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

Tuesday | May 5, 2020

Hello Eizell.





Everyone knows Warren Buffett hates Mondays (I'm guessing), and he tried to spread the love. Over the weekend, “Ole Diet Cherry Coke” himself was pontificating about how the airlines are awful and he is selling his airline shares.

In 2001 Warren said: “Now if I get the urge to invest in airlines, I call an 800 number, and I say: 'Hello, my name is Warren, and I'm an air-o-holic."

Buffett also said in 2007 (the other time he swore never to invest in airlines again):

“Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”
—Warren Buffett, in the 2007 Berkshire Hathaway shareholder letter

So last month when it was found out Warren was buying airline shares, people felt “this must be a great deal if Mr. Buffett is liking it”. Sunday, he came out again saying he is selling.

This sent the Dow down about 350 points on the open with the SPX down -32. Airline stocks opened down 10-11% on the news.


We were also hearing news that we are likely to enter a cold war with China, and at least times worse than the tariff war. Later in the day, there were rumors that top officials in China were preparing for a shooting war, but it is not from the mouths of anyone close to President Xi, so it got dismissed 15 minutes later. China is the most aggressive bullies on the world playground, so it would be no surprise if they did say it. Previous presidents may change their foreign policy to avoid war if threatened, but Trump won't tolerate the rhetoric.


After the airline selling on the open and fanning of the fog from China, the market slowly climbed out of its hole by the end of the day.

BOEING (BA) which had been as low as 124.35 closed at 131.46 (-1.91).

American Airlines (AAL) which had been as low as 9.15 closed at 9.82 (-0.82) or 7.71%.

TESLA (TSLA) even managed to climb after Friday's twitter rant from Elon. Mr. Musk was saying he is selling all of his assets, and sure enough....yesterday he put two of his homes on the market. No word on if he and the love of his life, Grimes, mended their ways, but who is she going to get other than Musk?

In the MORNING COFFEE REPORT yesterday I wrote that we will likely test 2,800 in the SPX. You can see that below. The low was 2797.85. Pretty damn close for a Chicago pollock.


TODAY: May 5


We had real reasons to tell off yesterday, but closed higher. This means there are buyers out there. We have a record $5.1 trillion in Money-Market accounts in the world that have yet to buy stocks.

Obviously, this statement is based on current information. Anything an change by tomorrow with all this fake news, real news, crazy news, and world in flux.

“May you live in interesting times was a Chinese curse”, not well wishes. Actually it is not an accurate translation. The real translation is something like:

"Better to be a dog during peacetime, than a human in times of war." (寧為太平犬,不做亂世人).

Just like CINCO DE MAYO is not a real holiday, but made up by marketers to sell beer – like coronavirus beer.

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 inter42mittent volatility
(-12.83% so far)

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Class tomorrow will be a MORNING class starting 30 MINUTES BEFORE the market opens (8:00 central). We will go into a review of Synthetics and then show piratical applications.




Up and Running for POT students (so far).

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