Hello my friends... this is the nightly update 01-14-2021
Trading list has been updated see attached.
U.S. stock indexes (except the Russell-2000) gave up their modest earlier gains to dip into the red in the final hour of trading today, to close slightly down on the day. Investors, economists and political analysts are all looking ahead and trying to assess what will be in an address by President-elect Biden scheduled for this evening, in which he is set to unveil his economic agenda and plans for further U.S. stimulus.
The NYT reports that Biden's spending package to combat the coronavirus pandemic (just another bull-shit smoke screen in my opinion) and its effects on the economy has an initial focus on large-scale expansions of the nation’s vaccination program and virus testing capacity" will come in at ~$1.9 trillion....this comes on the heels of the Coronavirus Aid, Relief, and Economic Security Act, which came in at a deficit of $2.2 trillion economic stimulus bill passed on March 27, 2020, in response to the economic fallout of the Covid-19 pandemic this will be another massive bailout and give-away program!
The package,
which will cover the pandemic, the economy, health care, education, climate
change and other domestic priorities and will include money to complete the $2,000
direct payments to individuals, and aid to small businesses and local and state
governments. One thing that markets may not like is that contrary to
previous expectations that the “stimulus” check will be $2,000, Biden will
instead propose additional $1,400 stimulus checks. This means roughly 30%
less purchasing power to buy out of the money extremely speculative calls on
stocks trading at all-time highs 😊.
Ø
It will also include an extension of
supplemental federal unemployment benefits, which are set to expire in March
for many workers, and more bailout help for renters.
Stocks dropped to session lows on news that instead of a $2,000 additional bailout stimulus the Biden plan will only include another $1,400, adding to the previously released $600 from the December $900 billion stimulus plan. The fact that Biden is going through with an almost $2 trillion stimulus contrary to that such an amount could be overly aggressive and be met with resistance even among centrist Democrats sent the 10-year yields to session highs.
Powell said it is way too early to talk about making any changes to the central bank’s massively easy monetary policy stance, including its $120 billion per month bond-buying program. He stated it would not be appropriate to even begin to talk about slowing down or “tapering” the bond purchases until there is “clear evidence” the FED is making progress on their “phony- bogus” employment and inflation goals, Several Fed-heads have speculated that if the economy recovers strongly this year, the central banker could reduce the pace of its asset purchases, but Powell pushed back on this speculation as it is not Bank or market-friendly rhetoric. “Now is not the time to be talking about it,” he said, “the economy is far from our goals.” Powell also said that the time will eventually come for the FED to raise their policy fed funds rate off zero but said “that time, by the way, is no time soon.”
Powell who would not see the inflation monster unless he was bitten by it also cast extremely doubt on the idea that inflation is coiling like a spring while the economy is hampered by the Covid-19 pandemic and will blast off higher as I am forecasting much-much higher once the economic activity resumes due to massive new deficit spending “stimulus” and massive free and easy money policies amounting to almost $5.25-$5.75 trillion.
Powell
agreed though that prices might rise once the economy recovers [they are
already rapidly rising, where is he living]. As always Inflation fighter Demi-god
Powell said he doubted that these prices gains would lead to persistently
higher inflation. “If inflation were to go up for any reason, inflation never stay
up” [he is right as the FED and government lie their asses off and hedonically
adjust their “BS” inflation numbers to suit their needs]. If inflation moved up
in ways that were “unwelcome,” the FED has the tools to act, Powell stated.
Ø
A few Fed officials, Kansas City Fed President
Esther George and St, Louis Fed President James Bullard have cited inflation as
a concern.
The Fed will meet on Jan. 26th and 27th to review its monetary policy stance. Interestingly yields on 10-year Treasury notes moved higher to 1.13% on expectations President-elect Biden will look to borrow more debt (placing distortions and the debt on the backs of future generations) to fund another massive economic rescue package in the wake of the coronavirus pandemic.
Chip equipment stocks soared on today, and the (SMH/SOX) Semiconductor index surging to a new all-time high...irrational as it seems (semiconductors are just commodities) we saw a 60% gain in 2019 and a 51% gain in 2020, and these same plays have not missed a beat so far in 2021. In just the first 9- trading days of 2021, the (SOX) has already risen parabolically “nearly 10%” this came after they more than doubled off of the March Covid-19 sell-off lows, now the Covid-19 the crash from early 2020 looks more like a tiny blip than anything else.
From a long-term perspective over the last 11+ years, it does not get much better than the performance of semis. From its low in late 2008, the SOX is up an outstanding 1,700%. For an index of more than 30 stocks, that is impressive. Semis have become pervasive in all aspects of the economy over the past decades, they have increasingly become a bellwether for the broader economy despite their commoditization.
When looking at the ratio between the SPX-500 and the SOX the current level of 0.8057 is the highest in more than 20 years, trailing only the short period of time right before the dot-com bubble implosion. In fact, going back to the 1990’s, there have only been 32 other trading days where the ratio was higher. The fact that the ratio is approaching the record-high levels from 2000 should be a looming concern for the giddy bulls who have been feasting on locoweed, and to believe that the sector will keep up its recent parabolic run going forward would be silly and foolish.
