Futures and options trading involve significant risk of loss and may not be suitable for everyone. Only risk capital should be used when investing in the markets. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The opinions and viewpoints discussed herein are entirely my own.  No representation is being made that a specific strategy or discipline will guarantee success or profits.  Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets.  Past performance is not necessarily indicative of future results.  The data contained herein is believed to be drawn from reliable sources; however, individuals acting on this information alone are responsible for their own actions. This material is, or is in the nature of, a solicitation. 

December 12, 2022

Several months ago, the intro to my newsletter was as follows:

October 18, 2022

I have been back from the Northwest “woods,” where I purposely knew zip about the markets, for several weeks now…and I think, am about as objective as ever get in this stuff. What follows are various notes and observations I’ve been making…and along with them, recommendations as to where I see the potential for big moves…and large percentage profits if I am right. Obviously, if I am wrong it can mean losing every dollar you put on the table.

 Stocks are a Buy

Unless you think the world as we know it is just stopping dead, I would suggest that virtually every major stock market in the western world is a buy.

And  I continue to think the same…

Regardless of all the negative angst Wall Street is spewing…

 As I have forever understood, and you are probably tired of hearing it, ALL of these paper markets…Stocks, Bonds, and Commodities…are just one giant mob psychology game…what I sometimes refer to as the “world’s biggest video game, not played for points, but for real money.” And that the price of every market we trade is nothing more than today’s perception of value, which is directly influenced by herds of analysts, investors, economists, traders  and internet squawking heads who are ALL hooked into the same mass media information stream…Whether it’s some well known name at one of the brokerage houses, who is purportedly deemed an “expert” or “professional” simply because they work there…or down to some Joe Average sitting at home in front of a computer, EVERYBODY is seeing the same information, and believing in the same supposed metrics (PE’s for example), and subscribing to the same well worn economic “rules” (and buzzwords) about what does and doesn’t matter…all of which SUPPOSEDLY is what moves the markets in a particular direction.

I know I  am always citing this, but really, how many times do you have to see bullish or bearish stories, or unanimously held opinions, just totally blown out of the water by what the markets actually DO…when, loosely estimated, this sort of thing must happen in a major way, 100’s of times a year? I mean, one year ago, not 1 in a 100 brokerage house analysts was telling anyone,” Hey, get OUT of the market now, especially all those tech stock rockets!” Or when I started buying Eurodollar puts a year ago, when the overwhelmingly popular opinion was that rates would be staying almost indefinitely at zero…and NOT that interest rates were about to go up more rapidly than at almost any time in history? When even the Fed (true “professionals?”) totally misread the inflation issue? And more recently, while the media has been screaming about non-stop inflation, what we’ve actually seen are any number of commodity markets having had giant percentage collapses during the past 3-6 months… And yeah,  I am repeating stuff you’ve heard over and over from me, but the point IS accurate. It is TRUE that whether or not it’s YOU, or me, or some bigwig name, everybody IS formulating their opinions and decisions based on the same media information…and importantly, while you certainly get media people trying to garner attention by sounding like they have a different perspective, or something new to offer, ALL of them are basing what they have to say on what they have been reading or hearing, and again, using the same myths about what moves the markets, from EVERYBODY else. For sure, they all try to sound independent, but they are NOT.

What’s the point here?

Again, a year ago, virtually every well dressed, articulate and buzz-word-proficient analyst and/or “strategist” (still think that Wall Street created term is the biggest joke there is) was simply full on bullish the stock markets…and virtually none of them were even remotely suggesting, “Look out. Crash ahead!” Then they spent months predicting up turn after upturn as the markets absolutely cratered…and they stayed that way, bullish, UNTIL stocks definitively (I believe) bottomed in early October…by which time, pretty much that entire crowd of formerly bullish brokerage house sheep had finally become bearish…again when the markets were dead on their lows…And now? From what I can see, after watching the Dow rally 20%, they are STILL BEARISH. And if you think that’s an inaccurate description (accusation), check out this chart and then these headlines going back to when the upturn came in early October.

