Is There No Common Ground?
On Thursday, Attorney General William Barr released the much anticipated Mueller report, and as I predicted several weeks ago the report is basically saying that it is inconclusive. It finds areas where it felt that the Russians had influenced the 2016 presidential election but at the same time it notes that it could not find any conspiracy to fix the election.
The second part on the obstruction of justice by Mr. Trump was as equally vague. The team of investigators say that the president tried to influence the direction of the probe but that several members of his inner team denied him that opportunity by refusing to act as Mr. Trump requested. The report noted that Article II prevents a sitting president to be charged with a crime and therefore he will be charged. Another interesting point in the report is that they decided not to have Mr. Trump deposed as they felt the time constraints would drag the investigation out too long.
How you view the report will be how you view the political scene in the U.S. If you are conservative you will say that the report should end the investigation and that it is time to move on. It neither proved the president guilty of obstruction nor had enough evidence that he did anything with Russia to influence the election. If you are on the left you will view it as a clear indictment of his presidency and that it is time for more investigations and the possibility of his impeachment. My guess is that the Democrats will continue to pursue the issue right up to the 2020 election. They may get Trump to go on trial but convicting him will be another thing.
On Monday the Notre Dame Cathedral in Paris had a horrific fire that destroyed much of the main structure. Many classic pieces of art work were removed before the fire consumed the roof and it collapsed. It will take years to rebuild the structure and cost hundreds of millions of dollars. Immediately some of Frances wealthy pledged support to get the national treasure rebuilt as quickly as possible. Rather than to show support for the effort, the radical left said that it was horrible that money from the wealthy should be used to rebuild an “old building” that has no relevance in today’s society. Rather, they said that this only proves that the rich should be taxed to the maximum and that money then be redistributed to the poor that they represent.
I doubt that the world has been more divided since the 1930’s and anyone who has ever studied history knows how that one turned out. Since the 1950’s, politics used to be much more middle of the road with the political spectrum focusing toward the center. It has now clearly become a battle of classes and as the war between the haves and have nots becoming fiercer, how it will end is anyone’s guess.
Ask Mr. Seifert
I am constantly asked questions about trading and how to exploit certain market factors to insure success. Each week I will answer one of those questions with a short paragraph which will cover the trading subject.
Question: Is there any way to write covered calls without the risk of losing my stock?
Answer: If you sold a cover call and the stock had a large rally you would lose your stock and not participate in the gain. If the market was in congestion, covered calls provided a way to enhance your yield but if the stock breaks out of the trading range, you either lost your stock or lost your downside protection. However, in the past five years the SEC has allowed investors to trade weekly options and this has been a game changer. The trick to success is to learn how to use weekly vertical credit spreads to help protect your downside and at the same time guarantee that if the market rallies you participate in the gain without the risk of having your stock taken away! Our Optionomics (www.optionomicsgroup.com) web site gives you the details of how to construct this trade. Please check it out it. It may give you some insight as to how professional traders are using this trade to increase long term yield while participating in any significant upside moves.
The Wise Guy Report: The View From The Floor
Each week I talk about what I think the Wise Guys (floor traders) are up to with the Big Three commodity contracts: Gold (GC), Crude Oil (CL) and Long-Term Interest Rates (ZB). I also track the Market Edge (www.marketedge.com) ‘Market Posture’ which has a twenty-six year record of forecasting the intermediate-term direction of the stock market as measure by the DJIA with around 70% accuracy.
T-Notes
This market continues to look for direction. Even with the Fed stating that it is not going to raise rates during the remainder of 2019, the ten-year has not broken out to the upside. This past week was typical of the price action we have been experiencing for the last six weeks. It is in a broad congestion pattern. It sold off slightly early in the week only to rally on Thursday and end the week “sharply unchanged”. Until a direction can be found we will stick to our current position.
Crude Oil
Oil continued on a roll this week making new highs early in the week before backing off to settle up slightly for the week. With no overhead resistance in sight, the only way to play this market is to keep trading with the strong hands which are the longs. Until something stops this trend we will stay with our current long position.
Gold
The precious metal traded down for the week and closed near its low tick. It is now squarely at long term support and if it continues to break it will stop out the long position that we have on. The lack of volatility in the equities market certainly has something to do with gold’s current market condition and if they continue we will get stopped out of the trade. If conditions hold, we will stay with the trade and hope that some event will cause gold to rally.
| The Big Three Commodities Contracts
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| Market Edge ‘Market Posture’ |
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Based on the status of the Market Edge market timing models, the ‘Market Posture’ is now Bullish as of the week ending 4/18/2019 (DJIA – 26559.54). The ‘Market Posture’ had been Neutral since the week ending 3/22/2019 (25502.32).
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