This Week in Barrons - 4-12-2015

This Week in Barrons – 4-12-2015:

                                                

“Statistics are a lot like a bikini - what they reveal is eye opening, but what they hide is essential.”  Mark Puliafico

Thoughts:

Dear Ms. Yellen:

At the last G20 meeting, the nations (including the U.S.) modified the rules concerning what is and what is not a bank deposit.  The new rule classifies ‘bank deposits’ as ‘bank holdings’, and that directly impacts who is entitled to these funds if and when a bank fails.  That means that the moment you make a deposit, the money belongs to the bank first and the depositor second.  In other words, if and when a bank fails the senior debt holders of a bank get paid first – virtually guaranteeing depositors never seeing 100% of their own money.  The scarier part is that if banks were forced to use ‘mark to market’ accounting, their real estate holdings alone would result in a significant number of bank insolvencies.  Therefore, under this new rule, insolvent banks could use their deposits first (to help pay back their debts) – leaving depositors with virtually nothing.  Ms. Yellen, is your name on this G20 resolution?

Lately, over 50 of our ‘so called’ allies have rushed to join the Asian infrastructure bank being run by China.  Our allies realize that China is going to be carrying a lot more weight globally, and their fear is that the U.S. dollar will go into a ‘free fall’ prior to official global reset.  Keith Neumeyer (CEO of First Majestic Silver Corp.) stated the other day: “With the central banks changing from selling to buying gold (which is quite unique in our lifetime), a reset of the financial industry is coming.  We’re seeing governments accumulate the metals because there is some kind of back-room deal being made.  The gold accumulation that I see is (a) outside the normal system, and (b) an accumulation of the physical metal.”  Ms. Yellen, my question is, when the reset hits, will it be the people that have the physical gold and silver that will win?

Lastly, I remember some of Harry Truman’s famous quotes: “The buck stops here”, and “If you can’t stand the heat, get out of the kitchen”, and finally “It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.”  But my favorite Truman quote is: “Just give me a one-handed economist.  Because all of mine say, on one hand I would do this, and on the other hand I would do that."  Mr. Truman – I feel your pain.  As of late, two different FOMC members (on the same day) proclaimed (a) that interest rate increases are right around the corner, and (b) rate increases may not happen at all this year.  The fundamental problem is ‘not’ which one publically spoke last, but rather not allowing capitalism to resolve the issue.  The Fed’s ‘zero interest rate policy’ (ZIRP) is replacing ‘hard work’ with subsidies that demand ‘less work’ and more dependence upon government subsidies.  ‘Do-It-Yourself’ motivation is a memory, as individuals are becoming solely reliant upon the government for their needs (food, shelter, healthcare, cell phones, and money).  Ms. Yellen, it’s your job to change the U.S. back from being the ‘Land of Free Stuff’ – to the ‘Land of Opportunity’. 

The Market:

Factually:

-       Earnings season began this week with Alcoa (AA) beating its already lowered earnings estimates with revenues that were also ‘below estimates’.  Remember the pattern of beting ‘lowered earnings estimates’ (via accounting) with ‘fewer sales’, as it will be repeated throughout this earnings season.

-       On Friday GE came out with a $50B buyback.  To put that in perspective, February was a record month for stock buybacks at $100B, and GE is going to do half of that by itself.  To do the buyback, GE is going to sell most of GE Capital – which contributed 42% of GE’s profits for the past 5 years.  So cutting to the chase, GE is selling the division that made half of their corporate profits, in order to keep their stock price higher in the short term.

-       In March the U.S. created 50,000 real jobs, but last week over 4 TIMES that many people (200,000+) signed up for ‘First Time’ unemployment benefits.

-       57% of Americans have $0 set away for retirement.

-       The NY Times reported that the average American is now worth 36% LESS than they were a decade ago.

-       The fastest growing jobs sectors are retail sales clerks and cashiers.  How well can you say: “Do you want fries with that?”

Last week I said that I would sell many of my long positions if the S&P’s closed below 2056, and that I would increase my holdings if the S&P’s closed above 2086.  Thursday’s session ended with an S&P close of 2091, and on Friday they followed through with a close of 2102.  The next milestone is 2108 – which isn't far away.  If we can get over that, there is little question that we will challenge the all time S&P high of 2117.  I think we will probably get there; however, breaking through and reaching even higher is going to be a lot tougher. 

