Bargain Basement Prices

Hey There Income Hunters,

 

Hey There Income Hunters,

 

Yesterday felt like Black Friday.

 

You know, the day after Thanksgiving when everything gets priced down?

 

I mean, just as inflation forecasts for Q4 are rising well above 5%, the highest-quality miners are being sold at rock-bottom prices.

 

There is really only one explanation for it and that is all the environmental, social and governance (ESG) nonsense.

 

(And the ESG nonsense goes in the same bucket as the Fed’s “transitory” B.S.)

 

I mean, ESG is nothing more than propaganda poppycock … 

 

In the markets, and especially commodities, only one thing matters: supply and demand.

 

As any good Black Friday shopper would, I picked up the companies I have been talking about for the past week. I’ll explain why and show you the names to look at next.

 

Reopening, No Debt Ceiling Crisis and Stimulus at the Finish Line 

 

I think we’re going to turn the corner on several issues over the next month.

 

(Which makes it an especially good idea to pick up Mark Sebastian’s monthly version of Volatility Edge this weekend. He’s ready to roll whether vol pops or plummets.)

 

      • As you can see below, despite the negative headlines, daily cases have rolled over and we are much closer to herd immunity than previously thought …

 

 

      • The debt ceiling has always been raised over the past 80 years — and this one will be, too. 
      • But the Democrats will successfully use it as a pawn to get the votes needed to pass a than $3.5 trillion nothing burger.
      • Europe’s inflation numbers have reached historic levels and their economy is set to grow rapidly in the quarters ahead.
      • Finally, China is ready to stimulate their economy for the push to the Winter Olympics and, on Friday, their equity markets rallied on bad news showing they have gotten a bit too cheap.

No US Equity Meltdown This Year 

I have looked long and hard for signs of an imminent equity meltdown.

However, there aren’t any.

      • Credit spreads are staying close to historically narrow.
      • Funding markets show no signs of stress and repo rates are at historic lows.
      • The Treasury curve between short-term rates and long-term rates is narrow, meaning there is no flight to quality.

Commodities and Energy Will Be Winners in Q4

      • Without a major meltdown in stocks, investors will return to the coming demand for energy as the reopening finally comes into play.
      • Copper and platinum will rebound, and the focus will return to the electric vehicle revolution.
      • Supply for commodities needed to meet today’s demand will push oil to new highs. Top miners, which are already making loads of money, will see their prices head back up.
      • I think gold will struggle until the dollar is clearly breaking down, so stick with energy and EV demanded commodities … 

Power Income Trades

I closed the SPY put spreads today, a bit too soon, but booked 62% & 24% gains … 

Friday Trades

      • BTO $VALE 10/15 17/18 CS for $.12
      • BTO $XLE 10/15 51/52 CS for $.25
      • BTO $RIO 11/19 72.5/75 CS for $.73
      • BTO $FCX 10/15 36/37 CS for $.19
      • BTO $SBSW 11/19 12.5/15 CS for $1

Five trades with total outlay of $229 per contract and a $800 profit potential. All have a decent probability of success, based on technical setup and fundamentals.

 

It’s all about low risk/high reward trades so you can maximize your return on capital (ROC).

Bring It Home

Trading Legion members remember to join me for Macro Monday at 11 a.m. when we look ahead to key data and market drivers for the week. If you’re not in the Legion, join us today.

Finally, remember that the key to consistent profits is this … Stay ahead of the money flow.

We successfully identified the market stresses coming in September. Now we need to look ahead while the consensus narrative is focused on those stresses.

Have a great weekend and as always …

Live and Trade With Passion My Friends,

Griff

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