Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Philstockworld (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

Faltering Thursday – Economy Shows Signs of Struggle

% of readers think this story is Fact. Add your two cents.


These are not the headlines for a record-high market.

Best Buy isn’t cutting jobs because the 2nd quarter is going to be fantastic, are they?  The Biden Administration isn’t cutting school expectations because everything is going to be normal after the Summer break.  The virus isn’t resurgent in Germany because it’s about to go away, Seadrill isn’t going Bankrupt again because the oil industry is rebounding.  

At what point do we plan on getting realistic?  We don’t have to because Uncle Sam keeps writing checks and everything is awesome until the money runs out (and maybe it never will).  Meanwhile, we’re being asked to pay record-high prices for stocks based on future expectations that everything will remain awesome for years so come and will, in fact, get much better because, currently, we’re paying 30-40 times the earnings potential of these stocks.  That means it will take 30-40 years for those companies to generate a return on our investment – AWSOME!

That means people are either buying stocks with irrational expectations or they are rationally using them solely as trading vehicles and have no intention of being long-term investors.  To the extent that is true, market sentiment can turn on a dime and, if it does and if there are no fundamental investors to underpin the stock prices – what is going to happen when that sentiment changes?

The change in sentiment in February led to a 35% correction in the market and it could have been worse but the Government quickly stepped in with FREE MONEY and, since then, we’ve been promised MORE FREE MONEY over and over again and, though we are still waiting for it – it does seem very likely that it will be here in a few weeks.  March’s FREE MONEY led us to a very nice market recovery and promises of FREE MONEY have kept things going but, at some point, we need to get the actual economy working again for all this to have a lasting effect.

4,000, if we get there on the S&P 500 (/ES), is going to be a great shorting line as it’s almost certain to be rejected on the first attempt.  If we measure the rally off the break over the 200-day moving average at 3,000, it’s a  33%, 1,000-point run that should pull back at least 200 points (weak retrace) and possibly 400 points, back to the 3,600 line – which has already shown signs of consolidation (indicating it is, indeed, significant support/resistance).  

SDS is the Ultra-Short for the S&P 500 and the March $11 calls are 0.65 and SDS is at $11.30 so you are paying an 0.35 premium for the position but SDS is a 2x short on the S&P so, if it does drop 20% in the next 36 days, that would pop SDS 40% – to $15.82 and the $11 calls would be $4.82 in the money for a gain of $4.17 or 641%. 

So, if you have a $100,000 portfolio and you are worried about losing $20,000 on a 20% S&P drop, you can mitigate that loss by buying 50 of the calls for $3,250 and they will pay $20,850 in profit at $15.82 and, if you put a stop on the short position at 0.40, you limit your loss to 0.25 x 50 contracts – $1,250 – not a big price to pay for insurance over the holiday weekend!

Be careful out there!

 

Provided courtesy of Phil’s Stock World.

Would you like to read up-to-date articles on the day they are posted? Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE – Not the Gambler!



Source: https://www.philstockworld.com/2021/02/11/faltering-thursday-economy-shows-signs-of-struggle/?utm_source=beforeitsnews&utm_medium=feed&utm_campaign=psw-feeds&utm_content=article-link


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 888-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 888-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)
Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen! 
Nascent Iodine - Promotes detoxification, mental focus and thyroid health.
Smart Meter Cover -  Reduces Smart Meter radiation by 96%!  (See Video)

Immusist Beverage Concentrate - Proprietary blend, formulated to reduce inflammation while hydrating and oxygenating the cells.

Report abuse
Loading...

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.