Yes I am aware that semiconductors are more prevalent in all aspects of the economy today than they were in 2000 and the tentacles of the semiconductor industry are just about everywhere.
TODAY...after Taiwan Semiconductor Manufacturing (TSMC), the world’s largest contract chipmaker, disclosed massive capital spending plans approximating $28 billion into capital spending this year a staggering sum if they follow through on the so-called buildout aimed at expanding their technological lead and constructing a plant in Arizona to serve key American consumers. {I seriously doubt these assertions]
Ø
They announced that its capital spending for
2021 would be between $25 billion to $28 billion, compared with $17.2 billion in
2020. About 80% of the outlay will be devoted to advanced processor
technologies, suggesting TSMC anticipates a surge in business for cutting-edge
chipmaking. One reason for this is that Intel, which on Wednesday announced a
new CEO, who is said to be contemplating a departure from tradition and outsourcing manufacture to the likes of TSMC.
Ø
For the December quarter, the firm reported net
income $5.1 billion, up 23%, and well above the street’s expectations. That
contributed to a 50% increase in full-year profit, the quickest rate of
expansion since 2010. Sales in the December quarter rose 14% to a record,
according to previously disclosed monthly numbers, helped in part by robust
demand for Apple’s new 5G iPhones.
Ø
TSMC also expects revenue of $12.7 billion to
$13 billion this quarter, well ahead of the $12.4 billion average of analyst
estimates. According to calculations, that will power mid-teens sales growth
this year, though that is roughly half the pace of the increase in 2020.
Ø The 4th quarter results revealed growing contributions from TSMC’s most-advanced 5-nanometer process technology, which is used to make Apple’s A14 chips. That accounted for about 20% of total revenue during the quarter, more than doubling its share from the previous 3-months, while 7nm represented 29%. TSMC’s smartphone business contributed about 51% to revenue, while HPC was at 31%.
Their cap-X spending means that they have an extremely high level of confidence in potential demand in future years 2021 (and likely 2022 as well), Equipment stocks with some of the highest exposure to the chipmaker include (LRCX, AMAT, KLAC, ENTG, TER, FORM, NVMI)!
The
CEO hyped on the call that construction on a planned $12
billion plant in Arizona will begin this year, without specifying how
much of the planned budget for this year will be allocated to the project. The
factory will be completed by 2024, with initial target output of 20,000 wafers
per month.
Ø
Even as semi-foundries such as TSMC, UMC
and Global-foundries are not expanding fast enough to meet the
pandemic-induced spike in demand for stay- at-home video-machines/toys and gadgets.
o TSMC is by far the most advanced of the foundries responsible for making a significant portion of the world’s semiconductors, serving the likes of Qualcomm and NXP Semiconductors NV, which also supply the mobile and auto industries.
Plays that I took today...on Thursday!
01-14-2021 I SHORTED 400 shares of ”ETSY” @ 220.90
01-14-2021 I SHORTED 200 shares of ”LRCX” @ 560.55 WE ARE CLOSE TO the potential SELL-ZONE Reviewed
01-14-2021 Developed 11-28-2020
I will be SHORT (200/100)
of “LRCX”
at $589.75 or > than < $569.00
I like using PUTS and or a vertical
PUT spread
01-14-2021 I SHORTED 200 shares of ”KLAC” @ 313.50 WE ARE IN the potential SELL-ZONE Reviewed 01-14-2021 Developed 11-28-2020 I will be SHORT (200/100) of KLAC at $319.75 or > than < $313.50 I like using PUTS and or a vertical PUT spread
01-14-2021 I SHORTED 300 shares of ”CVNA” @ 301.00 WE ARE IN THE SELL-ZONE Developed 01-07-2021 I will be SHORT (800/200
for the portfolio) “CVNA” “limit order loaded” at 316.95 or > than
< $299.25 target 240.00 then $222.75
I like using PUTS and or a vertical PUT spread
01-14-2021 I SHORTED 1000 shares of “GME” @ 42.65 (500 for the portfolio) WE ARE CLOSE TO the potential SELL-ZONE Reviewed 01-14-2021 “GME” I will be SHORT 1000 at $47.55 Looking for a push into OHR to $48.95 and or > than < $42.75 target $34.00 then $28.75 its optional
01-14-2021 I SHORTED 200 shares of “CMG” @ 1450.75 (100 for the portfolio) Reviewed 01-14-2021 WE ARE IN the potential SELL-ZONE Developed 08-17-2020 “CMG” I will be SHORT 200 at $1499.90 Looking for a drop after we rise above $1450.75 below this level (200/100-shares) target $1200.00 then 1075.00 We could sell some weekly calls that expire on Friday 1380
TBTF-bankers
reap huge gains off of Main Street and the working class; With interest rates
at historic lows, 0.5% to 1.75% how could this situation be
allowed to continue wherein corporations, banks etc. can borrow so cheap (use
it to buy back stock etc.) while Main-Street and the working class get
screwed? Looks like criminal behavior
(usuary) as the average credit card interest rate is 17.87% for new offers and
14.58% for existing accounts, according to WalletHub's Credit Card Landscape
Report.
