What If They Had A Recession And Nobody Came?

There are two main constituencies in the U.S. that are hoping for a recession. The financial markets, both stocks, and bonds seem to have a vested financial interest in there being one.

For the bond market, which has been the biggest rooter for a recession, a weak economy means lower loan demand and lower interest rates, which means higher bond prices. For the stock market, a weaker economy, although not necessarily a full-blown recession, promises more accommodation from the Federal Reserve and, therefore, lower interest rates, which generally translates into higher corporate earnings and, therefore, higher stock prices.

The Democrat Party and its allies in the press naturally want a recession simply because it makes it less likely that President Trump will be re-elected. So they are rooting strongly for a recession, although they can’t actually come out and say so.

The recession lobby got some fresh ammunition last week when the Institute for Supply Management’s purchasing managers’ indexes for September came out. They were some of the worst in years, which ignited a rally in the bond market.

On Tuesday, the ISM manufacturing index slipped further into contraction territory, dropping more than a point from 49.1 in August to 47.8, its lowest level since June 2009, during the Great Recession (there’s that word again).

Unfortunately for the pro-recession crowd, a lot of the rest of the economic numbers aren't telling the same story. The ISM’s index for the services sector – which covers about three-quarters of economic activity – also came in lower than expected, dropping nearly four points from 56.4 to 52.6, its slowest pace in three years. But it remained well in expansion mode (i.e., over 50). That part of the story got little attention. Continue reading "What If They Had A Recession And Nobody Came?"

6.9% Options Portfolio Return vs. 2.2% S&P 500 Return

Over the past 12 months, I’ve managed an options-based portfolio and demonstrated how this approach can offer a superior alternative to traditional stock picking. An options-based approach is very similar to running your portfolio like a business where you manage risk and take profits. Alternatively, an options-based approach is much like an insurance company where you sell as many policies as possible to collect as much premium income as possible with a premium cost level that maximizes a statistical edge to your benefit.

An option-based strategy mitigates risk and circumvents drastic market moves. Selling options and collecting premium income in a high-probability manner generates consistent income for steady portfolio appreciation in both bear and bull market conditions. This is all done without predicting which way the market will move. Sticking with dividend-paying large-cap stocks across a diversity of tickers that are liquid in the options market is a great way to generate superior returns with less volatility over the long-term.

Over the past 12 months, 298 trades have been made with a win rate of 86% and a premium capture of 57% across 69 different tickers. When stacked up against the S&P 500, the options strategy generated a return of 6.9% compared to the S&P 500 index which returned 2.2% over the same period. Options are a bet on where stocks won’t go, not where they will go, where high probability options trading thrives in both bear and bull markets.

Options Trading
Figure 1 – Basic principles and building blocks of an options-based portfolio
Continue reading "6.9% Options Portfolio Return vs. 2.2% S&P 500 Return"

Silver Update: This Setback Could Be A Takeoff Roll

Earlier this August, I shared with you the map for silver with three possible options of how the price could emerge. I labeled them with three different colors for you to distinguish them easily.

Let’s see below how did you vote for the future of the silver price.

Silver Poll

I didn’t doubt that the “Pessimistic” (red) scenario would be the least liked option as silver bears are rare these days amid the powerful bullish move in the metal’s price, that had preceded the ballot. The polar “Optimistic” (blue) scenario, which implied the non-stop move of the silver price to the upside to tag the former top of $21.13, ranked second. Indeed, it was a close call as the poor man's gold, surprisingly rocketed in a week after the post to hit the multi-year maximum at the $19.65. It could be a winning stake, but right after that the price dropped hard to close the first week of September below $18. And here comes the accurate prediction, that was picked by the majority as you had chosen the “Conservative” (green) scenario, which implied the setback of the price ahead of the final home run. Again, it was an amazingly prophetic call, thanks for sharing your votes with all of us here on the Blog.

I updated the map for you in the weekly silver chart below, let’s have a look there. Continue reading "Silver Update: This Setback Could Be A Takeoff Roll"

Weekly Futures Recap With Mike Seery

Platinum Futures

Platinum futures in the January contract settled last Friday in New York at 936 while currently trading at 886 down nearly $50 for the week as prices are right near a 5 week low.

I do not have any recommendations out of the precious metals sector, but historically speaking, platinum prices look very cheap. I will wait for the chart structure to improve. Therefore, the risk/reward would be more in your favor, so be patient as I will not take a short position.

The S&P 500 has experienced a wild ride to start the month as the volatility in that market is extremely high, and that is also influencing platinum prices. But if you take a look at the daily chart, prices are right near major sport as historically speaking platinum is incredibly cheap, especially compared to gold and palladium.

The trend at the current time is negative with the next major level of support around the 850 level as I will keep a close eye in the coming weeks ahead for a bullish position as the precious metals I believe are still in a longer-term bullish trend.

TREND: MIXED - NEGATIVE
CHART STRUCTURE: IMPROVING
VOLATILITY: AVERAGE

Continue reading "Weekly Futures Recap With Mike Seery"

ADL Predicts Oil Prices Will Fall Below $40

There are times when our research team interprets our advanced predictive modeling systems so well that we call a move in the markets 3 to 10+ months in advance of the move actually happening. It has happened for our team of research so often lately that we are somewhat used to the accolades we receive from our followers and members. Our October 2018 Gold price predictions are still playing out accurately and continue to amaze people – even though we made these predictions over 12 months ago.

Today, we wanted to highlight our Adaptive Dynamic Learning (ADL) predictive modeling systems expectations for Crude Oil. The research post we made on July 10, 2019 (see below). At that time, we warned that crude oil was about to head much lower and that our ADL modeling system was suggesting that oil prices would rotate between $47 and $64 before breaking much lower in November 2019. Ultimately, oil prices will fall below $40 ppb following our timeline and could begin a broader downside move before the end of October 2019. Read our full prediction/research report from the link below.

Oil

SOURCE: July 10, 2019: PREDICTIVE MODELING SUGGEST OIL HEADED MUCH LOWER

We believe the support level near $50.50 will act as a temporary support level over the next 3 to 10+ days before a moderate price breakdown below this level begins. Our expectations for November 2019 are that oil prices may fall to levels below $45 ppb on a deeper downward price move, yet will recover to levels near $47 near December 2019/January 2020. Continue reading "ADL Predicts Oil Prices Will Fall Below $40"