Stocks REALLY Ready to Lift Off?
Although a handful of Wall Street geniuses and Internet Yakheads have obviously HAD to acknowledge the bull market, there are still hordes of them trying to “intelligently” advise, “Don’t be a buyer here!” As I keep writing, when the Stock Market IS ready to stop, you won’t see ANY of them saying, “Wait! Not here!”, and you won’t see ANY headlines like those that follow (from the past few weeks)…all of which continue to demonstrate, on a daily basis really, that THERE IS STILL A TON OF STOCK MARKET DOUBT BEING SPEWED BY THE SUPPOSED FINANCIAL INDUSTRY “PROFESSIONALS.”
And to be clear, I could
not disagree more with ALL of the above…This IS a mob psychology game, and there
are still mountains of money on the sidelines, held by the “pros”, that should
already be invested in the market, but is not…And it WILL BE…just at sharply
higher levels as this thing absolutely runs away from them…
In spite of all the political turmoil in DC, I think the news is finally about to include an avalanche of “INFRASTRUCTURE BUILDING” (and spending) out of Trump and Congress. And yes, there will be token grumblings about “How do we pay for all this?”, but in the end, BUILDING, BORROWING AND SPENDING WILL BE THE THEMES GOING FORWARD…and THE RESULT WILL BE INCREASED ECONOMIC CONFIDENCE, GROWTH, AND ACTIVITY…ALL OF WHICH, I ABSOLUTELY AND TOTALLY BELIEVE, WILL MEAN SHARPLY HIGHER INTEREST RATES.
As I have been saying since the election…ALL OF THAT BUILDING (TRILLIONs!!!) WILL BE DONE WITH BORROWED MONEY…AND ASIDE FROM THE INFLATIONARY IMPLICATIONS OF INNUMERABLE GIGANTIC CONSTRUCTION PROJECTS…WHEN YOU HAVE BIG BORROWING, YOU DO GET HIGHER INTEREST RATES…And in the vein, I would also add that the Trump administration IS talking about an expansion, which, in my opinion, could only be compared to the sort of MASSIVE gearing up the USA went through as we entered World War II…In other words, we may be about to see a ramp up in economic activity…on 1000’s of fronts…on a scale that none of us…analysts, bankers, economists and Fed governors included…have EVER experienced or seen in our lifetimes…And therefore, how high (or quickly) rates could go may be beyond anyone’s current possible comprehension…Let’s get real…Until it happened , there weren’t 2 economists in a million who would have predicted that rates could go a LOW as they did…and I therefore say the same could easily now be the case going back in the other direction.
The Eurodollar market has been on pause for the past 5 months. It has been painful to sit through…and I don’t say this NOW just to say it…But I do think the major sell off I have been anticipating IS about to begin…The truth is, although it is not tit for tat, nor day for day, as I noted months ago, the Eurodollar market has had a DEFINITE tendency to trade dead opposite the Dow Jones…and with the Dow, I believe, about to take the lead, and EXPLODE higher, I think that EURODOLLARS ARE ABOUT TO BEGIN WHAT I CONTINUE TO THINK WILL BE A BIG,RELATIVELY NON STOP, MOVE LOWER.
Here is an update on the relationship between the two…
And even on their own, I think this Eurodollars are now ready to break…
Look…I am human…Five months sideways has left me worn out and discouraged…At the same time, my research and objectivity tells me, “This IS going the right way”, “What you are expecting IS unfolding and at some point WILL just blow wide open and trend steadily (no consolidations) lower.”
So…when I finished creating the chart that now follows, and sat back and looked at the cost of this option…and the way I know this market CAN (and I believe, WILL) collapse to the downside, any discouragement I might have had just TOTALLY disappeared…THIS STILL IS A GREAT, GREAT TRADE. I MIGHT BE DEAD ASS WRONG BUT THESE ARE INCREDIBLE NUMBERS…I ABSOLUTELY AM ADDING TO MY POSITION…AND ENCOURAGE YOU TO DO THE SAME…AS HARD AS IT MAY BE.
I believe that what I have drawn here is a VERY real and potentially quite accurate possibility…THIS CONTRACT STILL HAS JUST A SINGLE 1/4 % BUMP IN RATES BUILT IN BETWEEN NOW AND DECEMBER…AND I THINK THAT IS TOTALLY FRIGGING NUTS.
I know it’s hard…but I say, GET SOME MORE…I absolutely believe the Septs are going to come through (when this starts, it STARTS, and the Sept 9850’s are only 16 ticks out of the money), but the big value right now is in these December 9850’s…7 ticks out of the money and 7 months to go????
Recent pep talk note to myself that is so true: The hardest, but smartest, thing in this business…is to be enthusiastic when you really don’t feel that way.
Call and say hello…
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