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Prepared by and Scott
Writing under the nom de plume of J.L. LORD

Thursday | June 4, 2020

Hello Eizell.




I was fully expecting the day to test 3100, but I did not expect what came next.

The market gapped higher hitting SPX 3100 right at the open, and sat for a while. This is where we would typically see a drop below the magic number (3100), indicating it was all forced buying on the open. Instead, we kept climbing the rest of the day.

This was not oil or bonds, or even gold helping the market higher. The FAANG stocks have not led anything higher for weeks. This was all travel related stocks that had been beaten down hard in the coronavirus selling. Boeing (BA), for example, climbed 19.85 (12.95%) on the day. American Airlines climbed 5.6%.

After the market planted its flag on terra firma SPX 3,100, it continued a very shallow but consistent assent before hitting a high of 3,130.84.

I have been saying all year, including when down 36%, that the market was going to close the year higher; however, even I was surprised by the strength of the market given the riots, increased tensions with China, etc.


Make no mistake... It is my opinion that we entered the “point of no return” in a new cold war with China. It is what it is, and will eventually decrease our GDP by 3%, while taking their GDP down a LOT MORE. They are going back to the financial stone age if they continue flexing their muscles with this President. Their only hope is if Biden wins, or they learn a little humility.

Recall that back in the 1990's, Japan got too big for its britches and became the richest nation on earth. We could not stand for that, so we reshuffled the deck. Now the deck is going to be thrown off the roof.

Today alone:

  • Trump banned flights from China to the US – not because of the coronavirus.
  • Trump slapped “foreign mission” restrictions on Chinese media outlets.
  • The UK is considering offering citizenship to 3 million Hong Kong residents.

When the world wakes up to this, and things get more heated, we will fall hard. Right now, however, the market is SUPER STRONG. We are up 30% in 50 days. There is almost $5 trillion in money market funds waiting to be deployed. The Fed is printing money, and interest rates are at near zero. I actually should be surprised we are not higher.

We are only down 3.3% for the year in the SPX. LOL


TODAY: June 4

LONG TERM – NEW ALL TIME HIGHS (possibly), and then a NASTY trade war sell-off

With 4 days in a row higher, we have seen the SPX move from under 3000 to over 3100. Nothing goes higher (or lower) every day. I suspect we open lower, but any strong selling will probably be a buying opportunity.

I am still standing by my prediction (made December 31, 2019) that we will be positive for the year and making new all-time highs by the end of the year. I maintained this stance even when the SPX was down -35% for the year.

S&P 500 Price Limits

From 8:30 a.m. to 2:25 p.m. CST, there are successive price limits corresponding to 7%, 13%, and 20% declines below the previous trading day’s reference price.

From 2:25 p.m. until the 3:00 p.m. CST close of the cash equity market, only the 20% price limit will be applicable.

Average year with lots of intermittent volatility
(-3.34% so far)

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