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

Wednesday | October 14, 2020

Hello Eizell.

YESTERDAY'S CLOSING PRICES

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DAYS UNTIL ELECTION = 20

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YESTERDAY: October 13

SPX 3511.93 -22.29

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I'm a dolt. I stated (with a lot of uncertainty) in yesterday's MORNING COFFEE REPORT that the SPX could test 3500 on the downside. This was based on a need for an overdue pullback and that we went through the number without looking at it (or testing it). The low for the day was 3500.86, so I was about as close to being right as one could be, but lacked conviction to do anything.

The reason for yesterday's drop was AAPL's HIGH SPEED product release. If Tim Cook ran a circus, the elephants would sleep in the big tent as the tradition that Steve Jobs created has not carried on well since he passed. Most of the time, these events disappoint, and yesterday didn't break that particular tradition.

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PT Barnum (Steve Jobs) could make a phone that didn't work sound like a “must have” by simply telling people they hold the phone wrong. Tom Thumb (Tim Cook) is in charge of the circus now, and the enthusiasm is waning.

Going into the event, the shares of AAPL were unchanged and the SPX, though slightly lower, seemed to want to climb into the black. As the show went on, the media threw peanuts at the elephant looking for reaction; however, they just bounced of the pachyderm's skull sending the stock to hit the floor.

At the lows, AAPL fell below support of $120 (low: 119.65, down -$4.65) which pulls the SPX down it its lows of 3500.86. Buyers came in for AAPL at $120 which also had buyers come in on SPX 3500.

AAPL closed down -3.30 (121.10) and the SPX closed down -22.29 (3511.93). Both of these names were modestly higher just before the close with the SPX nearing 3525, but last minute selling in APPL caused last minute selling the the major indexes.

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TODAY: October 14

TODAY – Test 3500 or 3550, with my bet being 3550.

Earnings season started yesterday, and no one seemed to notice. Why would they? A couple banks reported and the fun names don't start for 2 weeks. We also have distractions like the stimulus, Hillary's emails found (can't wait to read about yoga), an election in 20 days, and AAPL's “Big Day” that sucked much of the oxygen out of any earnings numbers getting attention.

There is a saying on Wall Street that “The Trend is Your Friend”. The market has gone from -36% in April to +8.7% in October. I would say a swing close to half the value of the index is strong.

The other saying that rings true is “Don't fight the Fed”. Here, the Fed pretty much said they have thrown almost everything they can against the wall, and now it is time for more stimulus from the government. This is what we have been waiting for in between partisan game playing that is more politics than a genuine desire to help. Look, when is the next time politicians are going to have $2 trillion to throw around unless we have another 10-year Mid East war.

So as long as no negative news comes out about the stimulus plan, or surprises leading up to the elections, we should run higher.

NEXT BIG DAYS:

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.

2020 ONE-YEAR PREDICTION:
Average year with lots of intermittent volatility
(+8.7% so far)

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CLASS TODAY AT 8:00 AM CHICAGO TIME (instead of at night).

TOPIC: Day trading and wiggling out of losing trades.

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DISCUSSION BOARD

Up and Running for POT students (so far).

Really quickly...

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P.O.T. Schedule

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LAUGH OF THE DAY

Trading is a tough job on a stomach void of coffee and humor.
You provide the coffee and we will take care of the rest.

In keeping with the Circus Theme above....

BTW....I get it. I try to make my points on politics affecting the markets in a manner that points out all parties flaws – not just one. I will try a little harder.

The problem is politics is not what pissed off Siegfried and Roy's tiger – so you can ignore it under the big tent or big stadiums of the NFL. You can't as easily ignore it in the stock market.

This clown will try to just juggle.

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