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

Friday | June 19, 2020

Hello Eizell.

YESTERDAY'S CLOSING PRICES

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YESTERDAY: June 18

You know the day was very quiet when the SPX moved 1.85 points higher, not 185 or even 18.5. AAPL has been very volatile of late, and yesterday it settled up 0.14.

The day was simple, and I am not going to make it more dramatic than it was. This is not FAKE NEWS. Sometimes the market is quiet.

The market opened lower on renewed corona and employment concerns, deciding to test 3100. Once it hit 3100 “stop orders” and weak share holders sold stock a few points lower, with the SPX hitting the day's lows of about -$20 points.

After this, we bounced to get back to the “unchanged line” where the market spent the day porpoising above and below unchanged. CONSOLIDATION is the word that best describes the day.

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TODAY: June 19

TODAY – ?

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

Today is a complicated day, and one that is tough to predict given it is a quadruple expiration. We also have HUGE amounts of OTM put options used as hedges expiring today, to the tune of about $2 billion in notional value. There are also people reporting that stocks are going to be sold and rolled into bonds. All of this makes the bearish case.

The other side of the argument is – WHO CARES. All of the stuff above is baby stuff. The bigger stuff is we have interest rates at zero. The Fed is adding liquidity at a rate that has never been seen. We have $5 TRILLION (not 2 billion) in money market funds waiting for a decline to buy shares.

To me, this means we are flying a plane that has a cruise speed of 500 kts, and people are complaining about the 75 kt headwind. We will see, and that is what makes markets.

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.

2020 ONE-YEAR PREDICTION:
Average year with lots of intermittent volatility
(-3.57% so far)

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