One more on the list of “market hopes” is a Blue Wave turning the Senate back to Democrat control. Republican control is considered a negative for the market as the probability decreases for more Federal “largess out the wazoo.”

When sellers are dominant, prices can’t rise. Yesterday, my DP block SPY trade scan in Schwab’s StreetSmart software was full. Massive sell trades at $352.47 which were reported after Monday’s close on ATPs and posted Tuesday.

Futures are mixed.

A reminder of a comment I made in Tuesday’s webinar. The market (and most sectors) are trading at or near 3 STD which is easily seen in the BBands on your chart. If you need help adjusting a BBand overlay, call me. At 3 STD, correction is a natural part of a return to the mean.

The primary risk seems to be in the put-call situation mentioned yesterday. I do not have strong options background. What I have read is that the market is again (as in late August) in the grips of an options gamma squeeze. Essentially speculators are buying large amounts of short-dated call options, which forces dealers to buy the underlying stocks to hedge. This creates a circular buying spree. The surge is broken when options speculators sell and dealers must in turn sell stock to remove the hedges. This created last month’s decline.

The gap up above trend and SMAs for GLD was reversed on Tuesday with a gap down at the open below chart lines. If there is a developing inflation trade which some analysts are proposing, green vol stops suggest a better entry is available for the metal.

JPM & C expect losses and unemployment to be worse in 2nd half of next year. However, current loan losses were smaller than expected. GS this AM is responsible for futures turning green. The prop desks generated significant gains.

There is no resolution on a stimulus bill even with the Administration raising the amount to $1.8T. Speaker Pelosi accused Wolf Blitzer and CNN of being a Trump mouthpiece with no understanding of how a bill to help the American people works.

Inflation conditions require high demand and limited supply forcing prices up. Conditions are lacking as deflationary pressures persist. “Western technology and cheap Asian labor” generates surplus especially since other societies are not as heavily consumption driven as in the USA. China’s population spending only drives 39% of GDP. They are big savers which is not economically stimulative. Gobal trends are bigger than the Fed’s power. That unemployment is still rising at a rate greater than prior to the GFC is not helping the Fed’s effort to create inflation.

M&A is underway in the oil patch. Soft oil prices will drive more frackers to find a sugar daddy.

SEC’s Consolidated Audit Trail (CAT) is now active and able to quickly identify manipulators. Major banks fought this but lost the battle.


Don Creech
2323 Alaska Ave. E.
Port Orchard, WA 98366