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

Wednesday | March 18, 2020

Hello Eizell.

YESTERDAY'S CLOSING PRICES

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YESTERDAY: March 18

The markets were positive for a couple reasons.

First

First, the Fed made it clear that they would do whatever it will take to keep markets liquid. This is different that other times when they did the “Ready, Fire, Aim”. They acted in a less panicked manner.

Second

I was shocked to see President Trump have a press conference and address the medical as well as financial aspect of the administration's handling of the situation. In previous press conferences, President Trump talked about the stock market, the Fed lowering interest rates, etc.

Yesterday, I pointed out to my Practical Option Tactics (POT) students that much of the volatility in the stock market is fear-based panic. We are getting conflicting news with political biases. Some news agencies are even making crap up. Regardless of the validity of the news, the President has done everything he could with regard to the virus, with one exception. He has not calmed people down.

PROBLEM

It is nice to know the overnight repo markets are not going to collapse on the intra-banking system. It is nice to know the Fed is flooding the system with money supply. It is nice to know that the yield curve is acting well. FOR YOU AND ME this is good news. 99% of the population doesn't know what the Fed Funds rate is and doesn't care. They want to know a couple things.

  1. How bad is the virus?

  2. Will the hospitals be overwhelmed and turn me away when I am sick like the media is saying?

  3. What is the President doing to get more hospitals up and running?

  4. Joe Average doesn't want the National Guard there protecting them, they want the National Guard bringing medical supplies. We saw them protect us at the race riots in Chicago and Ohio.

Joe Average was not working in a bar last year, then elected to Congress and made an instant expert on viruses, economics, healthcare, foreign policy, budgets, the environment and the Supreme Court. You need that red lapel pin for that kind of magic. Joe Average is still working.

SOLUTION

I mentioned that President Trump needed to address this, and do it MANY TIMES. People are afraid and need to hear daily that things are being done, and specifically what is being done. I even mentioned that they should create more overnight hospitals like MASH units. Below is what I wrote.

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THEN

Hours later, President Trump and his team came to the microphone and mentioned that he was going to send in the National Guard MASH units if needed to create mobile hospitals. Everything needed is being fast tracked – masks, respirators, medical equipment, testing kids, etc. He mentioned that he was going to send money to everyone of us to help with any financial burden we may have.

That was much needed tonic for the ears, and a stark contracts to the previous day's briefing.

SURPRISES

SPX closed higher 6%
Dow closed higher 5.20%
AAPL closed higher by 10.65 (252.86), or 4.4%

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TODAY: March 18

LEMMINGS AGAIN

One day in a row higher is all we get until the President's message is understood and felt, and/or the virus declines.

Yesterday's press briefing was what was needed to be said. Interestingly, Joe Biden and Bernie Sanders later came up with the same plan later in the day.

It has been said that the average attention span of a goldfish is 9 seconds, while humans are at 8 seconds. We use to have a 12-second attention span, but that has (seriously) decreased to 8 seconds since social media took over.

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What the President said will be forgotten hours later. People will be bombarded by the “ALL CORONA – ALL THE TIME” news – all sensationalized and weaponized to keep you tuned in.

In order to stop the selling and fear, we will need at least one of two things. We need a decline in the virus spread and/or the President to have his team several times a day give a step-by-step list of everything being done in very basic terms. We need to hear it often. We need to be told that not everyone is going to get it – which they wont. It needs to be stated until even people who primarily watch the VIEW or CARTOONS understands it emotionally and intellectually.

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.

You’re braver than you believe, stronger than you seem and smarter than you think”.
—Christopher Robin, Winnie the Pooh

2020 ONE-YEAR PREDICTION:
Average year with lots of intermittent volatility
(-21.72% so far)

POT Logo


CLASS TONIGHT!

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DISCUSSION BOARD

Up and Running for POT students (so far).

Really quickly...

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P.O.T. Schedule to come.

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.


Sienfeld was ahead of his time.

People will give you money, but “they don't have a square to spare”.

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