One of the more interesting “games” played in the Options world is to pick the following month’s strikes (option prices) and simply go long – or short – according to what the playah sees ahead.
Options expire on the third Friday of the month – which is this week late.
When a market is trending strongly upward, as this one has been in the larger Wave II rally ny our reckoning, you would have simply bought call options on market indexes at last month’s expiration.
At options last month, August 19th, our Aggregate Index closed at 35,885.08.
Now, as of the Friday close (you do remember last week, right?) The Aggregate closed at 34,286.68. But this morning futures were up earlier, such that in the pre-open at 6 AM, our Aggregate priced around 34,451.57.
This means (on the long side – hoping for stocks to go up – Bulls retained only 96 percent of the former month’s price. 4 percent simply went poof!
As you can see in this view of things (on our Aggregated basis) World Money seems to be finishing up a Wave 3 (ii) rally. If this breaks this week, there’s a long way down possible. Because in stocks, Elliott wave damage seems most severe in third waves. In commodities, the real collapse mode is the fifth wave down, oftentimes.
Also frequently – and this week may be one of these – (unless you have a macabre longing for funerals and coronations) there’s some pretty good “action” in markets the week of options. It’s an eyes wide open week.
Your Lying Eyes
We can skip 95 percent of the mainstream news flow. But, scattered among the headlines are a few problems to keep an eye on which could “tip the mood.”
For example, here’s a report out Sunday which we’ve marked as ppossible “Bull, Biden Happy-talk” Inflation Showed Signs of Easing in Several Industries in August – WSJ
Our reasoning is simple: Groceries. See, it’s the falling price of gasoline since the Fourth of July that has papered over the internal problems of the dollar. So, while there’s a lot of happy-talk going around, there are counterbalancing headlines like Inflation Threat: Americans Delay Purchases and Miss Payments as Prices Rise (yahoo.com) and As inflation forces small businesses to raise prices, some customers push back – al.com.
To our way of thinking, the WSJ is reporting hope and hype (which flows like water around Wall Streeters – famed for talking their book) – while forward–thinkers are looking at the Big Problems ahead.
A Rail Strike, for Example
The way I was figuring it going into the weekend, someone besides us would see how bad things could get from a rail strike that could come as early as this week. Old slow Joe can campaign all he wants for the Senate, but the odds of the fall elections could really be hammered if the economy slips on this banana peel.
Not that it’s a secret: A possible rail strike this week could lead to significant interruptions and higher prices – Poynter. And yes, prices – especially food – could scream higher. CPI inflation likely to reverse 3-month downtrend in Aug on high food prices; WPI seen in double-digits.
The barely silver lining is that next year’s Social Security bump could be decent (over 8 percent) the way CPI-W has performed. A bad couple of months now could be good for seniors who make it to New Years.
Voter Buyoffs Going Large
Do try to remember that any gas price relief will likely evaporate an instant after elections.
But ahead of these, Big Cities with their generally far left of rational office-holders are trying to bribe the low-end voters: Guaranteed Income Programs Spread, City by City.
This is all made possible by government (at all levels) figuring out how asset stripping works – which is the Wednesday topic on Peoplenomics this week.
Then There’s the War Bets
Speculation is rising in many quarters now that president Xi of China – who has a big “third term” bid coming in a month at the CCP meetings – will hold off on reunifying with Taiwan until he’s got more party backing.
Xi and Russia’s Vlad Putin will be holding a pow-wow this week. Media: meeting between Putin and Xi at SCO summit will be a signal of support for Russia.
To our thinking, this could be the meeting where Putin and Xi could coordinate tactics and discuss final timing of the assault on American hegemony.
The good news, such as it is, might be that for now, Russia is still playing its energy cards. Putin’s strategy to weaponize winter by shutting off energy sales to Europe. Europe is not completely stupid (however, they did force the war in Ukraine with the urging of US State neocon/neolib embeds). Which results in Europe finding religion in coal again: Europe Energy Crisis: Coal’s Making a Comeback — Here’s Why.
The laughable part of all this is the U.S. policy wankers at Foggy Bottom can’t seem to understand that when a world shortage of good and energy is head is NOT THE TIME to be shutting (or even slowing) US output. Otherwise, the U.S. can be made to suffer, as well. Except that sets up voter payoffs through too-late tax hustles and all that.
We assume you know California, Connecticut, Florida, Georgia, Maryland, New York and Illinois had initially talked up a gas tax pause. And while Georgia’s governor extended to gas tax pause in the peachy state until October 12th, we wouldn’t put it past any democrat politician to keep the breaks going until the election plus a few days.
Still, the price of gas is likely to fall through year-end: Gas Prices: Projection for the Rest of 2022.
Be Skeptical of Cryptos?
Nothing would surprise us less than a fresh round of Crypto hype this week. That’s because with the overnight rally up to the $22,300 level, we are very close to a strong overhead resistance level:
As usual, color us skeptical, though this is not advice. I mean, if BTC gets over trend perhaps a new rally phase is here. On the other hand, it’s right in this area where the Big Manipulators ought to be “chumming the waters” to gin up fake interest in breaking higher which is what The Rich do – in order to unload on the Great Economic Unwashed while they take their money and run.
Naturally, we weren’t influenced in our thinking about how Critical SEC Filing Reveals Crypto Is Braced For A Surprise $500 Million Earthquake After Sudden Bitcoin And Ethereum Price Rebound (forbes.com). Naw, not us. Chumming?
There is still all that SEC stuff, though…and what about How Much Crypto Has Been Stolen in the Last Three Months? (gizmodo.com)?
Grandstanding political bullshit artist: Schumer vows to seek $3B for troubled Ground Zero health fund. Let me see, 9/11 was how many years ago? (21-YEARS) so here comes this POS with a plan 45-days before a potential ass-kicking election? Get lost! I hate grandstanding manipulators.
Classy Schools list: We like reading the annual run for the FAFSA handicapper’s summary in U.S. News and Whirled Retort:We think the price of sheepskins is horribly overpriced. And 9 out of 10 sheep agree.
War between straights and other? Thousands of Serbia’s Orthodox Christians rally against EuroPride.
So much for the Drought. Now, cue the whiners: Dozens of drivers trapped by mudslides as heavy rain, flash floods soak California. Serially, when Elaine and I were out there *(doing a turnaround) we did get our car wet to the floor mats in the Burbank flooding so we have been through “the Rains.” Miserable, but like everything else in Life, a lot depends on your ‘tude.
Belgium still has a little work to do on “speedy trials” looks like:Religion of Peace, did someone say?
Also, in Ure Up: Energy ministers are meeting this week on how to deal with the box Vlad Putin has the continent in. US fears Russian energy manipulation could fracture European resolve on Ukraine. Risk we took when the U.S. and EU bounced out of negotiations and opted for the war track.
Going into breakfast: NFIB and Consumer Prices tomorrow. Dow futures up 92, but with CPI tomorrow, we’ll hold short and see what happens.
Write when you get rich,