Our Updated Game Plan For Fastest Correction in Market History
Dear Subscriber,
Quick Update--we are working on a full update newsletter and will get it out ASAP. There are far too many questions than answers--but like every other correction, the bond market will tell us when enough risk is priced in. And holding 3000 in the S&P 500 and $48 oil are still the lines in the sand and at 4 pm they were both broken. We could have a REAL WOOSH DOWN overshoot in the morning--I WILL BE UP AND HAVE trades loaded in!
I continue to hold the XOP puts and S&P 500 Puts that I recommended Tuesday to hedge our portfolio (and hold them personally in a BIG way).
Action to Take: I would liquidate all remaining $10k-a Month-long positions and hold cash and PFFA to keep your powder dry. NRZ BDCL MIC are al vulnerable --especially NRZ with another mortgage refinancing
Understand, when I sent out the "Protect and Preserve Capital" advisory Tuesday late morning, I had no concept that we would go to a full 10%+ correction in 48 hours. At the 900 points down bottom this morning, this was the fastest 10% correction since September 2008. Wow.
The questions "is this a 50-day dip, 100-day or 200-day corrections"... and "will we hit a 30 VIX fear or 36 PANIC level" and both questions got answered this morning when we hit the 200-day SP 500 line in the sand and 36 VIX. In my opinion, we got ONE of the parts of a panic bottom this morning--and another failed bounce too. As always I look to the bond market to confirm this.
We need to see another test. IMHO we need to see the strongest stocks on the planet--enterprise cloud stocks--correct to complete the correction. Everyone now believes Fed cuts 50 basis points riding in on a white horse. OPEC meets next Tuesday and MUST CUT 1 million+ barrels a day. Then Super Tuesday results on Wednesday--if "Burn it All Down" Bernie sweeps enough delegates to insure nomination, healthcare, and financial stocks will get bigger haircuts.
We need conviction, capital and courage here to take advantage of this correction. Remember how we jumped into our favorite stocks in late December 26-28 2018 and how much profit we made with our courage, conviction, and capital? I do--and clearly, we will have another opportunity. But with the trade war, we have been running the US economy like a jet with one engine out and the other engine was the consumer/job growth/home values.
IF my worst fear comes true--that California with its HUGE Chinese ex-pat population has thousands of Covid-19 carriers, then the world's 5th largest economy aka the Golden State will guarantee a US recession. Already Goldman Sachs is out saying ZERO EPS growth is in 2020. US dollar is now falling--that means the market thinks our FED cuts 50 basis points AND it helps put a floor under oil.
To riff one of my favorite Wall Street bromides, "when the fundamentals are unclear and in a deep fog, technicals become your eyes."
https://www.jpost.com/HEALTH-SCIENCE/Israeli-scientists-In-three-weeks-we-will-have-coronavirus-vaccine-619101
PS: Big Thank you to one of our subscribers who delivered a case of VERY GOOD scotch saying "got your Code Red Alert--went to cash and PFFA and bought puts on XOP and SP as advised--saved seven figures of losses as of today. Thanks!"
You are welcome!
PS--For our All-Access members, we will hold a conference call AFTER the close of the market at 2 pm and answer every question that can be answered. IF you are not a member, come to https://transformityresearch.com/register and join the club!