This coming week, the floodgates of earnings reports will open, and we will get to hear the confessions from hundreds of companies.  Companies will ‘proforma’ and ‘one time charge off’ their way to accounting glory.  The real story will lie within their revenue numbers.  You see, companies can manipulate earnings, but it’s tougher to manipulate revenues / sales.  Buying back their own stock and using non-GAAP reporting are two mechanisms companies use to ‘account’ themselves into higher earnings.  But watch a company’s revenue numbers for Quarter over Quarter (QOQ) and Year over Year (YOY) comparisons.  When a corporation is showing QOQ and YOY revenue declines, that will be your ‘red flag’.

I think we will get to the all time highs.  I am not so certain that we will get past them in any meaningful way.  The top in the S&P that was set on March 2^nd could end up serving as a market ‘top’ for a long time.  In the meantime, I will lean long and pick up some swing trades, but I won't overstay my welcome.  This is not the time to buy and hold things.

TIPS:

The following chart is showing the technical indicators favoring an upward movement in the S&P and DOW this coming week.   Also, the VIX (volatility index) is currently low (12.58).  It’s tough for the market to ‘rollover’ with the VIX this low.  Therefore, this week we could see a steady ‘grind higher’ into Friday’s monthly options expiration.

Currently looking at: 

-       Mosaic (MOS) and Potash (POT) to the upside,

-       Carmax (KMX) and TripAdvisor (TRIP) to the downside,

-       Alexion Pharmaceuticals (ALXN) to the upside – buying a Diagonal for a 5 cent credit: - APR4 190 / + MAY1 192.5, and 

-       Sam Adams (SAM) – thinking of selling an Iron Condor: + 220 / - 230 to – 310 / + 320.

I’m currently holding:

-       AAPL – SOLD APR Iron Condor: + 119 / - 121 to -131 / + 133

-       DUST – SOLD APR2 Calls: -17

-       GLD – BOUGHT MAY Call Debit Spread: +112 / -120

-       HD – BOUGHT APR Call: +112, and SOLD APR2 Put Credit Spread: -114 / + 113

-       KR – BOUGHT APR – Call Butterfly: +75 / -77.5 / -80

-       LL – SOLD APR – Put Credit Spread: -30 / +28, then SOLD APR – Call Credit Spread: -35 / +40

-       NUGT – BOUGHT MAY Calls: +10

-       ORCL – BOUGHT MAY / JUNE Call Calendar: $45

-       RUT – BOUGHT May Call Butterfly: +1170 / -1240 / +1300

-       SYK – SOLD APR – Put Credit Spread: +85 / -87.5 and Buy Butterfly: +95 / -97.5 / +100

-       URI – SOLD APR – Iron Condor: +80 / -82.5 to -95 / +97.5  

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there!

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of his thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is the handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

Creativity = http://vimeo.com/user8991651/review/105373017/0d0c374c28 

Investing = http://vimeo.com/user8991651/review/105373016/a5e84dd610

Marketing = http://vimeo.com/user8991651/review/105373015/d7237d026d

Sales = http://vimeo.com/user8991651/review/105373014/0e44b43962

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@culbertsons.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 4-5-2015

This Week in Barrons – 4-5-2015:

                                                

Thoughts:

Dear Ms. Yellen:

This week I listened to a fascinating talk on our economy given by a panel of economists.  The discussion focused around ‘the light’ that I’m seeing at the end of the tunnel – and whether it is actually one of an on-coming train.  And this train would produce a pro-longed economic depression that could start within the next 6 months.  I was wondering how many of their points you agree with?

-       (1) Our Debt is destroying our economy.  After WWII, for every dollar’s worth of government debt, our economy experienced $2.41 worth of growth.  Currently, due to the staggering amount of our debt, our economic growth has dropped to 3 cents on every dollar, causing our growth to be stifled by the enormity of our debt.

-       (2) Our Misery Index is too high.  The Misery Index is a number created to measure the amount of economic suffering on a population.  It is currently at 32.89.  During the Great Depression it measured only 27. A high Misery Index normally precedes recessions.  And unfortunately our FED is no longer in a position to bailout our banks because it only has $56B of capital reserves remaining – to support over $4.3T in questionable, unstable banking liabilities.

