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By Jeffrey Cohen, Investment Advisor Representative US Advanced Computing Infrastructure Inc. Good morning to my cherished friends, clients, followers, family, and friends. This morning the markets look weakly higher. There was some news this morning to share, and we see markets that opened slightly, and weakly higher but are now flat. 1. The Case-Shiller US National Home Price Index is moderating. Housing prices were rising quickly, and that curve is now flattening. We think it is because of increasing interest rates on conforming 30-year fixed rate mortgages. Fewer home purchases likely means less spending in the economy. This is likely not the case for rental properties (in our opinion) which we think are driven by different factors. Rents are likely to move higher due to previous buying up of smaller, rented homes by large investment trusts while prices were lower. 2. The news in ZeroHedge and CNN were, well, about general interest topics. Lots of domestic news about violence, politics, medicine and just regular stuff. Not much discussion of markets or the economy In our words, the fix is in and our attention is being diverted away from money and markets. It could be rational behavior by those operators who show what is in demand. When we enter a bear market (again), people lose interest in stocks and investing. 3. Market breadth was very, very negative and bearish in both US corporate fixed income (bonds) and equities (stocks). New lows were significantly larger than new highs, and decliners outnumbered advancers. This is another sign of a bear market (yesterday's results). 4. Energy prices are down in the US. Gasoline was trading close to $2.50 per gallon wholesale, and is now at $2.61/gallon. This is a significant decline from a few weeks ago, and will help give us a reduced inflation reading (CPI). Oil is also trading lower, down to $90.50. 5. Currencies (non-US) are trading lower (meaning less valuable when compared to the US Dollar). We spent time in our morning video discussing the Japanese Yen at 138.50. We read that the Chinese Remnbi is also around 7.0, which is also very weak. These two export-focused economies are keeping inflation out and driving their export markets by lowering domestic income from export-related businesses. It also increases the price (and lowers demand) for imported products. 6. Copper grade #1, in contracts of 25,000 pounds, is trading lower at around $3.50 / pound. This is a sign of weakness for economic inputs. We also saw silver and gold trading lower. This will hurt the price of $FCX, which is a large copper producer. 7. Bitcoin is trading around $20,000 again. Dogecoin is around $0.063 8. Interest rates for savers in accounts of $100 or more have reached 2.20%. This higher saving rate helps lower the expected return for risk-based assets for the retail investor class.
9. The Federal Reserve Bank is not really tightening the money in circulation. They are not really doing quantitative tightening (QT) like they said they would. Sure, the amount of assets the FRB has liquidated is positive since April 2022, but it is $114B. That is miniscule and most likely not significant. We also discussed how the FRB is lowering the prices for MBS just as they might have to sell some. This is a market subsidy to market makers paid for by the taxpayer (which is you and me). 10. The Consumer Price Index (CPI) reading by the Bureau of Labor Statistics (BLS) will likely read lower and slower growth during the next reading. The largest component of growth is energy prices, and those are falling (at least for gasoline and oil, but not for coal). This recent fall in energy will support a 'friendly' inflation reading. Well, that's all folks. The US equity markets are trading down today. We will be focusing on building out a CQNS UP run model portfolio today. Stay tuned for more updates!
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By Jeffrey P. Cohen
Investment Advisor Representative US Advanced Computing Infrastructure Inc. Chicago Quantum
Update: 1430 ET today: The market fell hard today, and indiscriminately.
The market looked stronger this morning pre-market. However, it quickly headed lower. The market fell after Federal Reserve Board (FRB) Chairman Powell gave a fire and brimstone speech. We listened to it live and in replay mode, and were assured that the FRB would maintain its fight against inflation (bringing it back to 2%) with a tenacious and relentless focus, regardless of the cost to our society. This caused the financial markets to teeter on the brink. The US Dollar rose, interest rates (the long ones) rose, global stocks fell (except mainland China), and it looked like the bear market was in full bloom. High risk (high BETA) stocks fell dramatically. However, today, the picture looks different. It seems like things are settling down. We are worried about the size and amplitude (dramatic) financial markets movements based on a speech that was most likely a distraction meant to send the markets lower. It cost us a significant drawdown. We were uncomfortable for the weekend and Monday, but survived to trade another day. Now, Copper and other precious metals are back in their range. The US Dollar has moderated and interest rates seem to have calmed down (but they are still elevated). We made a video, and hope you like it. It is early pre-market, 0700 ET this morning. If you like the video, please hit the subscribe button and drop a comment. It helps us spread the word, since we are not paid to make the videos, nor do we advertise them. When you subscribe / comment, it tells YouTube that this is trusted and safe content that they can recommend to others.
