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

Wednesday | February 12, 2020

Hello Mayumi.

YESTERDAY'S CLOSING PRICES

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YESTERDAY: February 11

Yesterday, the markets jumped higher to new record levels with the SPX opening another 23.54 points higher (touching 3,375.63).

Coronavirus

The shocking thing about the run higher is that it was attributed to calming of nerves about the coronavirus. This makes no sense whatsoever when I could not find a single article saying that things are optimistic. The contrary is true. Most articles out are warning people that the numbers are way higher than reported.

There are sources showing how hospitals in China are sending people home who exhibit signs of the virus, telling patients “they don't qualify”. All of this is allegedly being done to hide the actual magnitude of the outbreak. Other sources are showing weak evidence, but have to be considered because we are talking about China, that bodies are being cremated quickly with a diagnosis of pneumonia – and not tested for the virus. Any reporter writing a negative (or truthful?) report about the disease is fired or arrested. Who needs a 1st amendment and freedom of the press?

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FED's POWELL TALK

Right now, the markets don't care unless this becomes a proven pandemic. The markets are focused on the fact that the Federal Reserve Bank is pumping in HUGE amounts of capital to keep the overnight repo market liquid. All that money has to go somewhere, and right now it is going into the stock market top 10 stocks.

The SPX was at 3,375.63 until Powell started to talk, and President Trump started to tweet about it. While Powell was speaking, the market pulled back a little but the SPX stayed higher by +10 points dangling on every participle coming from Powell.

Once Powell said that the QE-lite is ending by mid-summer and he stopped talking, the markets sold off to unchanged, along with the bond market going negative. In the last 30 minutes, the market got bought back a little to post a +$5.66 gain and new record high.

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TODAY: February 12

Yesterday, Powell testified before Congress and answered questions prepared by the Congressman's staff. Today, Powell speaks to the Senate, generally speaking a much more sophisticated audience.

Chairman Powell does not have a good track record in getting the market to run higher when talking, but BARING anything disastrous being said awkwardly, we might see it today.

“The American Republic will endure until the day Congress discovers
that it can bribe the public with the public’s money”
—Alexis De Tocqueville

This market is shrugging off the coronavirus. The market is shrugging off a socialist presidential front-runner who wants to forgive $1.8 trillion in student loan debt, give out free tuition (I'm going back for 4 PhDs), and raise taxes to 70%. This market is shrugging off history where anytime we have had 19 P/Es in the market, we have corrected.

We are not done going higher in the market. The markets get overbought because those coming late to the party are always the thirstiest, and there is nowhere else to put money with historical low interest rates.

We ONLY see markets fall when it seems like we can't go lower.

2020 ONE-YEAR PREDICTION:
Average year with lots of intermittent volatility
(+3.93% so far)

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CLASS TONIGHT:

Topic is MY PICK for the first time.

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