-       (3) Our stock market is over-priced when compared to our productivity.  One could make a case for the value of all of country’s public stocks representing (at some level) the fundamental value of that economy.  Currently the ratio of the total value of the stock market – divided by GDP is 203%.  Prior to the 2008 recession this ratio was 183%, and prior to the ‘Dot Com’ implosion it was 204%.  

The economists were making the point that we are heading for a stock market correction, and the loss of wealth this time could exceed $100T.  But every severe stock market correction requires a catalyst, and here are a few that they suggested:

-       (1) An attack on the U.S. Treasury market:  From October 2014 to March 2015 when Russia and China were dumping U.S. Treasuries, our FED bought them (via Belgium) in order to stabilize our economy.  But the FED is currently leveraged 77:1 and is (by all measures) ‘tapped out’.  What if nations continue to dump U.S. Treasuries?  If no one buys them, then U.S. interest rates will rise – sinking our stock market.

-       (2) A failing ‘Petro-Dollar’:  Because of our strained relationship with Saudi Arabia, they have started selling more oil in exchange for gold or for currencies other than the U.S. dollar.  Russia (one of the world’s largest energy exporters), has said: “It’s time to discontinue the dollar as the key reserve currency.”  If others follow this pace, and drop the U.S. dollar as their global reserve currency, then the dollar’s value will fall, and cause U.S. interest rates to rise.

-       (3) A fragile Chinese banking system: As the banking system in China continues to stretch, a highly leveraged, ‘shadow banking’ system is evolving.  Shadow banking has grown over 4,067% since 2005, and is approaching $8T in value.  China has many ‘ghost’ cities waiting for inhabitants.  If these ‘ghost’ cities do not soon become inhabited, then housing prices will collapse and (along with the ‘shadow banking system’) create a fundamental ‘ponzi scheme’ that could bring down the entire Chinese economy.

-       (4) The IMF’s planned replacement of the U.S. Dollar as the world’s reserve currency.  In the case of a global financial panic, the world’s Central Banks would be required to re-liquefy their financial markets.  Unfortunately our FED is ‘tapped out’ and leveraged 77:1.  The IMF (International Monetary Fund) is only leveraged 3:1 and has the only ‘clean balance sheet’ out there.  The IMF would print SDRs (Special Drawing Rights), declare them the world’s reserve currency, and effectively replace the U.S. Dollar in that category.

Ms. Yellen – the amount, frequency, and degree of severity of these elements seem to be growing.  Would you agree that – that light at the end of the tunnel is truly one of an ‘on-coming’ train?

The Market:

A report surfaced this week showing that of the 102 companies that have pre-announced earnings, only 16 companies have raised their forward guidance while 86 have lowered theirs.  That is the worst ratio for an earnings season in 7 years.  Historically April has been a good month for the market; however, this time around we have: (a) lousy economic reports, (b) corporate earnings estimates that will be missed to the downside, and (c) a collapsing DOW transportation index (IYT).  Adding this all up, this market has a lot of work to do to turn itself around, and create a sustained move higher.

Our economy has been supported for years by Central bank interventions, debt increases, corporate buybacks, and Non-GAAP / Pro-forma accounting.  Monday, the Atlanta Fed announced that their estimate for 1^st Quarter GDP was a mere 0.2%.  The Kansas Fed and the Dallas Fed reported their lowest economic numbers in 2 and 6 years respectively.  Recently, the manufacturing outlook in Texas turned negative for the first time in two years, and for the first time in 6 years the energy sector lost jobs.

Traditionally the first week in April is fair, the second week is rotten, and the third and fourth weeks are pretty good.  The explanation given is: (a) the first week is new monthly and quarterly money, (b) the second week is people selling stocks and bonds to raise money to pay their taxes, and (c) the third and fourth weeks are people spending their tax refunds.  Therefore, next week is not historically all that great of a week for stocks.  And with the poor ‘Non-Farm Payrolls’ report that came in on Friday, the markets will indeed need to keep the S&P index above the March lows of 2,040 in order to try and save the month.  If we were to lose the 2,040 area, then I think we are in for a fairly hefty market correction.  But as long as the S&P remains above that level, we should be range bound between 2,040 and the March high of 2,108.