Good morning, what we see are stocks trying to rally with flat futures prices. However, we saw a strong US Dollar and rising interest rates (yields on US Treasuries). We see an elevated VIX which means the price of downward protection is elevated, up about 25% over the past week. Commodities are mixed, but the pressure from the US Dollar and interest rates will be bearish on US equities. GLTA Enjoy our video below. In it, we discuss Verizon Communications $VZ in great detail. We share what we saw when we decided to go long the calls on $VZ, and why the stock price dropped this week. By: Jeffrey P. Cohen, Investment Advisor Representative US Advanced Computing Infrastructure Inc. Chicago Quantum Yesterday was a tough day in the markets. We saw it trending significantly lower in pre-market, and by the time the markets opened at 0830 ET, the move was largely completed. Thank you Finviz.com for the visual below. It does not mean that the markets were silent during the day, as we saw our investments move significantly during the day, but the die was cast early. In full disclosure, we added a long and a short position on Friday, and sold our short position Monday afternoon for a 2% profit. It was good work. However, our long position lost more than the gain and we added to our long bet with 80% of the profits of the short trade. This is what most investors will do, add to their long bets and 'buy the dip.' We did, fingers crossed. No bling bling today until our ultimate trade settles (hopefully higher). The market flip-flopped this morning in the past hour. Interest rates moved negative. US equity futures moved negative. VIX: negative. Semiconductors and chips are more down than up this morning. The market moderated this morning, with 17 minutes left before market open. The trades that looked obvious last night are mixed this morning. We will be watching the screens today.  The markets are interesting and show some conflicting data this morning. Interest rates rose this morning in the past few minutes (all pre-market), and they were down earlier. Most economically sensitive sectors are trading higher pre-market. The US Dollar is on fire, up against most currencies. However, the market is on a new downturn leg, down 5% over the past five days. Watch out, this could be the beginning of a new movement lower. I do like that the pre-market action is pointing higher, which could be just normal trading or a Bear Trap.  By: Jeffrey P. Cohen, Investment Advisor Representative US Advanced Computing Infrastructure, Inc. Ok, we see weakness across the US and Global (non-US) stock markets. Even Jakarta and Malaysia were down yesterday. However, mainland (PRC) China stocks were up. Europe is down. The cost of insurance is up significantly, as measured by the VIX. We get the feeling that traders are betting against US Equities using the Nasdaq Composite 100, The S&P 500 Index and the Russell 2000 Index. They are simultaneously buying puts, which will profit as the market drops (so, they make money both ways, actually 3 ways). Profit on the shorts, the puts and the insurance, and if they bought the VIX, they make money on that too. Who is losing today? The individual retail investor who bought risky stocks. You know who else may be losing today? Bank depositors. The top 10 US banks are trading lower in pre-market. Not sure why, need to take a look. Good luck in the markets today. Be careful, we have not seen a down Monday like this in a while, and it could define the week. Other notes we took while recording our video: 1. Yield curve not really inverted anymore, the long bonds are dropping. 2. Corporate bonds, especially investment grade, are dropping (both yield, and risk) 3. Economic metals are down, slightly. 4. Energy is flat this morning. 5. Long UST Notes/bonds are flat. 6. Yahoo Finance VIX is up 18.25% this morning to 23.13. FinViz VIX was already at 24.50 last night. 7. Fallon: Fibonacci Retracement Support level markets were down 23.8%. Fibonacci circle is found in nature as being a very efficient shape. Snail is a fibonacci. If you like Gold, NEM Newmont Mining. If you like Copper, FCX Freeport McMoran BX Blackstone $103.30 The Carlysle Group CG: $33.56 Narrative: Economy is doing great. Lots of Jobs. Inflation still a concern: FRB: Continue QT and Interest Rate Hikes Stock Market: US Equities: Will start to fall again Bond Market (Corporate): Will also fall US Treasuries (short-end will see higher yields) and (long-end: market will decide). Short UST: unchanged 1-year UST are up to 3.3% Mortgages are up 30-year fixed conforming: to 5.6%, and MBS are down sharply. Quantitative Tightening Pattern (up and down) - rinse and repeat. Each time, it goes lower. Silver under $20.00 an ounce. Gold at $1,743 / oz Yen 137/Dollar Bitcoin $21,250 (Hit $20k before $30k) Walking Wounded and MEME stocks are down PM Top 5 US Banks are down, PM Money Managers: Down Retail is down PM FLEX: Flexsteel industries: up PM Party City hold PRTY Up Coal is up Bitcoin related stocks are lower: Physical mining - lower This is the morning that people turn bearish. VIX is up 4.55% this morning. (Finviz) Pre-market: RED RED RED Why are all of the top 10 US Regional Banks lower this morning? - Recession Fears? - Housing Fears? - Interest Rates / Interest Income? - New Law / Politics? - USD - Stretch Her name was Darya Dugan. Looks like a Red Sparrow, which would be a valid military target if true. The Ukrainians are fighting back. VIX Climbing is a signal for short-term pressure against US Equities. By Jeffrey P. Cohen, Investment Advisor Representative
US Advanced Computing Infrastructure, Inc. Chicago Quantum By: Jeffrey Cohen, Investment Advisor Representative US Advanced Computing Infrastructure, Inc. Big day today. Lots of movement if you know where to look (in pre-market). Generational wealth being created and lost in pre-market and expected throughout the day today.
