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

Thursday | May 14, 2020

Hello Eizell.




I called this one wrong yesterday. I was expecting the market to close higher on the day, instead the SPX closed down -50.12 (2820.00) and the Dow closed down -516.81. The market did attempt to run higher, but was snuffed an hour after the open.

Selling was mostly dominated by headlines trickling out all day long about how bad the economy was, and that some of the biggest fund managers in the country all thought the markets had bounced too high from the lows.

Much of the selling can be attributed to the speech that Fed Chairman Powell made that (once again) disappointed the expectations of traders. I don't know if it makes more sense to just short the market every time he is on television, or to limit his time on television. Regardless, I can't recall a Fed Chairman that the markets didn't like more when measured by the frequency of closing lower after he speaks.


TODAY: May 14

I'm obviously out of sync based on my prediction yesterday; however, I didn't realize Powell was speaking. I am not trying to sound mean, but I just don't have any luck being long deltas when he speaks. After 4 days lower in the Dow, one would expect today to be higher by the close despite the night futures (E-minis) being down -6.50 at the moment.

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
(-12.71% so far)

POT Logo

Last Night's Class was changed to SCOTT'S CHOICE where we talked about futures. We discussed what a future was (margin, settlement, basis, fair value, etc). We discussed how to hedge an SPX position with a future option such as the E-minis. It was a very needed topic based on the emails and questions I was receiving, so I inverted the class last night for what will be next week's topic.



Up and Running for POT students (so far).

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