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

Thursday | August 13, 2020

Hello Eizell.



YESTERDAY: August 12

Steering as far from politics as possible, I will say this as succinctly as possible. After Tuesday's close, Biden announced his VP running mate would be Kamala Harris.

Running on a platform of higher taxes, higher capital gains taxes, and a nudge closer to socialism that markets hate. I have said that if Joe Biden picks a VP that could dramatically help his campaign (Michele Obama or Oprah), the market would move lower. If he picked someone riddled with problems and little benefit to his campaign, then the market would run higher.

Right after yesterday's close, the Minis started to climb after Biden's pick was released. Immediately after this was announced, the Trump campaign sent out a video mocking the Biden/Harris ticket. The media immediately lowered their ethics another notch and painted the 4th most liberal Senator as a “moderate” who brings huge energy to the campaign.

I will NOT point out that a jar of vitamins or narcoleptic could add energy to Biden's perceived “basement campaign”.


On the open, the SPX printed higher by almost $22, and kept climbing all day. Near the close, the SPX cash hit a high of 3,387.89, but closed at 3380.35 (+46.66, or 1.4%). This missed the previous closing high of 3386.15 which was made on 2/19/20. The intra-day high was 3393.52.

All week in the Morning Coffee Report, I have be predicting that we will make new highs by Friday. The pressure is on.


TSLA announced it would have a 5:1 stock split. This sent shares higher by $180.37 (close 1554.76), or 13%. It still amazes me how people buy stocks simply because it splits, almost as if they think they are going to get free money.


TODAY: August 13

TODAY Touching record high (3393.52) by end of week.

LONG TERM – NEW ALL TIME HIGHS (possibly), and then a NASTY trade war sell-off – probably after the election (This one has been here for WEEKS. Nothing changed).

I expect today to be a little choppy. Who wouldn't want to take some profits a fraction of a percent away from the all-time highs? Yet, where else are you going to put cash? Gold? I don't think so. With many trillions in money market funds, the fed flush with $1.3 trillion, etc., there is a lot of money left to force the market higher.

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 -36% for the year (this has been here since January 1).

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
(4.63% so far)

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It was a fun, educational and new topic for POT. We introduced pair trading for indexes, and then started a spread in the MICRO SPX vs NASDAQ. We discussed Notional Ratios to get the right balance where all that matters is the change in price of the two indexes on a percent basis. Regardless of what type of pair trading you are interested in, this class was huge help.



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