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

Thursday | July 16, 2020

Hello Eizell.




Yesterday, the market was destined to open dramatically higher after reports came out that the drug manufacturer Moderna has a possible vaccine. In a small trial group (<50 people), all of the test subjects developed antibodies for the coronavirus. This will go clinical phase 3 trials at the end of the month.

On paper, this is very optimistic news and this is why the SPX opened 40.76 points higher (to 3238.28). This coincided with news that AAPL had won a court ruling that allowed for a $15 billion in tax breaks that were being fought. The stock opened over $7 higher, hitting a high of 396.99.

The euphoria wore off after the first hour of trading. This took the SPX down to almost unchanged and AAPL into negative territory.

The rest of the day saw the market move higher in a very bumpy road. The Dow closed up 227.51 at 26,870.10 despite breaching 27000 earlier. The SPX closed higher by 29.04. AAPL closed at 390.90 (+$2.67). Yesterday, I stated that the SPX would closer higher and trade into positive territory for the year. I got lucky when we barely broke through to the upside, despite closing down -0.13% for the year.


TODAY: July 16

TODAY – LOWER – Breather

LONG TERM – NEW ALL TIME HIGHS (possibly), and then a NASTY trade war sell-off – probably after the election.

We have been higher by large chunks of late. The inability to close at the highs of the day tells me some people are selling this rally, and we might go lower for the day.

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 intermittent volatility
(-0.13% so far)

POT Logo

We discussed, showed and illustrated practical examples of how a call butterfly and put butterfly are interchangeable. We went on to discuss this is important for pricing, and to get around DAY TRADE limits. We also discussed example 161, and how is is a portal into the rest of the year.

Lastly students voted to change next week's class to a DAY CLASS where we will be starting the class 30-minutes prior to the market open.



Up and Running for POT students (so far).

Really quickly...

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