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S&P 500 Futures (/ESZ0) Market Profile for Wednesday, 09/30/2020.

  • Value Area High – 3337.00
  • Point of Control – 3327.50
  • Value Area Low – 3320.75
  • Pivot Point – 3333.00

Video Format

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Morning Market
Analysis, it will be
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Good Morning, the E-Mini S&P 500 as of this writing at around 7:45 am EST, would be opening Outside of Balance/Value & around Yesterday’s Low of 3316.50. Overnight inventory in my eyes is pretty much 76% net to the short side with futures currently down -19.00 points as of this writing in the now.

Things to note this morning, the E-Mini S&P 500 Futures (/ESZ0) from yesterday was Bearish, but we are trading just below the weekly range, which isn’t a great place to get short; my plan is to wait for a pop above the range so I can sell into stops of the breakout buyers. The important clue will be where price is at the open, In Value or Outside of Value? I will be using Day Trade Setup Types 3 thru 6 as my guide at the open.

Going into today (after looking at price action from Micro Composite Volume Profile Chartbook), I believe levels that need to hold today for Buyer’s to stay in control are an Initial Support Level of 3300.25 ish & needing to hold/stay above 3270.50 ish level. For the Seller’s, I think if price is above 3270.50 ish going into today, not much chance for the Seller’s. “If Aggressive”, you’re looking for Buyer Failure (IF NOTICEABLE) at today’s Key Resistance Levels above on Team Day Trader’s “Trader Worksheet” to sell high. Otherwise, I would look for price to break below 3270.50 ish & hold a pullback before selling this market short. So, let’s recap, dips should be buy-able till price is below 3270.50 ish, below gets vulnerable & a chance for Seller’s to take back control.

Your focus should be on levels & where value develops. Levels to watch price action today are going to be the reaction around 3327.50 ish, & if price closes above 3337.00 or below 3300.25.

Don’t forget, **Sequence = Failure, into Strength, into Pullbacks, and back to retest the Highs or Lows. CONTEXT is extremely important. Do not trade any setup mechanically and expect to have good results. Always judge the strength of any directional move in terms of market internals, overall pattern, tempo, & where the current range sits in relation to prior areas of balance.

Real Time Economic Calendar provided by Investing.com.

Conclusion

Embrace your subscription here with Pries Capital. As you work your way through your subscription, remember that this is not all-encompassing. It is a 40,000-foot view of how day trading/investing works & is designed to give you the basic information to get past the all-important question of how to get started. As time goes along, make note of any questions or highlights, & then come back to Jason, whether email or by phone, & ask questions to learn more about anything on your mind. Team Day Trader, a division of Pries Capital, is a community of all diverse types of day traders, so begin participating, learning, & growing.

With that said, “We have great challenges & great opportunities, and with our help we’ll meet them together!” – Jason Pries

Market Trading Report

Getting the maximum value from your subscription…

Federal Reserve Chair Jay Powell says he is keeping rates at zero for a while. It was no surprise, but it confirms that we will continue to ignore US Treasury bonds. They might not pay enough in our lifetimes to warrant our attention ever again!

Instead, we will turn our focus to higher paying fixed income vehicles. I am talking about corporate bonds, convertible bonds, and “preferred” stock. They all dish more dividend per dollar than lame T-Bills. But is this the best time to buy them, with an election just around the corner? It is a common question, as I am seeing many subscribers writing in to ask:

Overview

It was the 4th straight down
week for the market, w/ only
the NASDAQ making a gain.
Small caps took it on the chin,
falling -4.49%, and continues
to trail the other 3 indexes by
a wide margin so far in 2020.

The VIX, a measure of
investor anxiety, shot up to
its highest level in nearly two
weeks.

First, let us use the most accurate tool out there, the prediction market.

You can ignore the “gurus” who have developed models to predict the election. First, they were all wrong in 2016. Second, it is not necessary to listen to them because we can tap the “wisdom of crowds” (really, the wisdom of gamblers!) by looking at a site like PredictIt. We should not use a random poll to base our investment decisions on. We should follow the money that is flowing through a site like PredictIt to make actual wagers on real outcomes.

When making our dividend decisions, we do need to plan for any version of 2021-22 politics. As I write, the presidential election is being bet 56/44 in favor of the Democrats. It is basically a toss-up. The Senate is being priced close too with a 60/40 betting lean in favor of the Democrats. Only the House (83% chance of continued Democrat control) can be assumed to be a done deal.

Now what do the incumbents and challengers all have in common? What is the one area where they almost certainly agree? They are likely to let Fed head Jay Powell do whatever he needs to do to support the stock market economy. That will probably involve Powell’s sleek office printer:

The “economy” is a convenient excuse to ramp up greenback printing. However, we contrarians know that stock prices and the actual economy are two different things. Wall Street (sadly) does not care that our favorite restaurant is shutting its doors on Main Street. The stock market indices trade off the profits of big businesses. And big firms are still making lots of money. Plus, there is still a ton of “new cash” out there. Powell cranked up his money printer and flooded the world with liquidity starting in March. Other central banks around the world were generous as well. Here in the US, our M2 money supply is up an astounding 23% year-over-year.

Let us not let the current pullback distract us from this “big picture” view. We were due for a breather, as stocks do not always go up. We have got the pullback, it has taken down most stocks and some fixed income, too, and now it is time to go shopping.

That said, what are the best bonds to buy before, during or after the November election? We income seekers should consider:

  • Preferred shares, which pay 7% or more today,
  • Convertible stocks, which benefit from a rising stock market because they “convert” from bond to stock as their underlying equity price rises (the fund I like pays 4.4%), and
  • Overseas bond funds, which pay up to 11% today thanks to the big yields offered by emerging market governments.

Another benefit of these funds, beyond their big dividends, is their downside protection. For example, the S&P 500 topped on September 2 and is down 9.3% (as I write). Meanwhile, my favorite preferred stock fund, the Flaherty and Crumrine Dynamic Preferred and Income Closed Fund (DFP), is up by 0.6%. (Its positive total return is represented by the monthly dividend the fund just confirmed yesterday!)

If you’re wondering where I’m finding these pullback-proof monthly dividends… and perhaps the type of glue I’m sniffing to see these 4%, 7% and even 11% yearly yields in Bond-land, I’ve got three letters for you: CEF

There are some great closed-end funds (CEFs) that dish income investors these generous dividends. The great thing about CEFs is that they trade like stocks because they have fixed pools of shares. Which means that when the market slides, they can often trade at discounts to their NAVs (net asset values).