OK…I keep a running collection of headlines, primarily generated by the banks and brokerage houses, from 4 or 5 major sites…and they are presented below here chronologically…beginning with when the lows were being made  (OCT 13)  and ending with a few days ago…

Hopefully you’ll skip through them one by one and note all the big brokerage names…supposedly the “pros” in this game…and understand (for the 1000^th time) just how routinely WRONG their opinions really are…and remind yourself that, in spite of a 20% rally, they are STILL preaching, “Don’t buy it here.”

But my intention is not to sit here and say, “these guys are idiots and I am a genius.” I can be absolutely stupid at times in the markets…but these guys, in my observance, going back 42 years to my first 11 years in this biz at Merrill Lynch, ARE routinely so backwards as to be comical…EXCEPT for the fact that they DO influence how many people invest and risk their savings…At any rate, when every other word in the media today is either “Recession” or all of the rot you see above, I CONTINUE TO RECOMMEND BUYING THE STOCK INDICES.

So, RECESSION?...Who cares? OR I seriously doubt it…

For one, Oil prices, a MAJOR tax on the consumer have been almost CUT IN HALF since June, meaning money that was going to oil companies is being spent elsewhere…And with slides taking place in housing prices, producer prices, commodity prices, rents, retail consumer goods, etc…I’m fairly certain that the Fed has pretty much shot their last bullet…that if they do raise rates this week…THAT’S IT. Rates will then be moving sidesways to lower, which is already happening in long term rates…with TREASURY BONDS (which I am still long…with only one taker on my last buy recommendation) HAVING NOW RALLIED 14 POINTS IN THE LAST 5 WEEKS…as LONG TERM YIELDS HAVE DROPPED BY ALMOST A FULL 1%, the point being, Long Term Interest Rates have already started going down…which also is a “boon” for the economy.

And simply stated, a 3.7% Unemployment Rate means that anybody who wants a job can get a job. And when the whole damn population is working, and yes, many of them are getting the short end on life…which is the way it has begin throughout the history of civilization…EVERYBODY is working and EVERYBODY has some degree of bucks in their pocket to GO OUT THERE AND SPEND ON SOMETHING “EXTRA,” which IS why every store, highway, shopping center, airport, etc. is PACKED WITH CONSUMERS…And that is NOT going to stop.

I could go on and on…about technology growth, and expanding international consumer consumption, and the pandemic effectively being behind us as an economic deterrent, and the WAR too…and so on, but I’ll just stop here and say: THE USA AND WORLD ECONOMIES ARE GOING NOTHING  BUT “NORTH” FROM HERE. IGNORE ALL THOSE WALL STREET NAYSAYERS….AND BUY THE STOCK MARKETS. Here, there and just about anywhere.

And interestingly, with ALL the negativity, the chart below still LOOKS LIKE SOMETHING OF A COILED SPRING TO ME…that really COULD come out of here and just RUN from here…

Two ways to do this…With Futures, using the “micro mini” S&P 500 contract…

Or Buy Call Options…

And yes, this would be new all time highs…which we’ve been seeing for decades (with obvious contractions along the way)…But essentially, I continue to think we are in a global boom that began with the STILL EXPONENTIALLY EXPANDING TECHNOLOGY REVOLUTION in 1980, which was augmented by the collapse of Communism in 1989-90, thereafter leading to a worldwide adoption of Capitalism by Eastern Europe and China, thus introducing 2-3 billion new capitalistic consumers to the planet’s economy…And now, with Covid semi behind us, and certainly no longer a system wide economic surprise/distorter/deterrent…AND the Fed basically being DONE, AND the mid-terms out of the way, AND Crude’s almost 50% drop having drastically slashed energy prices for consumers, AND inflation on the wane, AND the strong (I think) possibility of Putin easing out of the war, I SEE NOWHERE FOR THE  ECONOMY, AND EQUITIES, TO DO ANYTHING BUT GO UP.

Call me if you agree, disagree, etc…Believe me, I LOVE to hear YOUR opinions.

Thanks…And Feliz Navidad y’all,

Bill

770-425-7241

866-578-1001

All option prices in this newsletter include all fees and commissions. All charts, unless otherwise noted, are by Aspen Graphics and CRB.

The author of this piece currently trades for his own account and has a financial interest in the following derivative products mentioned within: Micro Mini S&P 500