Dear Subscriber,

First a welcome to all the new subscribers--you got here just in time! Some have had difficulty getting into the paywall for our Newsletters and Updates.

With a completed registration and payment, here is how to you get access to our Newsletters and Updates
1) Go to www.transformityresearch.com
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6) Click on the TRANSFORMITY INVESTOR NEWSLETTERS AND UPDATES image or top right link PRO NEWSLETTER & ALERTS

FYI--we decided to offer a "6-Month Portfolio Protection Plan Membership" to Transformity Investor PRO to our Transformity Investing email list and beyond and it sorta went viral. I do think the moral and important thing to do here into the historic meltdown is informing as many investors as possible about

1. WHY this 10% Correction is headed to 20%+ correction from the double economic bombs or Covid-19 pandemic and Russia's decision to blow up the American energy fracking industry

2. HOW they can protect their retirement nest egg (raising cash and using XOP XLE SPU QQQ put options) 

3. WHY there will be SOON another historic buying opportunity like late 2018 to earn100-200%+ gains over just 6-12 months when

4. The forced stock market selling ends and forced US bond-buying has peaked and 

5. Covid-19 pandemic has peaked and infection rates stop growing (now July earliest but late 2020 very possible)

6. We know the leading 20%+ unstoppable secular growth sectors of the great Industrial Revolution 4.0 being led primarily by American based disruptors WILL BOUNCE BACK HARD because

7. "Value Investing is Dead" in a world where you discount future earnings and terminal value of companies growing just 2-4% at 1%!  

IF YOU HAVE family and friends that have a lot at stake and at risk in this now undeniable global pandemic and the negative real-time second-order global economic effects that are rippling through the world economy, feel free to forward them our Code Red Updates and invite them to click here and join us for just $49 in the Transformity Research digital bunker.  

Update: How could the capital markets change so dramatically in 72 hours?

Turns out pretty easy. With the topsy turvy 1,000 point swings, as I shared last week "when the fundamentals are unclear and in a deep fog, technicals become your eyes."  I also learned many moons ago there would be big traders and hedge funds blown up owning leveraged wrong way bets (one story of many at the end for your education). 

Well unfortunately for the market (fortunate for our April and JUNE QQQ, XOP and SPY Put options, though) the technicals, visceral fear and forced liquidations are running the show in the capital markets. Fear and forced selling like Friday IS the way investable bottoms are built--stock market corrections are literally a process where weak hand stockholders (on margin or recent buyers) pass their shares onto to strong hand buyers (deep pockets with long time horizons and no leverage).

But on Friday an unexpected global economic nuke was exploded in the American crude oil markets on Friday--one that I admit I did not see coming. 

The Russians Purposely Exploded a Virtual Nuke Into The Texas Permian Basin On Friday afternoon

In a way, I should have seen this coming. #1 Russia's economy is more broad-based than Saudi Arabia (who just floated the Aramco IPO and raised $2 trillion dollars). #2 America added a whole bunch of restrictions on Russia's major energy companies (Rosneft et al) a few weeks ago and Russia, of course, was not happy.

What to do? Russia said "nyet" to participating in OPEC's 1.5 million barrel a day cut plan--they literally walked out of the room. 

My read? They see the US oil frackers with $trillions in junk bond BBBB debt are already on the financial ropes already--and it is their 3-4 million barrels per day of new supply that has made up the loss of daily oil from Venezuela, Nigeria, Libya and some from Iraq. If they kill enough American and Canadian frackers, $60 Brent/$55 WTI oil prices are back with a vengeance.

Russia wins in four important ways to them: #1 they kill off new competitors #2 they kill off excess global supply #3 When China comes back online they will slowly work off the excess supply and buy more from their biggest oil supplier Rosnoft et al and #4 they deliver a giant economic fuck you to America. 

That's a four-bagger for Russia--makes totally good sense from their perspective and interests. 

With WTI prices down 20% TONIGHT, this move greatly accelerates the demise of any unhedged marginal producer with debt--and in my opinion, brings a round trip back to $28 WTI crude in 4-6 months the new reality. 

Action to Take: PURGE Energy from your portfolio if you have any left. If you must keep it, use XLE or XOP 2021 put options to hedge because $28 oil is going to blow up 200K direct and indirect jobs just in Texas. The non-energy markets will see this via BIG jumps in job losses, unemployment rates, small business bankruptcies and general economic mayhem in American's oil and nat gas oil patch.   

Here is why. The American hydrocarbon extraction, transportation, refining, and distribution industry is nearly a $2 trilllion+ annual industry in our $21 trillion US economy. Long gone are the days when gasoline prices going down $1 a gallon keeps the US consumer spending and is net positive economics. Today the consumer boost from $lower gasoline prices is nothing compared to the effect <$30 WTI oil and $2 nat gas has on the US economy, ok?

At SOME POINT, the MLPs that move, store and refine oil and natural gas will go through much-needed recombination and refinancing. My guess is most convert to C-corporations and consolidate under the oil majors and $20 billion energy transportation and storage giants.  

But make no mistake--#1 Texas and the CA/OK/LA/PA oil and natural gas patch will be in a DEPRESSION and those great paying energy blue-collar labor jobs will disappear like the vintage wine and homemade tiramisu we have for dessert tonight (36-year wedding anniversary with my wife Marjorie down with bronchitis--oy!) 