A 12.5% discount is unheard of for a bond ETF. However, there are many bond CEFs that are currently trading at discounts this generous. In fact, we can buy some secure foreign bonds for as little as 86 cents on the dollar (a 14% discount to NAV), thanks to this recent pullback and general ignorance about CEFs.

Economic News of Interest:

The number of Americans filing new claims for unemployment benefits unexpectedly increased last week, supporting views the economic recovery from the COVID-19 pandemic was running out of steam amid diminishing government funding. Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 870,000 for the week ended Sept. 19. Data for the prior week was revised to show 6,000 more applications received than previously reported. Six months after the pandemic started in the United States, jobless claims remain above their 665,000 peaks during the 2007-09 Great Recession.

U.S. federal debt held by the public will balloon to about 195% of the country’s economic output in 2050, from about 98% at the end of 2020 and 79% in 2019, the Congressional Budget Office projected on Monday. The CBO, in its annual Long-Term Budget Outlook, said that increased federal government spending associated with the coronavirus pandemic has accelerated the growth of U.S. budget deficits and debt. The nonpartisan budget referee agency said that the 2020 deficit is projected at 16% of U.S. GDP, and the share will fall for several years, but will begin rising sharply again by 2028.

Failure to deliver more government aid to households could precipitate a wave of mortgage defaults and evictions, Federal Reserve Chair Jerome Powell said on Thursday in a fresh warning amid a continued deadlock in Congress over another coronavirus relief package. While households are spending now, perhaps using what’s left of money from the $2.3 trillion package passed by Congress in March, “the risk is they will go through that money, ultimately, and have to cut back on spending and maybe lose their home or their lease,” Powell said in testimony before the Senate Banking Committee.

U.S. orders for durable goods increased in August at a slower pace than expected, restrained by declines in bookings for motor vehicles and military equipment, though a gauge of business investment rose more than forecast. Bookings for durable goods — or items meant to last at least three years — increased 0.4% from the prior month after an upwardly revised 11.7% jump in July, Commerce Department data showed Friday.

Now, The Week Ahead…

While it may no longer be the top news story in the financial press, the coronavirus pandemic is still with us. On Wednesday, Johnson & Johnson (JNJ) said that its vaccine candidate is progressing to Phase 3 trials. In the meantime, several countries in Europe are considering reinstating business and travel restrictions, as the number of new cases has re-accelerated. If the pandemic continues to spread, it could hamper the positive trajectory of economic recovery reported in recent months.

The first U.S. Presidential debates will occur on Tuesday evening. President Trump announced the nomination of Amy Coney Barrett to the Supreme Court on Saturday. This adds another layer of conflict to an already contentious election.

We will get the final reading for second-quarter GDP on Wednesday. This is followed by the closely watched monthly Payrolls Report (September) which is due out on Friday. This should be the last payrolls report before the US election. Estimates call for the addition of 800,000 non-farm payrolls in the month, and for the headline unemployment rate to tick down to 8.2%. Following the snap-back recovery in stocks from March lows, we believe that investment gains will be harder to come by in the second half of the year. As a result, deciding what and when to buy can be challenging for any investor. However, the fact remains that attractive investments are out there if you are willing to dig a little deeper.

Index Charts:

With the weekend ending, it remains to be seen whether the sellers will exert further pressure next week or will we see a turnaround, with major indices reaching key levels within a mixed macro backdrop.

Shares have fallen for four weeks, with the S&P pulling back around 10% from its record high. Sentiment has been downbeat so far in September. As well as profit-taking from record highs, there has been growing concerns about the disconnect between the economy and the markets.

Besides valuation concerns, the alarming rise in coronavirus cases across Europe and other parts of the world has revived growth concerns, just as the global economy was beginning to recover from the pandemic.

Recent macro data suggests the stimulus-driven US economic recovery may also be stalling, and there is growing uncertainty over whether there will be more fiscal stimulus with the presidential election looming. Yet, the selling has not been anything like back in March. And let us not forget the big elephant in the room. Officials from the Fed and other major central banks have been reminding investors that more stimulus may be provided if the economy warranted it. Also, several European countries have already extended their fiscal stimulus support and there is a good chance the US government will follow suit.

With various stimulus measures still ongoing, and more fiscal and monetary stimulus potentially on the way, we continue to do what we have done so over the past decade: buy the dip again. It is worth noting that some investors who were presumably hoping for a pullback have now got a 10% correction from the record high, which makes it more probable than not that we see a rebound soon.

With that said, from a technical point of view, the S&P has now reached a critical juncture after its recent falls:

S&P 500 Short-term (SPX)… As the daily chart shows, the index has been very sensitive around the ~$3215.00 area in the past, where we have seen good bounces and rejections from. And it was precisely here where the index once again reacted from on Friday, as it started to turn higher after being in the red in the overnight session.

But was this bounce an oversold reaction, or a sign of things to come in the next few sessions?

Well, some would argue that the RSI (banded oscillator) was at bear oversold levels and after a 10% correction you are bound to see some dip-buying at or near support.

For confirmation, I would now like to see the S&P stage a breakout point from this correction. The Day Trade Setup Type 15 is one of my reliable reversal patterns. So, a decisive break above would be deemed a bullish development.

To wrap-up this Market Trading Report, Friday’s reaction was nice, but it now needs to break out—and soon. Otherwise, there is a risk we could see further falls in the near-term. Indeed, a daily close below ~$3215.00 could see the index drop towards its 200-day average at ~$3107.00, or even lower. But even if that bearish setup plays out, it is worth remembering that in the grand scheme of things, the correction from the record highs has been relatively shallow thus far. The index has not even retraced to its 38.2% Fibonacci level (~$3054.00) yet. This means that objectively, the long-term bullish trend remains intact and traders should be prepared for a sudden short-squeeze rally to potentially emerge, even if the macro backdrop may suggest otherwise.

Charts of Interest:

Cirrus Logic (CRUS) is my “Chart of Interest” this week. The company makes integrated circuits for consumer electronics and other various industries. The stock gained more than 5% this week. We believe this positive momentum can continue throughout the remainder of 2020. Here is why:

What makes Cirrus Logic stand out is that the company derives nearly 80% of its sales from Apple (AAPL). This type of revenue concentration can often raise a red flag. It is less of a concern when you are talking about one of the biggest and best-run businesses on the planet. That leverage to the Apple juggernaut was on display last month when management posted quarterly results that exceeded expectations.

