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

Tuesday | April 21, 2020

Hello Eizell.




The day saw a strange market and history being made.


The market opened lower for two reasons. First, the close on Friday saw a last minute spike higher in share and index prices that was overdone. Second, oil opened lower and was of great concern.

Despite the price of the May oil contract (that expires today) falling closer to $0 all day, the market attempted to stay close to the unchanged line. It was not until 1pm Chicago time that oil broke through the zero line. Once the future contract went negative, it went into a free fall to -40.32 p/b in a 10-minute span of time.


Even with this going on in oil, the SPX attempted to stay afloat and seemed little effected by the chaos going on in oil as seen above. As oil was shocking the world, the Dow, NASDAQ and SPX wafted lower in a gentle manner. The SPX only gave up an additional -20 points as a result of the chaos, which is very mild considering the historical event unfolding.


After cash closed, the Minis fell another -12, giving a little concern to what will happen today.


TODAY: April 21

We will see. Today is a hard call. We saw the blood bath in oil markets yesterday, but today is the final day of the May contract that caused the problems.

I am watching the news and they are attributing it all to global oil demand. I don't think that is the whole story. I watched the oil fall from -0.10, to -1.10, to -2.00, to -7, to -18, to -32. This seemed to me to be more like a very, very large firm was being liquidated “at market” and irregardless of price. If so much of the selling can be attributed to the liquidation of a major player, not that prices would not have gone negative anyway – just much less so.


If we see a bounce in oil, I expect the markets to fly higher, but further chaos in the oil market could weigh on the markets prompting GREEN NEW DEAL people to pop out of the woodwork, making things worse. I will be more open-minded to this unproven and inefficient technology when I see the schematics for the train to Hawaii AOC promised. I'm probably just not smart enough to understand the science.

LASTLY: Kim Jung Un is in the hospital after cardiac surgery. It is reported that he is in “grave danger”. NBC news reported that he is brain dead, but then deleted the tweet. Imagine my surprise about that. It is unknown what effect his death will have on the market, who will replace him (if needed) and will they shoot him out of an anti-aircraft gun.

I am still standing by my prediction (made Dec 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 inter42mittent volatility
(-12.62% so far)

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