AT under $30 oil I will be buying AMZA with an XLE and XOP hedge and love earning $40,000 a month net of the hedge from the monthly distributions. For my Transformity Family Office managed income accounts, we will make a killing. 

But to get that golden opportunity there has to be a LOT OF PAIN before MLPs or energy is investable again and we have to have a TON of cash. How fast does oil go from $50 to $25-$28? Just watch--in freefall 20% just tonight!

Our Game Plan Remains Intact

1) The first leg of a capitulation bottom at 3050 support was broken hard on Friday and, but for a historic futures market margin call, we should have broken the KEY support at 2850 on Friday (more on that event in a moment).
2) The futures will break S&P 500 2850 levels HARD tomorrow morning--and if the SPY closes under 2850, the next support is 2600. If that does not hold then the NEXT support is 2300--those are the facts. 

Action to Take: HOLD your XOP QQQ Put Options and SPY PUT OPTIONS. IF we get a bounce off of 2850 FADE THE BOUNCE to build cash or PFFA shares under $24-BUILD CASH because IF we hit a full 20%+ correction like Dec 28-27 2018, there are going to be AMAZING opportunities at our feet as LONG as we have the cash to take advantage. 

So have a cold adult beverage, if you are a trader be ready for 9:30 am open, and be safe out there. 

IT IS NOT A TIME to be a hero, yet. 

The SP 500 looks headed to the 2350 support level—it just a matter of quickly this forced selling (leveraged hedge funds") and panic selling takes us!

PS--We have just 5 seats left for our All-Access program (which includes 5-year subscriptions to both newsletters for just $495--savings of over $500). If you want to take advantage of this one-time promotion, here is how you sign up (I suggest you do it on a laptop or PC) 

To complete your registration, 
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PSS Here is the story on the CBOE trader that blew up on Friday at 3.04 pm IF you have not seen the classic movie "Trading Places"--watch it soon.

(From ZeroHedge). There was a bizarre moment Friday after, when in the 40 minutes heading into the final hour of trading, the VIX kept rising and rising, preventing the S&P from doing its sworn duty of spiking higher into the weekend. And then, just after 310pm ET (or 1210 PT), the VIX collapsed, plunging by as much as 14 vols from 54.39 - the highest print since Lehman - to 40.84, the low for the day, and unleashing another unprecedented stock buying cascade, which almost sent the Dow green. 

What happened?

As the following chat session between three individuals, which includes a former CME index option trader (X), all of whom wish to remain anonymous lays out, what happened is that the VIX ramped as a major Chicago market maker was caught in the infamous gamma short squeeze, which forced them to keep buying the VIX as the VIX soared, in the process ending the VIX even higher, only to get margin called out of their position by their clearing firm, puking their entire position while liquidating anything they could, and unleashing the VIX selling avalanche and the 700 Dow point rally.

Regular readers will recognize this pattern: it is what happened, only not with the VIX by ES, back in February 2017, when the Catalyst Hedged Futures Strategy Fund pushed the entire market higher when it, itself, was caught in a similar gamma trap (and which this January was finally busted for fraud).

Below the full chat laying out what happened:

X: Someone got carried out of the pit in spx options 15 minutes ago

X: Utterly blown the fuck out

X: Their clearing firm literally liquidated some big market maker in Chicago hahahaha

X: Go to Ceres today

Y: Omfg

X: Someone big literally doesn't exist anymore

X: WE'RE RUINED MORTIMER

X: It caused a huge dislocation in the vix

X: You could see them blow out 😂

X: God i feel so happy now

X: (Ssssiiiippp)

Z: Someone hacked into this Boise publication and is posting redpills on their Twitter

Z: [link to Boise Weekly hacked twitter account]

Z: Is one of those degenerate leftist weekly publications so common in urban areas

X: Lol nice

Z: What's going on with the spx?

X: Bro

X: What a lollercoaster

X: Im in cloud 9 right now

X: My old he lush trading firm blew out vs vix 32

X: Now someone else the same size did it vs 48 haha

X: Old hellish*

X: Consolidated trading blew out vs vix 32 last week

X: Verifiable true

Z: Do you know the other firm?

X: I wanna say they were the 4th largest market maker in chicago

X: Asking my friend. Trying to find out

[pictures of VIX vs /ES[H2O] on TOS]

X: That dramatic rise in the vix is inconsistent with the speed and depth of the fall in sp500

X: Someone literally got liquidated around 3 eastern

X: [Z] tell them about consolidated trading

X: "Consolidated Trading was well known across Chicago as degenerate risk takers who would always maintain a short vol/gamma position regardless of market conditions. Finally bit them in the ass last week and they blew out even after the market gave them tons of opportunity to get flat or long vs vix 23"

X: [Screenshot of another chat he's in]:

Q: Vix 52

Q: 14 day vol is 60 lol

Q: Bro

Q: Someone big in Chicago just got carried out of the pit

Q: Their clearing firm mega puking them out CAUSED A SEVEN POINT POP IN THE VIX

Q: Reversed in minutes

Q: MORTIMER WE'RE RUINED lmfao]

And that's what's behind 700 point ramp late Friday into the last half hour of trading, confirming that the only movie one needs to watch to understand how the market really works is Trading Places.

Toby