(SUMMARY OF JOHN’S OCTOBER 9, 2024, WEBINAR)

October 11, 2024

Hello everyone

TOPIC

Goldilocks on Steroids

TRADE ALERT PERFORMANCE

+720.99% since inception

+51.62% average annualized return for 16 years

+62.77% Trailing One-Year Return

PORTFOLIO

Risk On

(NEM) 10/$47-$50 call spread 10%

(TSLA) 10/$200-$210 call spread 10%

(DHI) 10/$165-$175 call spread 10%

Risk Off

No Positions

Total Aggregate Position = 30.00%

THE METHOD TO MY MADNESS

Hot September Nonfarm Payroll influences all trades.

All interest rate plays get hit – bonds, foreign currencies, gold, silver, home builders down.

Use this dip to load the boat in all these sectors.

We are unlikely to see a more than 5% drop in indexes for the rest of 2024.

Technology stocks regain the lead.

Energy spikes on Mideast and China recovery.

Buy stocks and bonds on dips, but now in ALL sectors.

THE GLOBAL ECONOMY – CHINA SURPRISE

Nonfarm Payroll reports come in hot, as US employers added 254,000 jobs in September.

Unemployment Rate fell to a three-month low of 4.1%.

US GDP revised up to 5.5% growth since the second quarter of 2020.

The port strike is settled with a 62% six-year settlement.  The Strike cost the U.S. economy $5 billion/day, and it will take a month to restart.

EC imposes 45% Tariffs on Chinese EV’s.

ISM Services PMI rose to 54.9 in September from 51.5 in August.

Europe to cut interest rates by 25 basis points in October.

Blockbuster China Stimulus sets stocks on fire.

STOCKS – FROM STRENGTH TO STRENGTH

Stocks race to new all-time highs despite rising rates and Middle Eastern War.

Interactive Brokers starts US Election Forecast Trading.  The opening bids were 49% for Harris and 50% for Trump.

Vistra Energy (VST) tops Nvidia as the top S&P 500 stock this year.

Spirit Airlines (SAVE) may file for bankruptcy.

Hedge Funds stampede into China on news that government agencies promised to pour $1 billion into local stock markets.

Super Micro (SMCI) splits, joining a growing list of semiconductor companies that have split their stocks.

US Car Makers get slaughtered.  Avoid (GM) and (F)

Caterpillar (CAT) rallies on China stimulus and housing recovery.

Electrification is the latest hot investment theme.

BONDS – DEMOLISHED

Hot September Nonfarm Payroll demolishes bonds.

Every interest rate play gets hit hard.

Bonds will return to the long-term uptrend when we start to discount the November Fed interest rate cut.

The Yield Curve has De-Inverted, meaning that short-term interest rates have fallen below long-term ones.

Buy (TLT), (JNK), (NLY), (SLRN), and REITS on dips.

FOREIGN CURRENCIES – DOLLAR REBOUND

Dollar gets a sudden new lease on life, as hot September Nonfarm Payroll causes interest rate spike.

Higher interest rates make the US $ much more attractive to traders and investors.

This is a short-term rally only and may be the last chance to sell short the US$.

The long-term downtrend in the dollar is still intact.

There is no way the dollar can stand up to cuts down to 3.0% by summer.

Buy (FXA), (FXE), (FXB), and (FXY).

ENERGY & COMMODITIES – OIL SPIKE

Middle East war plus Biden comments on possible Israeli bombing of Iran oil facilities give oil best week in years.

Iran produces 3 million barrels a day, 90% of which goes to China.

Its sudden loss would take oil to $95 overnight.

Saudi Arabia has 3 million barrels/day in reserve production, but it would take months to bring online.

That’s why Israel won’t attack Iran’s oil supplies, so its weapon suppliers don’t see energy supplies disrupted.

Nuclear facilities and missile factories are much more likely targets.

John’s Cameco (CCJ) trade alert rallied strongly, up 25% in two weeks.

The nuclear trade is still on, with all plays hitting new highs.

PRECIOUS METALS – NEW HIGHS

Gold hits a new high at $2,668 an ounce as hedge funds pour in.

Seasonals for the barbarous relic are now the most positive of the year.

Gold holding up in the face of big interest rate rises shows it only wants to go up.

Escalation of Middle East war is very pro-gold.

Will This Crisis Take Gold to $3000?  Almost certainly, yes.

The next problem?  What to do when gold hits $3000?

Most likely, it keeps going up to $4,500, as the Chinese have nowhere else to save.

Buy (GLD), (SLV), (AGQ), and (WPM) on dips.

REAL ESTATE – GUT PUNCH

US Home Sales Plunge, down 4.7% in August.

Mortgage Interest rates made it down to 6.07%, then popped to 6.50%.

Buyers are clearly remaining patient amid steadily declining mortgage rates.

New single-family home sales decreased last month to an annualized rate of 716,000 after rising at the fastest pace since early 2022.

The median sales price, meantime, decreased 4.6% from a year earlier to $420,000.

That marked the seventh straight month of annual price declines, extending what was already the longest streak since 2009.

Real estate should pick up once lower interest rates feed through again.

TRADE SHEET

Stocks – buy the next big dip

Bonds – buy dips

Commodities – buy dips

Currencies – sell dollar rallies, buy currencies

Precious Metals – buy dips

Energy – buy dips

Volatility – sell over $30

Real Estate – buy dips

NEXT STRATEGY WEBINAR

12:00 EST Wednesday, October 23, from Lake Tahoe, Nevada.

