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

Monday | June 15, 2020

Hello Eizell.




Pre-markets / OPEN

The previous night, the E-minis (SPX futures) were up in a big way. I still said it was “BS” and we would test 3000 again.


Boy did I look like a fool when the SPX was up 86 points on good economic numbers and talk from Mnuchin. The higher we went, the more bearish I got, and did not change my opinion. Traders are so used to the market bouncing after a big drop that they just came in buying on the open, but the buying didn't seems strong and quickly faded.

In POT class, we bought put spreads when the Minis were up $66, then when up $20, and then when up only $5. Near 3000, we started to spread them off, so it was a fun day. To prove that even blind squirrels get a nut once in a while, we sold puts at the lows to hedge the longs.

By the close, the market closed up 39 SPX points and 477 Dow points. One must keep things in perspective based on the previous day's 1800 Dow point close lower. A 39-point bounce in the SPX when they were down 188 the previous day is small. A 477-point bounce in the Dow is big, but when it comes after an 1800 point drop, it is not an overwhelming recovery or indication the selling was a mistake.


TODAY: June 15


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

I personally don't care what the technical analysis guys care about. I want to see at least half of the previous day's large drop made back, and the market to close on the high of the day to believe the worst is over, and we could be bouncing higher.

We did NOT see that, so I am saying LOWER with a test of 2950 – if not more.

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
(-5.86% so far)

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The first update is important for information. I also did a 6-page complimentary write-up on bid-ask spreads, synthetics and box spreads that should be in your mailbox.




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