But as the disclaimer says: “Past performance is not indicative of future results".  April does not have to turn around in the 3^rd and 4^th weeks.  We need to let the market prove itself by passing technical milestones before acting too bravely this coming week.  The market simply feels like there is a great ‘shaking out’ coming, and if we’re not prepared – we too will be ‘shaken apart’.

TIPS:

I would be remiss if I didn’t take a moment to reflect upon the absolute disaster that was Friday’s ‘Non-Farm Payroll’ report.  The estimates were for job gains of 245,000.  The report showed that we only gained 126,000 jobs.  But wait, it gets worse.  Almost 60% of those 126,000 jobs (72,000) were fake – and simply added using the ‘birth/death’ model.  It gets even worse: the number of people ‘NOT in the workforce’ has grown to 93,173,000.  That is the first time we've ever seen that number over 93 million.  Of course the ‘spinmeisters’ blamed the weather and had us look at the averages, but with 60 of 69 economic releases missing estimates, and 86 of 102 companies lowering their 2015 outlook – it’s not that big of a stretch to say that our economy is hanging by a fraying thread.

As a further cautionary signal, in the year 2000 (45 days prior to the crash and with the NASDAQ making new highs) the transportation index (IYT) sold off.  Just this week the transportation index broke its 2^nd ATR (average true range) to the downside – signaling a potential, larger market downside correction.  When looking at specific stocks that are poised for a downside move, look no further than: Zillow (Z), Federal Express (FDX), and Alibaba (BABA).  Also, often accompanying a down market is the movement of Gold (GLD) and Silver (SLV) to the upside.  You could even look toward the gold miners moving higher and play them via NUGT.

I’m currently holding:

-       AAPL – SOLD APR Iron Condor: + 119 / - 121 to -131 / + 133

-       BABA – BOUGHT APR Put Debit Spread: +87 / -81

-       DUST – SOLD APR2 Calls: -17

-       GLD – BOUGHT MAY Call Debit Spread: +112 / -120

-       HD – BOUGHT APR Call: +112, and SOLD APR2 Put Credit Spread: -114 / + 113

-       KR – BOUGHT APR – Call Butterfly: +75 / -77.5 / -80

-       LL – SOLD APR – Put Credit Spread: -30 / +28, then SOLD APR – Call Credit Spread: -35 / +40

-       NUGT – BOUGHT MAY Calls: +10

-       ORCL – BOUGHT MAY / JUNE Call Calendar: $45

-       RUT – BOUGHT May Call Butterfly: +1170 / -1240 / +1300

-       SLV – BOUGHT May Call Debit Spread: +15 / -17.5

-       SPX – SOLD APR – Iron Condor: +2010 / -2015 to -2160 / +2165  

-       SYK – SOLD APR – Put Credit Spread: +85 / -87.5 and Buy Butterfly: +95 / -97.5 / +100

-       URI – SOLD APR – Iron Condor: +80 / -82.5 to -95 / +97.5  

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there!

Disclaimer:

Expressed thoughts proffered within the BARRONS REPORT, a Private and free weekly economic newsletter, are those of noted entrepreneur, professor and author, R.F. Culbertson, contributing sources and those he interviews.  You can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com> .

Please write to Mr. Culbertson at: <rfc@culbertsons.com> to inform him of any reproductions, including when and where copy will be reproduced. You may use in complete form or, if quoting in brief, reference <rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual stock trades - and see more of his thoughts - please feel free to sign up as a Twitter follower -  "taylorpamm" is the handle.

If you'd like to see RF in action - teaching people about investing - please feel free to view the TED talk that he gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

Creativity = http://vimeo.com/user8991651/review/105373017/0d0c374c28 

Investing = http://vimeo.com/user8991651/review/105373016/a5e84dd610

Marketing = http://vimeo.com/user8991651/review/105373015/d7237d026d

Sales = http://vimeo.com/user8991651/review/105373014/0e44b43962

To unsubscribe please refer to the bottom of the email.

Views expressed are provided for information purposes only and should not be construed in any way as an offer, an endorsement, or inducement to invest and is not in any way a testimony of, or associated with Mr. Culbertson's other firms or associations.  Mr. Culbertson and related parties are not registered and licensed brokers.  This message may contain information that is confidential or privileged and is intended only for the individual or entity named above and does not constitute an offer for or advice about any alternative investment product. Such advice can only be made when accompanied by a prospectus or similar offering document.  Past performance is not indicative of future performance. Please make sure to review important disclosures at the end of each article.