The company earned $0.53 a share in the June quarter, as revenue increased fractionally from a year ago, to $242.6 million. Looking ahead to the September quarter, management sees sequential sales improvement, to $290 to $330 million. Cirrus Logic has $606 million (over $10 a share) of cash and investments on its debt-free balance sheet. Backing this out, the company is currently valued at just 16.7x expected full-year earnings of $3.15.

The stock has received upgrades from two analysts this past month. The average price target of six active brokerage firms is $76.50, which represents 21.4% upside potential.

On top of the positive aspects mentioned already, the company has seen insider buying, as well as improving sentiment from investors (both professional and individual).

Conclusion

Embrace your subscription here with Pries Capital. As you work your way through your subscription, remember that this is not all-encompassing. It is a 40,000-foot view of how day trading/investing works & is designed to give you the basic information to get past the all-important question of how to get started. As time goes along, make note of any questions or highlights, & then come back to Jason, whether email or by phone, & ask questions to learn more about anything on your mind. Pries Capital is a community of all diverse types of day traders and investors, so begin participating, learning, & growing.

With that said, “We have great challenges & great opportunities, and with our help we’ll meet them together!” – Jason Pries

Fiscal and Monetary Tango

In this Economic Research Paper, I wanted to focus on the Federal Reserve’s Sep 21, 2020 Z.1 Financial Accounts release.

The Z.1. release is a quarterly report by the Fed that accounts for the assets and liabilities for entities throughout the United States, including households, businesses, and governments. It comes out with a bit of a lag, but the abundance of information makes it a great data set for monitoring long-term trends.

Record Net Worth

U.S. household net worth reached an all-time high in Q2 2020, both in nominal dollar terms (red line below) and in CPI-adjusted terms (blue):

Total household wealth reached nearly $119 trillion in nominal dollar terms by the end of the quarter. This new high in net worth is due to the sharp rebound in equity prices that occurred through Q2, the continued increase in housing prices, and the rapid growth of the broad money supply.

Some people are confused at why markets and overall net worth could have done so well this year so far, despite such a bad environment for employment and GDP.

The reason, of course, largely has to do with trillions of dollars of government transfer payments from April through July of this year. Due to record levels of stimulus checks, unemployment benefits, PPP loans for businesses that largely turn into grants, and corporate bailouts, personal income on a nationwide scale went up rather than down in this recession so far:

More important than absolute household net worth, and a key ratio to be aware of, is household net worth as a percentage of GDP. This ratio is shown in blue on the left axis of the chart below, with short-term interest rates in red on the right axis for context:

This ratio of household net worth as a percentage of GDP shot up to new record highs of over 6x or 600% this quarter (largely due to a sharp decline in GDP), after already being at record highs of nearly 550% in recent years.

All else being equal, low interest rates put upward pressure on real estate and equity valuations, which puffs up net worth relative to income and relative to GDP. As we have reached lower and lower interest rates over time, asset valuations have pushed upward. However, momentum and other factors tend to exaggerate this move in certain asset classes over time.

During the 2000 peak, real estate was reasonably priced compared to historical norms, but equities briefly shot up to record high valuations, which pushed up household net worth to about 450% of GDP.

During the 2007 peak, it was the opposite, with equities at historically reasonable valuations while real estate briefly soared to record high valuations, which pushed up household net worth even more to nearly 500% of GDP.

In recent years, both equities and real estate have been historically highly-valued together, as interest rates have hit lower lows, and that combination of high equity valuations and high real estate valuations has allowed household net worth to break out to record highs as a percentage of GDP, even compared to 2001 and 2007. We were getting close to 550% household net worth to GDP in recent years, and the decline in GDP in Q2 as asset prices went up, has briefly taken that ratio to over 600%.

Normally, a big economic shock would dislodge that and start to deflate asset valuations to some extent, but so far in this recession, record amounts of stimulus have been able to keep personal incomes and asset prices levitating through this year. And the four-decade trend of lower interest rates has been beneficial to asset price valuations.

Since August, fiscal stimulus has not been in effect, so uncertainty and volatility have returned to equity markets.

Equity-Heavy Household Allocations

The majority of household net worth consists of financial assets like cash, bonds, real estate, and stocks.

We all know by now that by most metrics, equity valuations are historically high. For example, based on the S&P 500 average price-to-sales ratio, or the cyclically-adjusted price-to-earnings ratio, or market capitalization as a percentage of GDP, the stock market is more expensive than most times in history. By some of those metrics, like the price-to-sales ratio, it is the highest in history, while in other metrics, like the cyclically-adjusted price-to-earnings ratio, it is the second-highest after the 2000 dotcom bubble peak.

On the other hand, the one key metric for which stocks are not particularly expensive, is the equity risk premium, meaning the earnings yield or dividend yield of the S&P 500 compared to an interest rate benchmark, like the 10-year Treasury rate. By that metric, the valuation advantage still leans a bit towards the stock market, especially if you filter out a handful of particularly bubbly stocks.

And that is what makes this environment so hard for investors. Back during the dotcom bubble 20 years ago, 10-year Treasury notes were yielding a very attractive 6%. Not only were stock valuations extremely high, but the equity risk premium was also at a record low compared to those high-yielding nominally risk-free bonds, so Treasuries were a no-brainer better alternative to stocks that smart investors could shift into.

With interest rates around the developed world all near-zero currently (or even nominally negative in some cases), and thus sovereign bonds set to produce extraordinarily low returns over the next decade, many investors are left scrambling for assets, including equities and real estate even at rather high prices.

In other words, many investors accept the prospect of long-term low returns that stock indices are likely to offer at such high valuations, because those returns could still be comparable to, or better than, the return they’ll get from Treasuries over the next decade, in exchange for more volatility. Both will likely be low-returning areas, especially in inflation-adjusted terms, but which will be better is an open question.

I prefer good-quality stocks from a long-term perspective, but I do use Treasuries for some counter-cyclical defense, to buy dips and sell rips in equities and other asset classes via tactical rebalancing.

However, we must be cautious because equities are very popular among investors at this time. Besides the traditional stock and bond valuation metrics, one ratio we can look at is the percentage of U.S. household assets that consist of equities, from the Fed’s Z.1. report.