In today's video we focus on options expiration and a few stocks that are really moving in pre-market. We don't see the kind of news in the mainstream social media, or news media (online) that gives us a reason to trade either up or down. The narrative feels managed and politely positive. That is ok with us, we like polite society...however, this is not how you manage money or your investments. Stocks are showing red pre-market. Down about one percent. We have not seen this in a while and it surprises us. The VIX is trading where it landed two days ago, up about 15% to 20% from the low of 20.00 it reached recently. There is not much fear in this market despite almost retracing half the losses of the recent bear market. The US Dollar is super strong. Interest rates are rising and falling multiple times in a week as the market tries to decide whether we are in a recovery, a recession, a tightening, a pivot, and whether inflation rising in China and Japan just means that this is a global contagion of 'free money' and we all have to work together (sink or swim) to recover global tight (and valuable) fiat currencies. We don't know whether firms are hiring, firing or just standing by. Production and orders are down, inventories are being used up...but not sure whether this is just a short-term malaise as the Summer wears on. Cannot tell long-term economic direction today. So, Good luck out there. There are individual risky (high BETA) stocks that are down 5% to 15% pre-market at the time we made our video and those options values are moving dramatically. Options premium is being burned and earned even before the market is open. We noticed so many stocks that are trading actively this morning. We discuss Corbus Pharmaceuticals stock trading action today. It was exciting over the past few days, and the large, million share bets sent the stock down from ~$0.30 to ~$0.215. Very risky moves, and looks like there was a big short again this morning of over 1 million shares. We also see significant pre-market movement in Verizon $VZ lower. Hallador Energy Corporation $HNRG is trading higher this morning, up to $7.00 per share. Corporate bonds were lower yesterday and Mortgage Backed Securities lower today. Likely in part due to slight weakening of risk-free US Treasuries, and the rest is market / firm risk. Markets looking flat today. Bond Yields not moving much. Recession fears seem to be abating. Most industry sectors are mixed this morning. There is not a firm commitment of direction either way today. Enjoy the video. Not investment advice. Good luck to all! GLTA! Jeff Disclosure: At the time of the video, we are long the common of $AMS and $CRBP and short the common of $HNRG. By: Jeffrey P. Cohen, Investment Advisor Representative & President US Advanced Computing Infrastructure, Inc. Chicago Quantum Good morning, it’s August 17. We wore a RED shirt today because we thought the market would drop today. We are not happy that it is falling, but we are in a bear market and this is a good reminder. Friday, Options expire on individual stocks that have them. VIX was up 17% last night. People were buying downside insurance on their portfolios. BBBY up pre-market. There is a market to make money in individual stocks that is independent of the direction of the overall market. It happens in the summer (things are slow), kids off school and college, low liquidity and few people around. Quiet times. We heard 2nd hand (hearsay) that the Federal Reserve / US Treasury bought its own 30 year bond issuance. Bought $38B of it this week. By doing that, they are keeping yields lower and raising the price of the bonds. US Treasury PUT or a floor under bond prices. Corporate Fixed Income was down. ROTATION ALERT Market Sector Rotation from Risky to Consumer based and lower-risk names. Risk off on UST 1 month yields down 1, 10 and 30 year UST yields up. 10-year yield is up significantly. DD: latest 10-year auction. Bond futures are down (hard to tell).1/4 to 1 down. The geo-political narrative has changed in the US mainstream media. Everything is bad economically, and there is no news internationally except that Europe will suffer from crushing economic hardship. Ukraine Russia news is hard to find. Taiwan China news is impossible to find. Inflation is not in the news either, must have been fixed by that new law. News is on the drought globally. Liz Cheney (love her dad, Dick Cheney) lost her congressional seat in Wyoming. She was not true to her party, and she paid the price for that disloyalty and lack of grace. EUROPE stocks down significantly. VIX moderated. Big bets were made in Asia last night, and again this morning after the market opened. Asian markets bought the puts against the SPY Asian markets up significantly last night, and spent some of their earnings to protect their US equity positions. Global players doing that too. Easier to trade Asian hours, probably. Equity Breadth still solid. 80% trading above 50 SMA 34% above 200 SMA, bear market rally 2.5:1 new highs to new lows Bitcoin dropping a little US equities dropping a little. We might add bitcoin to our runs to see the price relationship to US equities. US dollar is up Housing inventories up, new housing construction and permits are down. Buying are walking away from house contracts. Housing is bearish today. BBBY $28.35 seems very high for this stock today. Not sure what is happening. IMO: Chicago Quantum: We need to ‘end or win or negotiate a settlement’ to the Russia Ukraine crisis. Ukraine can target Russia's energy infrastructure without taking a single civilian life in the process. $FMNB made it to $15.00 per share. Congratulations. Now, the day is well underway and we are just passing Eastern Time Zone lunch hour. Stocks that are risky and high-BETA have dropped significantly today. This is not a good day for risk assets (after they have risen 100% or more since the June 16 low).
Our personal portfolio is down and the CQNS UP run picks are down as well. Good luck to all. |
AuthorJeffrey Cohen, President and Investment Advisor Representative Archives
November 2022
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