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Hello, my friends...                           01-05-2021     1950hrs

We begin this year in pretty much the same condition as we did during the last several weeks of 2020. In my view, it is way too late to be buying, except perhaps for defensive purposes. Although the market has managed to continue making new highs, the action has been very choppy and on ½ the volume when compared to the subsequent selling. Please remember that though I see limited upside potential it does not automatically mean the market is ready to go plunge off a cliff. As I have discussed in past weekend and market reports, tops take time to develop (more of a rounding pattern), especially significant ones (made on weak volume), and even after the final closing highs have been seen, it is sometimes many weeks or months before a bear market gets underway and becomes fully developed. Since the NYSE went on my fully bearish longer-term indicators the Dow has gained 2.0%. The SPX-500 has gained 2.4%. These new highs have so far been contained within the 5% range rolling top technical that I consider being significant. I think caution is warranted, but I cannot say with a high level of conviction as yet that the market is currently on the brink of a significant decline. In my view, the upside potential over the intermediate to long term is limited. The $64,000 question yet to be answered is whether an intermediate-term correction of 10- 20% will restore the technical health of the market or whether the avoidance of a health-restoring correction will lead to a major bear market.

Stocks did have a bit of an afternoon trading bot lift [light volume]. The Dow actually went negative before turning back up. While the proponents of BitCoin are trying to claim creditability and indestructibleness, I think that was more of a short squeeze [like we have seen in TSLA of late] than anything else. The financial news cheerleading media presumes that the strength in crude oil was based on the surprise cut by Saudi Arabia of a billion barrels a day in production. But many traders feel that crude oil may also be up on the idea that a new President may be tested with new Mid East tensions. Whatever the reason energy stocks led the rally defiantly, and I think to some degree that put a bid on the Short-crude-trade. At any rate, the bulls were very-grateful take it, after yesterday's slightly whipsawing performance. The key will be, can the crude bulls hold onto the gains tomorrow. That will be an important test.

Oil prices soared today on the heels of Saudi's self-sacrificial slashing of 1-million b/d output. They said this action was pre-emptive which, does not seem like a positive catalyst just how worried are they about their economy? How much did they want to suck up to Russia with a Biden administration coming into the mix? 

“We do that with the purpose of supporting our economy, the economies of our colleagues in OPEC+ countries, to support the industry,” Prince Abdulaziz told reporters. The Saudi pledge (if we can believe their crap) makes for a tighter crude market than traders had been anticipating and their action sent crude surging to a new 10-month high with WTI back above $50.00 until the API report was released.

API" the report showed the following

·         Crude -1,663mm (-1.2mm was expected)

·         Cushing +1.003mm

·         Gasoline a gain of 5.473mm  (+1.4mm was expected)

·         Distillates a gain of 7.136mm (+2.2mm was expected)

Analysts expected a 4^th weekly crude draw to end the year and they were spot on but the product builds were very significant... and not very bullish...

As most of you saw in my intraday comments and subsequent updates yesterday the action was intriguing to say the least. Many of the indices opened up into new record highs in many cases. The buying apparently may have come from offshore as global markets and futures were better, but once the apparent foreign money was deployed there seemed to be no follow-through. What may also have happened (that I should have thought of ahead of time) was that while it was the first day of a new month and a new year which might brought possible new money, what showed up instead may have been people who wanted to defer profit taking (delaying capital-gains tax) into this fiscal year and less they waited and began selling as soon as the opening rally stopped. I believe even people who feared that there is a possibility that capital gains could be raised assume it would not be retroactive to the beginning of the year but rather it would take place effective on the date it was passed (in 2021). Soon into the late day that selling found itself selling into a vacuum (lack of depth and buyers) and prices began to escalate on the downside and then the technicals deteriorated further and sell-bots took-over. The markets began to look like we were about to experience a major one-day key-reversal and that may have frightened traders and that exacerbated the selling into the early afternoon hours. We saw that the selling abated somewhat as the European markets closed (this is when my sell signals indicated a reversal as such, I covered our trading SHORTS and reversed into LONGS on the indexes and futures). It was hard to do so as the deterioration was heavy enough that by mid-day, we were looking at possibly having the worst first day of trading since 1932. Pavilion dip buyers and bargain hunting began to show up which trimmed the losses.

 

Traders feared that today initially could be a rumor mongers delight and that it would be all about the Georgia election and King-Trump antics. While it is unlikely that we will have any results for days after. The key overall concern here is about whether the Democrats will sweep and control the Senate. I do not at this juncture expect that but if they did sweep with a Vise Presidential tie breaker vote majority would give them a chance to ram through all kinds of tax programs etc. By having the simple majority, they will be allowed to name each committee chair.

We saw today that December ISM manufacturing index rose to 60.7 from 57.5, and that was above the estimate of 56.8. This is the highest reading since August 2018. New orders rose to 67.9 from 65.1, while backlogs grew to 59.1 from 56.9. Supplier deliveries, implying delays in deliveries because of supply constraints, rose to 67.6 from 61.7. Inventories, both at the manufacturer and customer levels, were up slightly and still remain lean. Employment got back above 50 at 51.5 from 48.4. Export orders ebbed a touch to 57.5 from 57.8. Finally, and a big theme of mine this year as you know, prices paid jumped 12.2 points to 77.6, the highest level since May 2018. The ISM said, “The manufacturing economy continued its recovery in December. Survey Committee members reported that their companies and supplies continue to operate in reconfigured factories, but absenteeism, short term shutdowns to sanitize facilities and difficulties in returning and hiring workers are causing strains that are limiting manufacturing growth potential. However, panel sentiment remains optimistic.”