As of Q2, 23.5% of household assets consist of equities (in red below), which is near the high end of the multi-decade historical range. I also included household real estate as a percentage of assets on this chart as well, which is currently at a more historically average allocation:

When equities were over 20% of household assets in the late 1960’s, the result over the next 10 years was about 2-3% annualized returns, which is not even adjusted for inflation. Then, when equities fell to cheap levels in the 1970’s and 1980’s, down to well below 10% of household assets, the annualized forward returns were over 15%, which even after adjusting for inflation were great.

The dotcom bubble, where equities briefly reached 25% of household assets was the worst time in modern history to buy equities, as they produced slightly negative 10-year annualized returns from there. The 2008-2010 period was a great buying opportunity, and now from 2017-2020, equities have been backing up to around 25% of household assets.

This inverse correlation between household equity allocation and forward equity returns is roughly what we would expect to happen from a rather crowded trade.

To summarize here, U.S. household assets and net worth are at a record-high percentage of GDP and earned income, and equities currently represent a historically high portion of those highly valued household assets. This combination historically does not bode particularly well for ten-year forward returns, especially if we adjust for inflation. As a long-term trend, however, it is not a trading signal, but rather just a “big picture” observation.

Equity-Heavy Capital Structures

Despite being highly indebted based on various metrics, such as corporate debt as a percentage of GDP, corporate capital structures are tilted more towards equity than average, as of Q2 2020. That is because, as previously described, equities are so highly valued.

Specifically, at the end of Q2, total corporate equity (excluding banks) was worth $33.5 trillion, while total corporate debt (excluding banks) was worth just under $11 trillion. In other words, total corporate debt was worth about 1/3rd as much as total corporate equity shares at market value.

If we add corporate equity and debt together, the total is about $44.5 trillion, with equity accounting for about 75% of that total, and debt accounting for the other 25%. That is the current capital structure of U.S. nonfinancial corporations in aggregate: three quarters equity and one quarter debt.

Compared to history, this ratio is currently on the high end, meaning that equity value outweighs debt value by more than average. This chart shows market-value equity as a percentage of the total sum of equity and debt since 1945:

During the booming 1960’s, corporate equity remained in a 70-75% band for capital structures for most of that period, with debt representing the other 25-30%.

Then, during the inflationary 1970’s and 1980’s, equity valuations were much cheaper, and so equities made up just 50-60% of corporate capital structures. Corporate debt was relatively low as a percentage of GDP, but corporate equity was also unusually cheap.

The 1980’s began a disinflationary trend and a mega stock boom into the 1990’s, with corporate equities reaching a record 78% of the total capital structure at the peak of the dotcom bubble by the end of the 1990’s decade.

Then, this ratio went down and chopped along for a while after the dotcom bubble burst, and then during the 2009 market bottom, equities were very briefly back to just 60% of the corporate capital structure before quickly shooting back up.

For the past several years, since around 2014, corporate equities have once again been hovering at around 75% of the corporate capital structure, which is near the top end of the historical range.

The big caveat for this comparison of corporate capital structures, is that it is currently more top-heavy than usual. The handful of mega-cap tech and internet stocks, like Amazon (AMZN), Microsoft (MSFT), Apple (AAPL), Facebook (FB) and Alphabet (GOOGL) represent several trillions of dollars in equity market capitalization but have comparatively very little debt. Most of their combined capital structure consists of equity.

As we move down into medium and smaller companies, however, their tilting towards debt becomes a lot bigger, with lower equity valuations and higher debt loads.

Both corporate debt levels and equity valuations have been sharply rising, so corporate debt and corporate equity have both grown faster than GDP. This chart shows nonfinancial corporate equities (blue) and debt (red) separately, each as a percentage of GDP:

Equity value peaked in the 1960’s at around 90% of GDP, bottomed at below 40% of GDP in the 1970’s and 1980’s, soared to 160% of GDP during 2000, bottomed at around 70% of GDP in 2009, and now is at a record high of over 170%.

Meanwhile, corporate debt used to be as low as 20-25% of GDP but has since nearly tripled to the 55-60% range.

Partially this trend increase is from globalization, especially if we compare the 2010’s to the late 1960’s. The S&P 500 is a lot more global today than it was 50 years ago, both in terms of earning revenue from abroad, and cutting expenses by building things in cheaper countries.

However, it is not all (or even mostly) from globalization. The S&P 500 used to earn a bigger percentage of its revenue from overseas ten years ago than it does lately, for example, even though the stock market capitalization to GDP ratio doubled during that time due to increases in equity valuation.

In fact, globalization as measured by global trade as a percentage of global GDP, peaked in 2008 according to World Bank. This mirrors what we see from the S&P 500 foreign revenue percent table above that also peaked in 2008.

So, changes in valuation play the key role for the value of the stock market as a percentage of GDP, especially over a given decade, but that can be amplified by structural trend shifts like corporate tax cuts, globalization, and large publicly-traded companies taking market share from non-public small businesses.

Final Thoughts

My theme is that with the economy in the state that it is currently in, whenever fiscal stimulus is shut off, rising insolvency and normal recession characteristics could begin playing out.

The reason this current economic environment is tied to fiscal stimulus in an unusually tight way, is because of where we are at in the long-term debt cycle.

The amount of leverage and wealth concentration in the economy are both historically high, so any disruptions to broad personal income can more easily lead to systemically poor outcomes both in terms of civil unrest and broad insolvency than those disruptions could cause in a normal, healthier environment.

That will likely make the 2020’s into a particularly “macro heavy” decade, because this could very well continue to play out differently than a normal business cycle depending on how fiscal stimulus or lack thereof impacts the economy. My long-term macro is for very heavy fiscal spending, but the timing is tied to politics.

My overall process continues to be to focus on good individual stocks, with a side order of real estate. I am using fiscal stimulus as one of my tactical risk-on and risk-off indicators, but the underlying theme is to focus on quality businesses. Unfortunately, we must factor stimulus or lack thereof into fundamental business earnings estimates, especially for the more cyclical industries.

Personal incomes and many risk assets have so far defied the recession due to fiscal stimulus. But whenever stimulus goes offline, the natural tendency for an economy so indebted and impaired, is to sink into a period of disinflation and a weakening recovery. Whenever stimulus goes online (which at this point is significantly funded by permanent central bank monetization of the Treasury’s bond issuance), nominal GDP growth can be improved and risk assets have a better shot at pushing up, at the cost of higher inflation expectations and currency devaluation.

Most asset classes these days are correlated to one big theme: rising or falling inflation expectations. And these expectations are tightly tied to fiscal policy.

