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

Thursday | October 8, 2020

Hello Eizell.





YESTERDAY: October 7

SPX 3419.75 58.50


In yesterday's MORNING COFFEE REPORT, I distinctly predicted that after President Trump canceled the Corona virus Bailout Discussions, he would come up with a “Plan B”. HOURS LATER, President Trump tweeted that he was trying to push through a $1,200 check for everyone, and was planning on pushing through a $25 Billion bailout for the airlines. The two specific items I pointed out were addressed.

As a result of these tweets by President Trump, the market opened higher by 23.61 SPX points, and reached an apex of 65.32 SPX points. BOOM. We were down -47 points Tuesday and higher by 58 points yesterday. The net result of canceling discussion with Pelosi where he is being held hostage is +11 SPX points.

The best performers were travel stocks.


TODAY: October 8

TODAY – More higher.

Last night's debate probably changed nothing. Just like Biden, Kamala refused to answer questions about raising taxes and packing the Supreme Court. Instead, she made grade school angry faces and changed the topics. This sent the markets a little higher as the market is betting on a Trump win, even if they don't necessarily like him. They know Biden will destroy the economy and markets with his tax plans, and are running higher on the assumption the media's prediction Biden will win is wrong (again).

BTW...I am neither a dem or republican. More of a libertarian if anything.


October 15 – Presidential debate #2
October 22 – Presidential debate #3

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
(+5.84% so far)

POT Logo

The class was about Volatility Dispersion (aka Index Arbitrage). It is a tough subject to conceptualize, though easy enough to think about. It is simply a pair trade. Instead of share prices that are “paired up” volatility levels between an index and the equities that make up the index.

This does have practical applications for people who have many equity and index positions, but is a more theoretical topic.



Up and Running for POT students (so far).

Really quickly...

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You provide the coffee and we will take care of the rest.



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