Weekly Stock Market Forecast

Posted on by The INO.com Team

This week we have a stock market forecast for the week of 2/13/2022 from our friend Bo Yoder of the Market Forecasting Academy. Be sure to leave a comment and let us know what you think!

The S&P 500 (SPY)

SPY Weekly Chart - Stock Market Forecast

After literally years of watching the S&P 500 top out, correct about 10%, then running in a straight line back to highs due to the Fed printing money. I think this is the lower high that I have been waiting for. As I have stated before, the Fed is losing control of the economy, and if this is true, then this is the best short entry available.

This short trade will live or die based on the action of the Fed, but if I'm right and this is the moment in history where the "pump" fails, the downside potential will be VERY rich.

It's time... now, let's see how wacky things get over the next couple of weeks. As the old Chinese saying goes, "may you live in interesting times"! Continue reading "Weekly Stock Market Forecast" →

Fear Of Russian Invasion Sinks Stocks

Posted on by The INO.com Team

Increasing tensions between Ukraine and Russia sent crude oil to new highs, with it gaining roughly +5% on the day and trading above $93 a barrel. This news led investors to dump stocks and head for safe havens like gold, which spiked over +2% today.

The DOW tumbled 504 points or -1.43% to close at 34,738.06. The S&P 500 dropped -1.90% to finish at 4,418.64, and the NASDAQ fell -2.78% to end the day at 13,791.15. And for the week, the DOW lost -1.00%, the S%p 500 lost -1.82%, and the NASDAQ led the way lower, losing -2.18%.

Key Levels To Watch Next Week:

Continue reading "Fear Of Russian Invasion Sinks Stocks" →

Fed Jawbones Mean Business

Posted on by Gary Tanashian

3 month T-bill yield is demanding the Fed raise the Funds rate

And the Fed is listening.

Yesterday I made a sarcasm-tinged post about the parade of Fed jawbones in the media and the coordinated and thus comical desperation they seem to exhibit. The stern message is that the Fed Funds rate could be raised at any time (which is possible even before the next FOMC meeting on March 16, in my opinion).

I would not advise you to listen to those who think they know what the Fed is thinking and insist that the Fed will not dare raise the Funds rate. They will dare and they will do it, barring any significant short-term changes to the current macro. In my experience, the Fed has done what the bond market tells it to do almost without exception. Ben Bernanke held ZIRP for a deplorably long time but that was because the T bill on the chart below allowed him to. Continue reading "Fed Jawbones Mean Business" →

REITs May Be Great Investment Moving Forward

Posted on by Matt Thalman

Real estate has historically been a great investment during times of high inflation. And in certain ways, it’s also a good investment to be holding during times of high-interest rates. Just a month or so ago, the US saw inflation at over 7%. And during the Federal Reserve meeting in January, Jerome Powell made it very clear that interest rates would be rising in the near term. So, what are you waiting for?

Ok, before you go off buying, let me dig a little deeper into why real estate and REITs are good during times of inflation and high-interest rates. For the most part, REITs will perform well during periods of high inflation because while goods and services are increasing in price, so will real estate because the price to build new homes will have risen due to inflation.

Think about what we just saw over the last two years with residential real estate in the US. Lumber, metal, plastic, concrete prices all increased due to the pandemic supply chain issues. Thus, the cost to build a brand-new home also went higher. If the price to buy brand new goes higher, then the price of pre-owned homes can also go higher simply because of the laws of supply and demand. And if the price of building a new home or buying a pre-owned homes goes higher, rent prices can also go higher. Continue reading "REITs May Be Great Investment Moving Forward" →

Downside Protection: Risk-Defined Put Spreads vs Cash Covered Puts

Posted on by Noah Kiedrowski

Option trading can provide a meaningful addition to one's overall portfolio strategy when used in a disciplined manner. When options are used as a component to a holistic portfolio approach, generating consistent monthly income while defining risk, leveraging a minimal amount of capital, and maximizing returns is achievable. An options-based portfolio can provide durability and resiliency to drive portfolio results with substantially less risk via a combination of options, long equity, and cash. When engaging in options trading, specific rules must be followed. One of the most important rules is to structure every option trade in a risk-defined (put spreads, call spreads, iron condors, diagonal spreads, etc.) manner.

The January 2022 meltdown in the overall markets is a harsh reminder of the trade-offs between risk-defined options and options that have undefined risk. The overall markets were in freefall, with a large percentage of stocks getting cut in half with indiscriminate selling across all sectors. The extreme market conditions throughout January resulted in all stocks auto-correlating in a downward spiral. During these periods of unrelentless selling across the markets, risk-defined options are essential to protect one's portfolio from massive losses while preserving cash-on-hand within the portfolio.

Put Spreads vs Cash Covered Puts

Risk-defined option spreads (i.e., put spreads) prevent any losses beyond a specific strike price, avoids the assignment of shares, does not require a significant amount of capital, and does not soak up capital with share assignments. Conversely, in the case of cash-covered options (i.e., cash-covered puts), large amounts of capital are dedicated to the trade, and share Continue reading "Downside Protection: Risk-Defined Put Spreads vs Cash Covered Puts" →