So, depending on their time frames, investors have that tango, of being more tactically aggressive or defensive based in part on fiscal stimulus being on or off, combined with whatever other indicators they prefer to use, such as fundamental valuations, oversold/overbought conditions, and technical indicators.

Conclusion

Embrace your subscription here with Pries Capital. As you work your way through your subscription, remember that this is not all-encompassing. It is a 40,000-foot view of how day trading/investing works & is designed to give you the basic information to get past the all-important question of how to get started. As time goes along, make note of any questions or highlights, & then come back to Jason, whether email or by phone, & ask questions to learn more about anything on your mind. Pries Capital is a community of all diverse types of day traders and investors, so begin participating, learning, & growing.

With that said, “We have great challenges & great opportunities, and with our help we’ll meet them together!” – Jason Pries

Market Trading Report

Getting the maximum value from your subscription…

BONUS >>> I’m going to try doing these at the end of every month… August 2020 Monthly Market Review

Also, here is September’s Trading Day Expectancy for anyone interested.

In August I was thinking about 3 major market themes that I expected would continue to emerge or completely reverse.

Overview

It was a down week for
the market, with the major
indexes pulling back on
Thursday and Friday.

Main indexes tumbled on
Thursday, heading for
their worst day since June
as technology dumped,
while economic data
highlighted concerns
about a long and difficult
recovery.

  1. The focus on the junk bonds (JNK) and investment grade bonds (LQD). Junk bonds have remained strong indicating the appetite for high risk companies has not waned-good, news for the market. Investment grade bonds sold off into a warning phase. However, on a weekly chart, it held just where it needed to at 134.31-the area of support for now.
  2. The focus on the banking and financial sectors of the market. Although those sectors saw a brief pop, XLF and KRE are pretty much exactly at the prices they were when I left. What does that mean? Most likely, these areas reflect the reality of the economy and how many loan defaults and bankruptcies continue to plague real economic growth.
  3. The dollar, low rates, rising metals, up move in sugar and all the factors that still support a stagflation theory.

Is that still in play?

No doubt the recent rally to new highs in the S&P 500 and Nasdaq is impressive. However, this market remains divided, with stocks skyrocketing or languishing and not much in between. The Economic Modern Family is equally mixed with the Russell 2000 and Russell 3000 trading sideways. Regional Banks (KRE) stuck near the bottom of the range and Semiconductors (SMH) are flying.

Here is where we see the stagnation part of the stagflation theory…

To date, grains (wheat and soybeans), which I have pointed out repeatedly as trading at 100-year lows versus the SPX, have rallied well. Gold has held its gains although has yet to convincingly clear $2000 an ounce. Rates have firmed a bit while the dollar continues to free-fall. Only late this week, the dollar found some footing, which could take it to test overhead resistance. Sugar, my secret sauce for stagflation, edged higher above both the 50 and 200-day SMA’s. Sugar can continue to tell us more about rising food costs amid supply chain disruptions. I am still watching commodities, particularly gold and silver.

And now, with civil unrest a daily headline globally as well in the US, the market, which is very one-sided towards tech, could be close to overdone.

For that, volatility is a key to keep eyes on.

After a reversal bottoming pattern on August 26 (Day Trade Setup Type 15) confirmed, even while NASDAQ runs, the move in VIX (the fear index), over the 50-day SMA (Recuperation Phase) and holding above my 20-Storm Gauge, could mean trouble.

Economic News of Interest:

There are growing signs the labor market recovery from the depths of the pandemic in mid-March through April is faltering, with financial support from the government virtually depleted. Non-farm payrolls increased by 1.371 million jobs last month after advancing 1.734 million in July. Government employment rose 344,000, with 238,000 temporary workers hired for the population count. Job growth peaked at 4.781 million in June. The unemployment rate fell to 8.4% last month from 10.2% in July, even as more people entered the labor force. Economists polled by Reuters had forecast 1.4 million jobs added in August and the unemployment rate sliding to 9.8%.

The number of Americans filing new claims for unemployment benefits fell below 1 million last week for the second time since the COVID-19 pandemic started in the United States, but that does not signal a strong recovery in the labor market.

The drop in initial claims to a five-month low reported by the Labor Department on Thursday largely reflected a change in the methodology it used to address seasonal fluctuations in the data, which economists complained had become less reliable because of the economic shock caused by the coronavirus crisis.

“There are new seasonal adjustment factors this week which brings down the joblessness slightly. The labor market looks just as bad as it was and it will be a miracle if economic growth can continue at such a fast clip during this recovery if it has to drag along millions and millions of workers without paychecks.”

Chris Rupkey, chief economist at MUFG in New York

The number of people receiving unemployment benefits under all programs jumped 2.2 million to 29.2 million in the week ended Aug. 15. A report on Thursday showed growth in the services industry slowed in August. The services sector, which accounts for more than two-thirds of the U.S. economy, has been hardest hit by the pandemic.

Now, The Week Ahead…

China’s August trade data will give insight in to the speed of the recovery from the pandemic in the world’s number-two economy. On Monday, trade figures out of China are expected to show exports rose solidly for a second straight month in August, while imports edged back into growth. Chinese exports have not been as severely affected by the global slowdown as some analysts had feared and are set to be a key driver in the nation’s economic recovery. Already high tensions between Washington and Beijing are expected to escalate ahead of the U.S. presidential election in November. China remains well behind on its pledge to boost purchases of U.S. goods under the Phase 1 trade deal that took effect in February.

On Thursday, the European Central Bank (ECB) will hold a policy meeting against a background of slowing inflation and a strengthening euro. ECB officials will have plenty to discuss after the euro hit $1.20 for the first time since 2018 and euro zone inflation turned negative in August for the first time since 2016. The slide into deflation is a red flag for the central bank, which targets annual inflation of close to, but just below 2%.

The euro has been boosted by a broadly weaker dollar and improved sentiment towards the European Union’s 750 billion-euro pandemic rescue fund. As such, any impact on inflation may be temporary. But in the longer term, the ECB may be forced to reevaluate its monetary policy given the Fed’s shift to tolerate higher inflation, which could weigh on the dollar.

U.S. consumer inflation figures will be closely watched after the Federal Reserve’s recent policy shift to adopt average inflation targeting. U.S. inflation seems to have little chance of hitting 2% anytime soon and Friday’s inflation figures for August are expected to show core CPI rising 0.2% month-on-month and 1.6% on a year-over-year basis. The Fed, which is now aiming for an average has said it will not worry about inflation running above its 2% target, which is seen as giving it room to keep interest rates low for as long as it wants.