U.S. banks will significantly struggle to understand and interpret how their residential mortgage portfolios will perform this year, because borrower-assistance programs “bailouts” during the pandemic have clouded who will be able to pay when the very gracious forbearance periods and enhanced jobless benefits expire. I believe that lenders should be bracing for significant losses across most credit products, but mortgages stand out because the share of those loans in forbearance has continues to rise.
The key difference: the mortgage forbearance program is imposed by U.S. agencies that back the vast majority of housing debt and it does not require borrowers to show proof of hardship. That has made it difficult to tell who enrolled out of real need; including those who will never be able to resume payments and the con-men who took advantage of the Covid-19 forbearance opportunity! [I have 4 tenets who work for the Department of the Navy, who never got laid off, but have not paid their rent in over 8-months, they were never furloughed or laid off? They are leeches!]
So no one really knows how many of these folks who are in forbearance are actually going to be able to recover, and how many of them are also going to go into a serious delinquency cycle.
Some of the biggest U.S. mortgage lenders like JPMorgan and Wells Fargo may talk about mortgage trends when they start reporting 1st quarter results on Friday.
About 2.7 to 2.9 million U.S. mortgage borrowers, were in forbearance programs as of 01/06/2021 according to the Mortgage Bankers Association (MBA). The numbers began rising toward year-end but remained far below the 8.6% peak in June, MBA report indicated.
The homeowners who remain in forbearance are more likely to be in significant distress, with fewer continuing to make any payments and fewer exiting forbearance. More than 58% the borrowers in forbearance have been forced to request extensions since October. Those who have remained in forbearance since the start of the bailout programs are the least likely to re-emerge, credit-monitoring service TransUnion recently stated. When all of these bailout plans stop, they will likely NOT have the ability to repay!
Banks
and bank-investors should be worried about a repayment Wile Coyote cliff when
relief programs expire.
Most
of the increase in forbearance requests have come from customers with Ginnie
Mae-backed mortgages, the MBA report indicated which caters more to 1st
time homeowners, and those with low-to-moderate income, than its peers Fannie
Mae and Freddie Mac.
Please remember that these (3) government-sponsored firms have offered 12-month payment holidays through March 2021. Banks including Chase, Wells Fargo and Bank of America Corp offered similar relief and are allowing borrowers to tack missed payments onto the end of their debt, rather than face balloon payments when forbearance ends.
My turn wave
market timing property indicators
has forecasted a potential turn-window, and the technicals are getting
significantly stronger, and it pointing toward a HUGE inflection
period ahead, the window is tightening as we get nearer to the potential turn....and
according to my wave analysis we have multiple
waves converging and a major Inflection point & Fibonacci
collision of price and time waves/patterns and Gann topping [Gann lines, are based on the premise
that prices move in predictable patterns. Gann's theory is based on
time/price movements] possibility hitting the overall
markets on/between 01/08/2021 and 01/15/2021 and since
we have been in strong bullish
up-trend from the March lows its likely to be a bearish reversal
wave...the monthly and weekly index charts are also buried in extreme over
bought conditions as well!
This corrective wave could be (key-word is
could, we never know what we do not know) be the start of a
significant major Bearish corrective period ...my system and analysis is
telling me that this could be a significant correction period lasting 21-29
trading days...with the potential for a slight retracement after the initial
down-cycle then another downward corrective wave will likely play
Ø I
am looking for a potential drop
of 2000-3,000 Dow points
Ø I
am looking for a potential drop
of 350 - 350 Nasdog
points
Ø I
am looking for a potential drop
of 250 - 285 SPX-500
points
Ø I am looking for a potential drop of 175 - 200 Russell-2000 points
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...
A reminder my friends: I reiterate this very incantation every day multiple times to get myself centered to trade this awful market……" Every-Day in every way....I'm feeling better and better about my trading; I am getting better and stronger in my ability to utilize and run good money management and to pull the trigger on positive trading set-ups that provide good risk-to-reward; I will always be aware of the big picture...but intraday I will trade what I see and my technicals indicate....and above all, I will always seek to constantly improve my trading and short-term investing knowledge every day!"
Please my friends keep an eye on the DEBT With debt & leverage at all-time highs, rising interest rates will lead to the mother of all credit crises. And what if the FED and other central bankers manipulate rates low? With 10,000 baby boomers turning 65 every day, historic low rates (screwing savers) are leading us into the mother of all pension crises; but these are not the favorite people of those in power!
PLEASE TRADE
CAUTIOUSLY on the LONG & SHORT side, be quick to book profits and in times of uncertainty it’s ALWAYS
very prudent to wait till the smoke clears if you are uncertain; remember trade
when the perceived risk to reward favors your trades; and that NOT to trade is
often a prudent decision as well!
