Thursday morning
January 12, 2023
Hello everyone,
How are those New Year’s resolutions going??
Any traction? Is there stickability there?
Why not head over to Honolulu for a few days in February this year and join John for his strategy luncheon on February 17. It’s a win-win trip – a holiday which is a tax deduction as you are travelling for business, and you will have the potential to make money while you are there. Can’t beat that.
If you are heading over to Europe for the northern European summer, why not add a cruise leg? You can join John on the Queen Mary for the July 13 Seminar at Sea.
John did his bi-weekly webinar yesterday, so this post will be a summary of what he talked about.
Title: January Surprises
MTD – hottest start in history of Mad Hedge Fund Trader with 13.89% MTD.
90% invested (40%long and 50% short)
TSLA
GOLD All long
WPM
BRKB
Three TLT trades All short
46.67% average annualized return
Expect choppy markets and range trading for the next 6 months. 355 on the downside and 410 on the upside.
2023 – the year of commodities.
Look for S&P 500 at 4,800 by end of 2023.
VIX dives to $22 = no trade.
Gold and Silver break out.
Energy – new lows on warmer weather and supply glut and Russia failures.
Nonfarm Payrolls come in warm at 223,000 for December.
Shipping costs dive 40%, as supply chain problems end.
IMF sees a slow decade of global growth.
Slowing from 3.2% in 2022 to 2.7% in 2023.
The Fed is selling 90 billion worth of Bonds every month.
2023 starts with a big, short cover, but we are stuck in a range.
2023 will be all about value in H1 and growth in H2.
Commodity plays will lead, oil plays will lag.
Financial will be strong,
Biotech will be the safety trade.
Use pullbacks to scale into tech stocks.
Start scaling into Tesla.
Tesla is now the most widely owned and traded stock in the market, beating Apple.
Terrible H1 and strong H2 to replay in 2023.
One million and a half orders for Cybertrucks.
Tesla selling at 10 times their 2020 earnings.
Suggested trade: Tesla LEAP Jan 2025, 180/190
Buy calls at 180
Sell short calls at 190
If Tesla closes over $190 in two years, you will do well.
One subscriber asked about the FCX LEAP, "The January 2025 FCX LEAP approaching the upper end of the 42/45 range. If it crosses 45, do we close the position?"
Sell half – take the profit.
Keep the remaining half – play with the house’s money.
Expecting $100/share by 2025 expiration.
Therefore possible 1000% return on position.
Possible head and shoulders bottom forming on Microsoft. Think about a 2-year LEAP on this stock.
ROM – also possible head and shoulders bottom.
BONDS
A new default risk.
Dark clouds are hanging over the bond market as a government shutdown and default this summer is in the cards as chaos reigns in the House of Representatives.
The House controls all the spending in the U.S. government with a majority of 4, soon to be an unmanageable 3.
TLT should reach $120 in 2023 without political interference.
Keep buying (TLT) calls, call spreads, and LEAPS on dips.
30-year fixed-rate mortgages dropped 80 basis points to 6.48%.
U.S. budget deficit drops by half.
Buy TLT, JNK, and HYG on dips.
New House Speaker = probable defunding of the IRS.
Bond negative.
Prevents the IRS from upgrading computers, and improving customer support. E.g., if your accountant wants to ask a question, they are kept on hold for an hour. When you’re paying them $100/hour, that’s not an ideal situation.
Foreign Currencies
Japan reverses 30-year easy money policy – interest rates rise from 0.25% to 0.50%.
Yen soared 4% on the move.
Buy Euro, Pound, Aussie, and Yen.
China lockdown will keep the Yuan relatively weak.
Strong currencies will also deliver major bull markets in emerging markets stocks. (EEM) & (CEW).
The US is now the world’s top oil producer followed by Saudi Arabia & Russia.
Gold/Silver
With interest rates likely to fall in 2023 – reactive by the Fed to recession, precious metals could be one of the big trades of the year. Demise of crypto puts new focus on gold. Buy GLD, GDX & GOLD on dips.
Become a subscriber to Jacquie’s Post. Just go to madhedgefundtrader.com and go to John’s store, or simply click here.
Cheers,
Jacque
"The man who does not read has no advantage over the man who cannot read." - Mark Twain.