That is good news for stock markets, real estate property and other assets that benefit from cheap money.

As always, we’ll be watching Thursday’s report on initial jobless claims for weekly insight into the strength of the recovery in the labor market after the August jobs report showed that hiring slowed again last month as financial aid from the government dried up.

Index Charts:

Before we get to the state of the market, I figure it is probably a good idea to address the current violent selloff that happened in the stock market towards the end of the week.

The fact that the market suddenly fell, without notice, and on no news, should not come as any surprise to our clients. In addition, everywhere you look, media outlets have been sending a “buyer beware” message for some time now. So, the question was not “if” the market would eventually sell off, but rather “when”?

Cutting to the chase, it looks to me that the “unwind” of the speculative behavior (aka aggressive call options trading), which was likely triggered by options expiration, is creating what amounts to a version of “forced liquidations”.

Sure, profit-taking is going on here as there are lots of profits to be had in the mega-cap COVID winners. Heck, even I “right-sized” my position in Apple (AAPL) last week by taking some profits since the percentage holding in the portfolio had gotten out of hand. (And before that, we had used the joyride to the upside to rebalance our aggressive stock portfolio back to the target percentage holdings, thus “right-sizing” the positions into strength.)

When will it end, you ask? My guess is that the “unwind” part of this will take a few days and the “correction” part of this move, which was needed (as long as you’ve held the positions for a while) will last a week or two.

In my experience, I have found that having some idea of what to expect helps me keep my emotions in check, which tends to produce better decisions – especially when things appear to be falling apart at the seams.

Now let us get to the technical analysis…

S&P 500 Short-term (SPX)… I will start with the daily chart perspective as it struck of a buying climax in the short-term. My interpretation? On one hand, the correction is not likely over yet, but a daily upswing attempt is probably coming – and the Buyer’s will have to prove that this will not turn out as a 2-Try Reversal Trade Setup.

On any downside move, we have very prominent Key Support Levels at the August 3rd Gap and the Compression Breakout Support Level.

The key takeaway from this analysis I want everyone to pay special attention to is the Momentum Oscillator (MACD). As Price and Time come off, the first touch of the Zero-Line of the Oscillator is highly reliable for a bid in the market. I am telling you this now, so you have the time to gather some dry powder when that day comes to put it to good use. As the future will come into fruition, we will bring Market Profile, Key Levels, and the MACD into play to capitalize on the perfect timing for a long-term position trade.

In Credit Markets’ point of view, high-yield corporate bonds (HYG) did not decline as abruptly Thursday and Friday, and the volume coupled with the piercing tail point to no selling stampede on Friday. But, the daily setback in investment grade corporate bonds (LQD) on Friday was pronounced.

No rush in Gold (/GC) to liquidate longs, and with the current consolidation I am still under the impression of a Bull Flag or Symmetrical Triangle Price Pattern (however extended in time, because the king of metals had quite a run since recovering from the March deflationary collapse).

Copper (/HG) took off like a bat out of hell on Friday, showing signs that it is not rolling over either. The upcoming sessions will be telling but I look for its uptrend to stay in tack at least till $3.30 ish before a possible pause/pullback.

To wrap-up this Market Trading Report, the key culprit of declining S&P 500 was technology (XLK) – its volume itself calls for caution as the correction here is not likely over yet. Despite Thursday and Friday’s profound setback, the S&P 500 is still in a Bull Market. The correction though appears likely to have a bit further to run in time, as a minimum. The autumn season storms have arrived, but the medium-term picture remains bullish.

Charts of Interest:

Dave & Buster’s Entertainment Inc. Dave & Buster’s Entertainment, Inc. is an owner and operator of high-volume entertainment and dining venues under the name Dave & Buster’s. The Company’s concept is to offer its customers the opportunity to Eat Drink Play and Watch all in one location. Eat and Drink is offered through a menu of Fun American New Gourmet entrees and appetizers, and a selection of non-alcoholic and alcoholic beverages. The Company’s Play and Watch offerings provide an assortment of entertainment attractions centered around playing games and watching live sports and other televised events. Its customer mix skews moderately to males, primarily between the ages of 21 and 39. As of January 29, 2017, the Company owned and operated 92 stores located in 33 states and one Canadian province.

Dave & Buster’s Entertainment Inc. (PLAY) is my “Chart of Interest” this week. Full disclosure, we personally own this in the portfolio as we thought market participants overreacted to the Covid-19 threat. The company reports its second-quarter earnings on Thursday, September 10. With that said, taking positions on stocks that are expected to beat earnings expectations do increase the odds of success. Therefore, it is worth checking a company’s Earnings ESP ahead of its quarterly release.

As far as technical analysis is concerned, I will keep it simple… We feel at this point there is a very high probability this company will not go out of business, so at this point we have no stops in place. Any dip will be an accumulation phase as a larger percentage of the portfolio. You do have nice Consolidation Box Range from $11 to $14, I like the momentum oscillator moving to the zero line on the weekly chart with plenty of room to run. You have the first targets of the Gap at $27.08 coinciding with the 50-period weekly moving average sitting around $26.68. I want stress for us, this is a long-term investment trade, ultimately purchasing in pullbacks with portfolio examination as stock gets closer to ~$55 ish.

Conclusion

Embrace your subscription here with Pries Capital. As you work your way through your subscription, remember that this is not all-encompassing. It is a 40,000-foot view of how day trading/investing works & is designed to give you the basic information to get past the all-important question of how to get started. As time goes along, make note of any questions or highlights, & then come back to Jason, whether email or by phone, & ask questions to learn more about anything on your mind. Pries Capital is a community of all diverse types of day traders and investors, so begin participating, learning, & growing.

With that said, “We have great challenges & great opportunities, and with our help we’ll meet them together!” – Jason Pries

Investing During Chaos

In the world of finance, we have a huge clash right now between the largest economic shock in generations contrasted with the largest ever government response both monetary and fiscal, and that impact between such massive things is causing all sorts of interesting behavior in the markets.

On one hand, we have the biggest global economic contraction of the modern era, the highest unemployment level in post-WW2 American history, and a virus that continues to affect consumer, business, and government behavior. The world went into this crisis with record debt-to-GDP levels, which made what could have been a manageable situation into a more extreme situation. This is an incredibly heavy economic anchor that was built over decades and triggered by a random event.

