Very Dark Storm Clouds or Breakthrough?
Updated: May 27, 2022
BULLS: The first three months of 2022 rank as the second-worst start in the history of the US market. (S&P 500) (Courtesy of @CharlieBilello) This does not mean that every single stock bit the dust. It just means that the index has taken a very nasty beating. The interesting thing about the chart below is what happened after the first 90 days of trading. Not what I expected to see.
Historically speaking, a poor start to the year, even a record-setting poor start, often resulted in a bounce-back by the year's end. It even happened in 1932! With the world, in complete disorder, and the market spewing incredible volatility it's time to sell covered calls. This is a key element in any knowledgeable investor's toolbox. Keeping this in mind, I have added yet another REIT to the portfolio. Ticker symbol MPW (Medical Properties) 6.4% yield. These days I'm totally focused on dividend stocks that have a fairly active options market so that I can sell covered calls during pullbacks. Nice income generator. 2022 has so far been stricken with major geopolitical problems, record inflation, endless US political infighting, and a twenty-year high in the dollar which translates to negative revenue for American companies with global reach. Not enough? More negatives: the Chinese pandemic lock-down and a looming recession in Europe, storm clouds with China over Taiwan, and the worldwide wheat supply dwindling because of the war in Ukraine. There are only 10 weeks of wheat supply remaining in storage. Are you kidding me? More bad news. According to Wall Street guru Louis Navellier, some of that nasty selling this year involved large hedge funds that were deleveraging by reducing some oversized positions. Some of those firms, and reckless investors no doubt, had trouble meeting margin calls. By the way, a covered call option strategy does not require margin! Another shock to the market included Target's disappointing earnings announcement, which spearheaded a huge move down on May 18th. Target not doing well implied that the US consumer is at risk! Folks are spending so much at the gas pump and at the supermarket that they are stalling on discretionary and lots of other goods that you might find at a Target. This sucks. By the way, the 60/40 stock and bond portfolio has NOT worked thus far either. To this point, bonds have taken a hit. Below is a chart of the /ES futures on May 24th. The large blue candle wiped out 3 days of market progress and is pushing down to another break.
BOTTOM LINE: This is a stock pickers market. Here's another possible entry. URNM, an ETF that focuses on uranium and the North Shore Global Uranium Mining Index. Logically, if you want clean energy and want the world to power electric cars, you need a way to generate the energy to charge those cars and keep the grid going. URNM, Sprott Uranium Miners, provides a yield of 7.3 percent. As a technical trader, the focus has to be on the charts, and both symbols MPW and URNM are offering logical technical entries as of May 23rd.
BALLERS: The game-used jersey of Diego Maradona that he wore when he scored the infamous 'Hand of God' goal in 1986 was acquired for a record-breaking 9.3 million dollars. It was authenticated that Maradona himself exchanged the shirt with a member of the English soccer team, midfielder Steve Hodge. That catapults Maradona to the top of the sports memorabilia list. According to Forbes, Pele's number 10 jersey commanded $225,109 in 2002. Hey, that’s a bargain! Babe Ruth's jersey sold for 5.6 million back in 2019. Now that's very serious inflation, but Ruth was an American legend and Maradona was an international star. You can pick up some interesting Maradona jerseys on ebay and etsy for much less. And this PSA rated autographed baseball card on ebay seems like a great bargain.
This British report, of course, focused on the dastardly nature of the 'Hand of God' goal.
BullsandBallers.com and Hilltop Media Productions are not investment advisors or brokers. Please trade at your own risk and follow proper risk management. This blog is intended for educational purposes and entertainment for like-minded traders and investors.
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