir-Abdollahian told Qatar’s Sheikh Mohammed bin Abdulrahman Al Thani last Thursday that an expansion of the war in Gaza is “inevitable,” according to Iran’s Press TV.
It’s clear to see, Flynn remarks, that the market has taken out all the risk of any supply disruption so if something does happen, we could see a sharp reversal of prices.
Citi analyst, Maximilian Layton said prices will likely consolidate at current levels for now but noted that there are upside risks on the horizon.OPEC+ meets in two weeks and could take action to defend prices while there’s still a low risk of regional war.There is still a risk of conflict spreading to other parts of the region, notably the risk of Israel-Iran attacks, or the US being drawn into the conflict, and/or imposing tighter sanctions on Iran again.
Speculators might well be behind the swings in oil.Fears of supply interruptions typically spur the oil trade to buy “just in case”.When no supply disruption takes place, the market gets hit with liquidations of these positions, which, without the war, wouldn’t have been bought in the first place.
Analysts point out that the outlook for oil stocks and the commodity itself is for higher prices next year. According to a BCA Research Report from Robert P. Ryan, chief commodity and energy strategist, and Ashwin Shyam, associate editor for commodity and energy strategy, it can be argued that based on supply-demand fundamentals, Brent Crude – the international benchmark – should average $118 a barrel in 2024, up from $80 currently.
Stronger global demand should underpin the market in 2024. UBS’ Global Wealth Management also sees Brent moving higher to the $90 to $100 a barrel range.OPEC expects an increase of two million barrels daily in 2024, while the International Energy Agency forecasts an 800,000 daily move.
BCA Research notes that if the war expands to include Iran and its proxies and drives crude prices above $120, Saudi Arabia and the U.A.E could release up to 2.5 million barrels a day, keeping oil roughly in that range.
BCA advises investors to take positions in the SPDR S&P Oil & Gas Production exchange-traded fund (ticker: XOP).
There is a very high degree of risk involved in trading. Past results are not indicative of future returns. MadHedgeFundTrader.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for futures trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information. You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of MadHedgeFundTrader.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies.
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