On the other hand, we have the biggest-ever collective fiscal injection by countries around the world including in the United States, and rapid debt monetization and asset purchases by central banks to facilitate those sovereign deficits and smooth out volatile markets. The Federal Reserve has crossed the Rubicon into buying individual bonds including some junk bonds, as well as muni bonds, in addition to the Treasuries and mortgage-backed securities they already have a long history of buying. This is the ability to use an infinite balance sheet to print money and buy assets.

The result is that we have very large dislocations, like the stock market soaring on heightened liquidity, and junk bond spreads lower than they would be in a natural market, while the economic situation remains stressed.

As this chart shows, employment levels in the United States have crashed to levels not seen since previous recessions in 2003 and 2009, and yet the stock market itself has reflated nearly back to all-time highs.

Source: St. Louis Fed

Now, there are various ways that the above chart could be scaled. But the point is, if someone had told you last year that in 2020, we would have a global pandemic, and a global economic shutdown in response to that pandemic, that resulted in the biggest surge in unemployment in the modern era and the most negative quarter for GDP on record, that the stock market would only fall 30-some percent and then be back near all-time highs in three months?

Probably not, right?

As this next chart shows, the stock market’s rebound and the Fed’s balance sheet rise have been in almost perfect harmony. This lockstep behavior even includes the recent local plateau we have been in since mid-June, as the Fed has tapered liquidity and the market took a step back from its upward trajectory:

Source: St. Louis Fed

The Extent of Economic Damage

While the market enjoyed a nearly V-shaped recovery from late-March to mid-July, the underlying economy is not really showing signs of such a strong comeback. This will take time to work through.

The number of initial jobless claims keep coming down each week, but continued claims are proving to be a bit “stickier”:

Source: St. Louis Fed

Even after this big decline in initial jobless claims per week from almost 7 million at the worst point to under 1.5 million per week lately, they’re still more than twice the weekly peak of the 2008/2009 crisis, which remained below 700k at the worst point.

In other words, 3 months after initial COVID-19 shutdowns, we are still shedding existing jobs faster on a weekly basis than we were at the peak of the Great Recession:

Source: St. Louis Fed

As millions of people continue to lose jobs, millions of other people are getting some of their jobs back or finding new jobs. So, the number of continued claims that has been hovering around 20 million, which is about 3X as high as the level that was reached during the Great Recession, which did not touch even 7 million at its worst point:

Source: St. Louis Fed

As of April and May data, the United States already has much higher unemployment rates than our advanced peers such as Japan, northern Europe, and Australia, and I contend that this divide is likely to continue for quite some time. This is happening for a variety of reasons.

A surface reason is simply that we have different unemployment policies and a greater ease for employers to lay workers off compared to a number of other countries, which can make for a more dynamic economy but can also cause higher peak unemployment levels during crises.

However, perhaps a larger reason is that due to having the global reserve currency for decades in the post-WW2 era, the U.S. has had to run major structural trade deficits decade after decade, and as a consequence of that, has exported a large portion of its industrial capacity to the rest of the world. Economists Robert Triffin and John Maynard Keynes both warned during the Bretton Woods era that the system as constructed would eventually lead to this sort of problem, and they were right in this regard.

In other words, having the global reserve status has created a consistent demand for the U.S. dollar from a global perspective. This is because most commodities are priced in dollars worldwide, and countries need commodities (and have a lot of dollar-denominated debt), and thus need dollars. This keeps the dollar strong and pushes up the import power of Americans and reduces our export competitiveness, so we gradually stopped making things over the years, not just compared to emerging markets but also compared to wealthy peer regions like Japan and northern Europe.

This has left the United States more reliant on the services sector as a share of our economy than most of our peers, and the services sector is disproportionally harmed by COVID-19 and related shutdowns by businesses and governments to slow the spread of the virus. It also means we are reliant on things like masks, pharmaceuticals, and military components from China and similar regions. In other words, it feels good for people in a country to have extra import power, until it hollows out the country’s manufacturing base, which is what has happened.

Most wealthy folks and white collar workers have been insulated from this trend for a while, enjoying many of the benefits of a strong dollar without directly feeling most of the drawbacks, while blue collar workers have generally been more negatively affected, because although their dollars are strong, their jobs have shifted overseas and/or their wages were more pressured downward by foreign competition.

The U.S. has a lower median net worth than a significant portion of our peers despite a higher mean net worth than many of them, which means that we have a greater percentage of people on the brink of insolvency, that can’t afford lost income streams. In addition, the United States has the highest per-capita healthcare costs in the world, and for many people, their health insurance is tied to their employer. Plus, the U.S. went into this crisis with the highest government deficit as a percentage of GDP than most other advanced countries in 2019.

For these reasons, my overall opinion is that the U.S. will be forced to have larger fiscal deficits and central bank balance sheet expansion than many of our advanced peers over the next 3-5 years, even though most nations will also face high deficits and monetization of those deficits. It is a question of relative magnitude relative to GDP.

I will monitor this situation over time to see how it develops.

Equal Weight vs Market Weight

I am watching a few indicators lately, and one of them is the ratio between the S&P 500 equal weight index and the S&P 500 market weight index.

Most major stock market indices are weighted by market capitalization, meaning that the bigger the market capitalization of a stock (the total value of all shares), the bigger its weighting in the index.

For example, Apple Inc (AAPL) has a weighting in the S&P 500 that is more than 100 times as big as Nucor Corporation (NUE), even though they are both S&P 500 members. Nucor is a mid/large cap steel producer, while Apple is one of the largest mega-caps the world has ever seen.

As another example, even compared to other top-100 S&P 500 companies, like Union Pacific Corporation (UNP) or Texas Instruments (TXN), the software titan Microsoft (MSFT) holds a slot in the index that is more than 10X the weighting of either of them.

This market capitalization allocation method is mainly for low costs. Index funds were created decades ago when trading costs were high, and this market-weight momentum strategy maintains minimal turnover. Nowadays, trading costs are way lower, but that is still how many index funds are weighted.

On the other hand, there are some equally weighted indices. An equal weight S&P 500 index, for example, weights each of the 500 companies equally. So, rather than Apple representing over 5% of the index and Nucor representing 0.05% of the index, they would both represent 0.20% of the index. An equal-weight index must rebalance regularly (usually quarterly) to maintain that equal weighting.

Here is how the S&P 500 market-weight-vs-equal-weight data compare from inception of the data in 1989 to the end of June 2020:

Source: Bloomberg

However, we can see that there are periods where the market-weight index does way better (such as the 2000 tech bubble), and periods where the equal-weight index does way better (such as the 2007 housing bubble).