Note: Joining BARRONS REPORT is not an offering for any investment. It represents only the opinions of RF Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop.

All material presented herein is believed to be reliable but we cannot attest to its accuracy. Opinions expressed in these reports may change without prior notice. Culbertson and/or the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/> 
Until next week – be safe.

R.F. Culbertson

<mailto:rfc@culbertsons.com>

<http://rfcfinancialnews.blogspot.com>

This Week in Barrons - 3-29-2015

This Week in Barrons – 3-29-2015:

                                                

Thoughts:

This is a weekend where:

-       The Ukraine is receiving more and more arms shipments,

-       If Greece exits the Euro – no one would be surprised,

-       In Yemen, bombs are falling and ‘boots’ are on their border,

-       Saudi religious leaders are calling for the destruction of churches,

-       U.S. and Israeli tensions are heating up over Iran’s nuclear plans, and

-       In 2015, U.S. stock funds have seen the largest outflows since 2009.

Congratulations to China are in order, as it appears that the IMF (International Monetary Fund) will add the Chinese Yuan into its global Forex benchmark basket of currencies.  Strategists at Bank of America Merrill Lynch believe that the IMF will vote this October to include the Yuan as one of the units that make up the Fund's "Special Drawing Rights" (SDR), a ‘pseudo’ meta-currency used in IMF transactions.

This will inch the world ever closer to creating a system of trade and transactions that are not governed by the U.S. and the U.S. dollar.  This is the reason for the BRICS's bank, and the Chinese Infrastructure Alliance bank.  Once these competitive banking arrangements and accompanying transaction processing systems are in place, you will see nations fleeing from the U.S. dollar.  The U.S. dollar's ‘dictatorship’ days are indeed numbered.

The U.S. is trying desperately to avoid losing its economic supremacy, as nation after nation is signing-on with the Chinese Infrastructure Alliance bank.  Just think about a Russian - Chinese alliance.  Russia is one nation where the U.S. holds no real ‘sway’ over its economy, military or its people.  And likewise, Russia does not rely on the U.S. to buy its goods and services.  Marrying Russia’s natural resources, food production, and military technology with the Chinese population and manufacturing abilities – is a ‘tag team’ that sends shivers down the U.S. government’s spine.

Recently the Dollar has surged, and has some people taking that as a sign of our economy being strong.  In my opinion, that is completely wrong.  The U.S. dollar isn't based upon anything other than its relationship to other currencies.  So if the Euro goes down, then the dollar goes up.  It’s like being the best looking horse in a glue factory – because the entire system is about to change.

With the Chinese going into the SDR basket, some of the ‘price-caps’ on gold will be released.  That’s not to say gold will go crazy, but it won’t be held down as much as when China was in accumulation mode.  This will give the dollar yet another currency war competitor.  And as the dollar falls from grace, there will be inflation, shortages, and bank outages – nothing permanent but certainly disruptive.  I think that these disruptions will be worse than the 2008 financial crisis.  Has such a disruption occurred in the past?  Yes.  In 1933 the U.S. Government issued Executive Order 6102 – that made everyone turn in his or her gold.  On April 5^th 1933, President Franklin D. Roosevelt signed the executive order: “forbidding the Hoarding of gold coin, gold bullion, and gold certificates within the continental United States".  This order criminalized the possession of monetary gold by any individual, partnership, association or corporation.

To say this was a shock to the system is an understatement.  With the swipe of a pen, people were forced to turn over any and all gold that they had in their possession.  In return, people were given paper money.  This was an economic ‘reset’ event.  So huge ‘resets’ have occurred in the past, and it's my belief that we are about to witness another one.  In coming weeks, I will discuss what to do about these events, and how you can protect yourself.

The Market:

The market moved lower this week for two (less-than-obvious) reasons:

-       One, any time a market sets an all-time high level – that level becomes resistance (a ceiling) for the next time the market tries to move higher.

