January 17, 2017
The yakkity yak nitwits are still saying,
“Don’t buy it here. The Trump rally is over.”
The stock market has basically been moving sideways to higher in a very small range since mid December, and it now seems that herds of nitwit brokerage house analysts and talking heads are once again bleating the same “Don’t buy it here” garbage they were spouting throughout 2016…For sure, there are some of them who have begrudgingly had to adopt a bullish perspective, but there are PLENTY of so eloquent “experts” STILL telling you to SELL…Here below, again, as evidence, are just a few recent headline examples of exactly the sort of incessant bearish leaning nonsense they continue to espouse…day after day, week after week…And DO note that three of these headlines are straight from the major brokerage houses…to which I would add: When have you EVER seen the brokerages, as a group opinion, be anything but investor poison? Also, as I’ve repeatedly pointed out…from my own experience working at a major house for 11years…just because they pin analyst labels on some group of guys does NOT mean they have ANY idea about which way prices are going…In plain English, they always seem to know everything about a market…EXCEPT… where it going.
Let’s be clear…I think all of the above is just ignorant babble coming from people who look good, dress well, and SOUND smart…but are just plain FOREVER wrong…which includes the ONGOING rally that they TOTALLY have missed since the election…and really, for ALL of 2016.
And here is what the three major indices actually look like…
And as I keep writing, IF STOCKS ARE GOING SHARPLY HIGHER, INTEREST RATES ARE GOING TO DO THE SAME…MEANING EURODOLLARS WILL BE GOING SHARPLY LOWER.
And, yes, I am like a broken record on this…But when I have what I think is the one of the biggest opportunities I have ever seen in this business…and have so very few people seeming to agree with me…It DOES affect my opinion…and fervor. I have written a newsletter for almost 35 years now, and I long ago realized that the best ideas are the ones that nobody wants…and right now, in spite of the fact the Eurodollar market currently has barely more than a 1/4% increase in rates built in all the way out to September (8 months!), I have virtually no one who wants to buy the September put option I am now recommending.
My VERY Strong Opinion…
STOCKS ARE NOT FINISHED ON THE UPSIDE…NOT EVEN CLOSE…AND INTEREST RATES ARE JUST BEGINNING TO RISE…MEANING EURODOLLARS HAVE ONLY JUST STARTED THEIR DOWN MOVE…WHICH I FIRMLY BELIEVE WILL TAKE THEM DOWN, AT LEAST, 125-150 POINTS DURING THE BALANCE OF 2017.
I RECOMMEND BUYING THIS PUT OPTION NOW…
BEFORE THE FIREWORKS START IN STOCKS…
AND BEFORE YOU START HEARING
“FED RAISING RATES FASTER THAN ANALYSTS EXPECTED”
I may be quite wrong...but I do think that the move down WILL happen pretty as I have drawn it below...if not even faster...and bigger...And DO understand that just because this market has been "meandering" lower does NOT mean it can't suddenly accelerate, literally from one day to the next.
By the numbers…To see this option worth $625…a triple…Eurodollars would need to move only 40 points IN THE NEXT 8 MONTHS…And to see it worth $1250 (7 x current value), they would need to move only 65 points IN THE NEXT 8 MONTHS…So I’d encourage you to take another look at the chart above and count the 25-50 point moves that already have occurred during the past year…while all the market was basically doing was moving SIDEWAYS…Obviously, if I am wrong about all this, and Eurodollars stay up here above 9850 for the next 8 months, this option WILL then be worthless..
If you think I am making sense, DO something with this…whether you already own some or not…If you agree with me, and have the risk capital and the temperament for highly leverage investments like this, don’t just sit there and “wait to see what happens first.” The trade, and the leverage, is there now…In fact, this same option, now at 5.5, traded at 11(a double) just three weeks ago when Eurodollars were just 10 ticks lower…And believe me, just one or two good down days can put it right back there…and the current leverage will be gone…
Consumer Price Index (inflation gauge) out tomorrow at 8:30 AM…Will be interesting to see what happens..
Give me a call if you want to know more…
All option prices in this newsletter include all fees and commissions.
The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Eurodollars