Here is a chart that I lighted back in May. The top five stocks in the S&P 500 (Microsoft, Apple, Amazon, Alphabet, and Facebook) now make up over 20% of the 500-company index, which surpasses the amount of concentration that occurred even at the height of the Dotcom bubble:

Source: Goldman Sachs, via Business Insider

Historically, the equal weight version tended to go on to perform worse than the market-weight version for the next several years after periods where the top 5 companies had a smaller share of the index, such as the mid-1990’s and the mid-2010’s. Inversely, it tended to outperform significantly from periods where the top 5 stocks had very high concentration, such as the early 1980’s and early 2000’s.

We are currently in the biggest period of concentration in over 40 years.

If we view it as a ratio, meaning we take the S&P 500 equal weight total return index and divide it by the S&P 500 market weight total return index, we can see more clearly periods where one or the other outperforms. Whenever this line is rising, it means equal weight is outperforming, and whenever it is falling, it means market weight is outperforming:

Source: Pries Capital, via Jason Pries

There, a strong pattern appears. During the later stages of a business cycle, and particularly during recessions when the market sells off sharply, investors flock to the biggest and strongest companies, and therefore the market weight version outperforms. On the other hand, during the earlier portions of a new economic cycle, when growth is accelerating, the equal weight version outperforms. At that point, previous market leaders tend to be overvalued, and new leaders spring up to take their place in terms of equity returns.

And then this pattern can be overlaid with the previous point that the equal-version tends to do well over a cycle from a starting point of high-concentration, while the market-version tends to do well over a cycle from a starting point of low-concentration.

If history is of any guide, if a new business cycle begins, we should likely see the equal weight version outperform in the years ahead, after under-performing for the past several years, and particularly under-performing during this crisis. In other words, some of the more troubled names like banks, miners, industrials, and so forth would likely need to rebound more sharply, if there is to be a true broad-based recovery from the March and April lows.

Both the stage of the cycle we are in (mid-recession), and the degree of concentration we have in the S&P 500, would suggest that the next several years are more favorable towards the beaten-down equal-weight version.

On the other hand, investors should always be aware of the possibility of a major structural change, i.e. that “this time is different”. Maybe we’ll enter a new era of mega-cap dominance, where Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Facebook (FB), and Alphabet (GOOGL) continue to outperform, going from over 20% of the 500-company index to over 30%. That is not my overall opinion, but it is an outcome to consider in terms of risk management.

This could depend in part on antitrust decisions for how much acquisition and consolidation that the U.S. government wants to let happen in the corporate sector, which makes it difficult to predict. Alternatively, it could shift in equal-weight’s favor if there is a sustained trend change from disinflation (which disproportionally benefits “growth” names on average) towards reflation or stagflation (which would more likely benefit “value” names on average).

There has been an interesting development in the past couple weeks of multiple major advertisers, from Unilever (UL) to Coca Cola (KO) to Verizon (VZ) to Honda (HMC) to Diageo (DEO), dropping or pausing their Facebook (FB) ad campaigns, and some other social media advertising plans as well. Will it be temporary and blow over, or will analysts need to adjust their bullish forward consensus estimates a bit?

Source: fastgraphs.com, via Jason Pries

Meanwhile, Alphabet is apparently shifting from secular grower to cyclical mega-cap now that it has such a large market share of the (cyclical) advertising industry, with an anticipated decline in 2020 adjusted EPS, which would be its first adjusted EPS decline as a public stock since the early 2000’s, while it is trading at a more than 32X multiple of analyst-consensus 2020 earnings per share.

Source: fastgraphs.com, via Jason Pries

Slow-growth blue-chip Apple, at the same time, has been closing stores due to a rise of COVID-19 cases in the United States, and has significant supply chain exposure to China as the economic war between the two great powers continues to heat up, but has been bid-up to rather high valuations.

Source: fastgraphs.com, via Jason Pries

Long-term Portfolio Updates

I have several investment accounts, and I try to provide updates on my asset allocation and investment selections in each “Economic Research” article.

These investment accounts include a primary passive/indexed retirement account, two actively managed brokerage accounts at TD Ameritrade and Infinity Futures, and the model portfolio account specifically for our Investment Clubs.

Changes since the previous issue:

  • Opened a 2% stake new position in Nucor (NUE).
  • Added 3% stake in JP Morgan Chase (JPM), now up to 5%.
  • Sold 5% stake in Aberdeen Gold Shares ETF (SGOL), now down to 10%.
  • Sold 5% stake in Aberdeen Silver Shares ETF (SIVR), now down to 9%.

In other words, I reduced precious metals exposure a bit and increased equity allocation.

Source: Pries Capital, via Jason Pries

This was for a variety of reasons. Precious Metals in my opinion has become overvalued after such a strong rally, it became clear that the stock market was pricing in a V-shaped economic recovery.

I would be happy to shift that 5% stake back into precious metals “if” I start to see the major markets start to roll back over and negative sentiment come back in.

Final Thoughts

The stock market has been bid-up by the combination of fiscal and monetary policy response, while the raw economic indicators remain in a troubled state.

I shifted some equites into precious metals in March (a bit earlier than ideal, rather than right at the bottom), and rode up this rally, but I’ve been putting on the brakes a little bit since mid-July. I am going to keep a close eye to see whether the spring fiscal stimulus is running out of steam or not.

I continue to view assets that do well in an inflationary environment (or negative real interest rate environment) in a positive way for the long run from current levels, as part of a diversified portfolio. This includes certain types of real estate and real businesses, high-quality commodity producers of copper and oil, and quality gold miners.

I also continue to like a diverse batch of global equities as part of a portfolio, but am cautious about the heights that the S&P 500 and Nasdaq have reached in recent months amidst so much fiscal and monetary stimulus, and thus use a counter-cyclical Treasury management policy of taking some chips off the table in overbought conditions, and getting a bit more aggressive in oversold conditions.

Conclusion

Embrace your subscription here with Pries Capital. As you work your way through your subscription, remember that this is not all-encompassing. It is a 40,000-foot view of how day trading/investing works & is designed to give you the basic information to get past the all-important question of how to get started. As time goes along, make note of any questions or highlights, & then come back to Jason, whether email or by phone, & ask questions to learn more about anything on your mind. Pries Capital is a community of all diverse types of day traders and investors, so begin participating, learning, & growing.

With that said, “We have great challenges & great opportunities, and with our help we’ll meet them together!” – Jason Pries