-       Two, we are in a ‘buy-back blackout’ period.  The buy-back rules forbid a company from buying back any of it’s own stock within 5 weeks of an earnings report.  Given we’re coming into earnings season, and considering that stock buy-backs are the single largest boost to this market – a lack of companies gobbling up their own stock leaves a major vacuum of buyers in this market.

Two other specific events caught my eye this week:

-       One, on Wednesday the market started falling dramatically as soon as the SEC passed the ruling subjecting high frequency trading (HFT) firms to more advanced Financial Industry Regulatory Authority (FINRA) regulations.

-       Two, U.S. oil inventories increased by 8 million barrels this week.  Which means that at our current rates of production and usage have about 2 months of storage remaining.  After 2 months, all of the options for storing oil will be exhausted.  What happens when all of the available storage options are gone?  Experts say that either (a) oil production will grind to a halt, or (b) oil companies will push the price so low, that it will cause massive buying.  Only time will tell.

As we come to the end of the first quarter, this week was a terrible week for bulls.  The DOW and S&P fell for 4 straight days, and then had an anemic gain on Friday.  In this first quarter, approximately 52 out of 60 economic reports missed their estimates to the downside.  The Atlanta FED even told us their estimate for 1^st Quarter GDP will be around 0.3%, and that about half of that came from people being forced to buy Obama-care.  This begs the question: Has the market ‘topped’, and should we prepare for a long, slow grind lower? 

I think the autumn of 2015 could be an interesting time, and that it wouldn't be unusual for the market to start fading 6 months in advance of a rough patch.  Historically, this coming week often ends positively.  And considering that this is a holiday shortened week – that should add even more credence to an upside bias.  Therefore, I have no problem thinking that we put in a bounce this week, but here’s the catch:

-       The market set a previous high of 18,288 on March 3^rd.

-       We then moved down to 17,635.

-       Buyers came in and bounced the market to 18,127 – before rolling lower again.

-       If we don't see the market bounce over that close of 18,127, then a pattern of ‘lower highs’ will be in place, and that is NOT a bullish sign. 

I'm leaning long this week, but pay attention to the high.  If we close lower than 18,127 on the DOW, I may have to start considering that this market run is over, and that this market is destined to start working its way lower.

TIPS:

The DOW and the S&P have gone negative for the year, and this is only the fourth time in the past 20 years that this has happened.  I think in the next several weeks we will get more and more chop as we enter earnings season.  Next week we have the non-farm payrolls report, along with the markets being closed on Friday.  

In terms of recommendations:

-       WGO (Winnebago) had poor earnings this week, and is a strong candidate for selling a Put Credit Spread.  Remember, in times of high volatility – you want to be ‘selling’ premium not buying it. 

-       Other candidates for selling Put Credit Spreads are: CNI (Canadian National Railroad), and PRU (Prudential Insurance Company).

-       DIS (Disney) should be moving higher in the coming weeks.

-       HERO (Hercules Offshore Inc.) is potentially poised to go out of business.  It is currently trading at $0.14 – so please be careful if you’re playing this to the long side.

-       ORCL (Oracle) moving higher is interesting to me.  I would buy a MAY / JUNE $45 Call Calendar for $0.40.  I would allow the $45 May Call to expire worthless, leaving only the June $45 Call with a small cost basis.  I would then sell the June $46 Call against our June $45 Call for potentially $1.00 – pocketing the $0.90 profit.

-       SAM (Boston Beer Company) I like to the upside, and am looking at Sell the May +220 / -230 Put Credit Spread.

I’m currently holding:

-       AAPL – SOLD APR Iron Condor: + 119 / - 121 to -131 / + 133

-       GILD – BOUGHT APR Call Butterfly: +100 / -105 / +110

-       FB – BOUGHT APR – Call Debit Spread: +80 / -90

-       KR – BOUGHT APR – Call Butterfly: +75 / -77.5 / -80

-       LL – SOLD APR – Put Credit Spread: -30 / +28, then SOLD APR – Call Credit Spread: -35 / +40

-       SPX – SOLD APR – Iron Condor: +2010 / -2015 to -2160 / +2165  

-       SYK – SOLD APR – Put Credit Spread: +85 / -87.5 and Buy Butterfly: +95 / -97.5 / +100

-       URI – SOLD APR – Iron Condor: +80 / -82.5 to -95 / +97.5  

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm. 

Please be safe out there!

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