We saw in 2020 the goods side of the economy the beneficiary of the collapse in spending on services and it is likely why manufacturing so outperformed. The need for inventory replenishment also gave the sector a boost in the latter half of 2020. This strength should continue this year until the service sector starts to come back and consumers shift their spending again. At the same time, supply constraints will continue, inflation pressures will only grow, and we will see in the back half of 2020 how this shakes out when factory floors are mostly immunized.

 

Some new ideas:

Ø  Developed     01-05-2021  “SHORT”  Bloated financial stock (looking for a double top failure) “GS”   Ranks a B+ Swing-Trade, I am  looking to take (400/ 100 for the portfolio)   “GS”  (LIMIT ORDER at $287.85 to step in)  “GS ” is a SHORT I prefer a push into overhead resistance at  $297.00+/-  and or > than < $279.85   target $250.05  then $237.05  its optionable              

Ø  Next earnings release: 01/19 before market, confirmed. EPS consensus: $6.41 (they reported $9.68 last quarter)  Revenue consensus: 9.66 billion  (they reported 10.700 billion last quarter)

Ø  Developed      01-05-2021  “SHORT” solar index    “TAN”   Ranks a B+ Swing-Trade, I am  looking to take (800/ 200 for the portfolio)   “TAN”  (LIMIT ORDER at $111.85 to step in)  “TAN ” is a SHORT I prefer a push into overhead resistance at  $119.00+/-  and or > than < $109.85   target $87.05  then $70.05  its optionable       

Ø  Developed      01-05-2021    “RLAY”    Ranks a B+ Swing-Trade,  “Biotechnology stock”    I am  looking to take (1000 for me / 500 for the portfolio)   (LIMIT ORDER at $27.50 to step in)  “RLAY ” is a LONG I prefer a technical solid retracement to $26.40+/-  and or a drop below and support established at $31.00    target $39.05  then $45.05  its NOT optionable          12% Short interest

Ø  Developed      01-05-2021    “GBIO”    Ranks a B+ Swing-Trade, I am  looking to take (1000 for me / 500 for the portfolio)   (LIMIT ORDER at $17.50 to step in)  “PLTR ” is a LONG I prefer a technical solid retracement to $16.40+/-  and or a drop below and support established at $20.00    target $27.05  then $34.05  its optionable          on 01/04/2021: Generation Bio reports two non-viral gene therapy milestone achievements; Data confirm delivery of closed-ended DNA to the liver via novel, cell-targeted lipid nanoparticles    ALSO  Generation Bio files for 7.5 mln share common stock offering 

Ø  Developed      01-05-2021    “PLTR”    gaining government contracts   Ranks a B+ Swing-Trade, I am  looking to take (1000 for me / 400 for the portfolio)   (LIMIT ORDER at $13.00 to step in)  “PLTR ” is a LONG I prefer a technical solid retracement to $12.40+/-  and or a drop below and support established at $16.00    target $22.05  then $29.05  its optionable     Palantir Technologies Inc. builds and deploys software platforms for the intelligence community in the United States to assist in counterterrorism investigations and operations. It offers Palantir Gotham, a software platform for government operatives in the defense and intelligence sectors, which enables users to identify patterns hidden deep within datasets, ranging from signals intelligence sources to reports from confidential informants, as well as facilitates the handoff between analysts and operational users, helping operators plan and execute real-world responses to threats that have been identified within the platform.

Ø  Developed      01-05-2021    “QURE”   Ranks a B+ Swing-Trade, I am  looking to take (1000 for me / 300 for the portfolio)   (LIMIT ORDER at $22.50 to step in)  “QURE ” is a LONG I prefer a technical solid retracement to $21.40+/-  and or a drop below and support established at $30.00    target $45.05  then $53.05  its optionable     QURE  Provided a clinical update on its hemophilia B gene therapy program; co's Phase III HOPE-B study has been placed on clinical hold by the FDA following the submission of a mid-December safety report relating to a possibly related serious adverse event associated with a preliminary diagnosis of hepatocellular carcinoma (HCC) in one trial patient who was treated with AMT-061 in October 2019 and who also had multiple risk factors associated with HCC. Co will conduct investigations into whether the gene therapy made any possible contributions to the development of HCC. At two-month lows.

Ø  Developed      01-05-2021    “ABNB”   Ranks a B+ Swing-Trade, I am  looking to take (1000 for me / 300 for the portfolio)   (LIMIT ORDER at $13.20 to step in)  “ABNB ” is a LONG I prefer a technical solid retracement to $102.40+/-  and or a drop below and support established at $120.00    target $145.05  then $166.05  its optionable     

Developed      01-05-2021    “DASH”   Ranks a B+ Swing-Trade, I am  looking to take (1000 for me / 300 for the portfolio)   (LIMIT ORDER at $13.20 to step in)  “DASH ” is a LONG I prefer a technical solid retracement to $90.40+/-  and or a drop below and support established at $109.00    target $125.05  then $146.05  its optionable     

Ø  Developed      01-05-2021    “WW”   Ranks a B+ VALUE & Swing-Trade, I am  looking to take (2000 for me / 600 for the portfolio)   (LIMIT ORDER at $13.20 to step in)  “WW ” is a LONG I prefer a technical solid retracement to $12.40+/-  and or a drop below and support established at $16.00    target $23.05  then $37.05  its optionable       

I restarted the Growth and Value Play portfolio as of 01/01/2021, we had record returns in 2020, should be impossible to repeat gains of over 1000%, the portfolio has been reset to $25,000, not including the carry overplays

I have placed bets that they could try to gap-up and romp the markets into this 1^st trading week of the New-Year!

WE are knocking on the entry door on a number of our SHORT inverse leverage funds, see notations, most are optionable as such we can buy longer-dated calls, a vertical call spread or a covered call situation...