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

Wednesday | June 10, 2020

Hello Eizell.




Don't you hate it when someone answers their own questions? I do.

Apparently, that joke will be lost on a couple of people, much like the reasons why the SPX (Standard & Poor's 500 index) is only down 0.7% on the year, and the NASDQ hit 10,000 for the first time.

Two months ago when the world was shutting down over the coronavirus, I got a lot of mail from people who wanted to disagree with me that the coronavirus was not that big of a deal, that China was going to be a bigger deal, and that despite being down 37% for the year we would close higher on the year.

That is fine. I could have made snow cones with the “snowflake” rants I got before the election when I said mathematically Trump will beat Hillary who is ahead in the polls. No one bothered to read that her 14 point lead was conducted by sampling of 82% registered democrat voters. A simple ratio formula would have shown Trump would win by a landslide.

Surprisingly, I didn't think most Americans could even find the Britain on a map, but I got a lot of push back when I said the Brexit would happen, and the market would run up anyway. Looking at our FACEBOOK back in 2016, you will even see I wasted time making a “Don't fear the Brexit” video.

I have a strong desire to win. My ex-wife use to laugh about how competitive we were—but I LAUGHED MORE!

Monday, the SPX went positive for the year, even sooner than I anticipated. Newton's 3rd law of motion states “For every action, there is an equal and opposite reaction”. Yesterday, the NASDAQ breached 10,000, led by a huge run higher in Apple Computers (AAPL). I guess this is my insecure way of saying “I told you so!”.

The main reasons we jumped higher is that the Fed is pumping money into the system faster than before, the virus is proving to be benign compared to fears (0.2% mortality – not 4%) and $5 trillion in money market funds with no where to go and having missed most of the bounce. We have a lot more to go as well (with a caveat below in the TODAY SECTION).


After the market opened lower yesterday, it was apparent that people were taking profits, and confused. For the last two to three weeks, we saw a sector rotation out of past groups that led the market higher (FAANG stocks – FB, AAPL, AMZN NFLX, GOOGLE) and into sectors of the economy beaten up by coronavirus fears (travel, banking).

Yesterday, this unwound with travel stocks (BA, AAPL, CCL) falling hard, and FAANG stocks being bought again. It looks like we are back to the old routine again.


I was not expecting much from the market yesterday. In the MORNING COFFEE REPORT (seen above), I stated I expected to test SPX 3,200. The graph near the top of the page shows we did just that, and closed just above 3,200. This has been the recent paradigm for large numbers, and Newton's Law of Inertia would say if it will continue until something acts as an outside force.


TODAY: June 10

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


We went through 3200 and then the next day, we fell to test it. Technicians are happy, so they will buy. There is $5 trillion in money market cash waiting to be deployed, and with the coronavirus losing headlines to protests, people will think about the markets more.

Do NOT get me wrong....We will keep running, but we have a day in the future where President Trump and President Xi will start testing each other, and the unseen cold war going on will become visible. People will be running from stocks again.

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
(0.07% so far)

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