RECORDING OF JACQUIE’S POST OCTOBER 6, 2024, ZOOM MONTHLY MEETING.

https://www.madhedgefundtrader.com/jacquie-munro-meeting-replay-september-2024/

Cheers

Jacquie

(FARMLAND INVESTMENT – A RELATIVELY UNKNOWN OPPORTUNITY)

October 9, 2024

Hello everyone

Spanning many decades in the past, farmland has emerged as a very robust and consistent investment vehicle, outperforming traditional investment options such as the S&P500, real estate, gold, and bonds. 

How can that be?

Farmland offers consistent returns

Over the past 30 years or so, farmland has never recorded a negative calendar year. 

Let’s delve into some examples here.  In the first instance, farmland remained positive during the dot-com bubble, when stocks were down for three consecutive years.  Similarly, in 2008, when the S&P500 dropped by 37%, farmland recorded a positive return of 16%.  This resilience and consistency make farmland a unique and attractive investment option.

Supply and demand dynamics

The principles of supply and demand go a long way to explain the performance of farmland as an investment.  We all know the global population continues to grow on the demand side, leading to an increased need for food.   This trend is expected to continue, providing a steady demand for farmland.

On the supply side, as cities expand and populations grow, development often encroaches on farmland, reducing its availability.  This phenomenon of urban sprawl has decreased the supply of farmland, further driving up its value.

The combination of increasing demand and decreasing supply creates a healthy investment recipe.  It ensures that farmland retains its value and provides consistent returns, making it an attractive investment option.

Farmland - An Underutilized Investment

Despite its impressive performance as an investment, farmland remains relatively unknown in the mainstream financial advisory sector.  Many typical advisors have never considered it a viable investment option.

The upfront cost was high, and it was thought that investing required an intimate knowledge of the farming industry.  However, that is changing rapidly, with new investment opportunities that greatly reduce these barriers to entry.

Today, all you need to invest in farmland is a bit of extra cash and an investment account.  New opportunities are starting to open to the public.

Farmland can be considered as an alternative investment.  Farmland produces returns both with rent yields and appreciation in the farmland’s value.  So, these investments can work somewhat like dividend stocks or other rental property, with gains from income and capital gains. 

Ways to Invest

1/ Owning land directly

If you want to invest in farmland, it’s still possible to own land directly.  In this case, you could buy the land outright and rent it to a farmer who would use it for their crops or livestock.  So, owning land directly means it would work like an investment property.

The capital needed to buy a farm may be quite significant.  For instance, according to the USDA, the average farm size in 2023 was 464 acres.  The USDA also reported an average cost of $4,080 per acre in 2023, up from 3,800 the year before.  Using these averages, you could expect an average purchase price of $1.89 million for a farm.  Naturally, you may be able to get started with less if you can find the right opportunity.

2/ Farmland REITS

Real estate investment trusts (REITS) are not just for office  buildings and apartment complexes.  REITS can also invest in farmland, and they’re a popular way for investors to enjoy the benefits of real estate investing – that is, enjoying income – without the headaches of management.

Investing in REITS makes diversification easier, and they’re much more liquid, and the minimum investment is often much lower.  And REITS enjoy no corporate income tax in exchange for distributing 90% of their taxable income to investors as dividends.

Gladstone Land (LAND) and Farmland Partners (FPI) are two of the most prominent farmland REITS.

3/ Agricultural Stocks

One alternative to investing in farmland directly is investing in agriculture stocks.  The idea is simple:  instead of buying farmland, you buy shares of stock in companies in the agriculture industry.

These agriculture companies might be involved in things like crop production, agricultural equipment manufacturing, fertilizer production, and distribution.  Crop producers, for example, make a return on the investment from producing the land, and they may own the land, too, so they can benefit from the potential rise in land prices. 

Widely held agricultural stocks include Archer-Daniels-Midland (ADM), Corteva (CTVA), and Scotts Miracle-Gro (SMG)

4/ Farmland Mutual funds and ETFs.

Some investors prefer mutual funds or ETFs because it is often easier than buying stocks in individual agricultural companies. 

Notably, farmland mutual funds don’t always invest exclusively in agriculture and often invest in adjacent sectors.

Buying individual stocks gives you a greater level of certainty over where your funds are being invested.  This is not always true when you invest in mutual funds.

The Fidelity Agricultural Productivity Fund (FARMX) aims to invest 80% of its assets in agricultural productivity companies, and its largest holding is Deere (DE), the well-known name behind much agricultural machinery. 

It is important to note that these funds can come with high fees – so you always need to check these before investing in any fund. 

This is an item of interest Post to show you alternative investments.  Overall, it is my preference to buy individual stocks where I can rather than funds. 

QI CORNER

SOMETHING TO THINK ABOUT

Cheers

Jacquie

(A LOOK AT ISRAEL’S AIR DEFENSE SYSTEM & THE COUNTRY’S TIES WITH BOEING)

October 4, 2024

Hello everyone

Israel’s Iron Dome air defense system is one of several systems the country has developed to protect itself from missiles since the Gulf War in 1991.

It also uses Arrow interceptions, and a system called David’s Sling.

The short-range Iron Dome air defense system was built to intercept the kind of rockets fired by Hamas in Gaza.

It was developed by Rafael Advanced Defense Systems, an Israeli state-owned company, with US backing, and became operational in 2011.  Each truck-towed unit fires radar-guided missiles to blow up short-range threats such as rockets, mortars and drones in mid-air.

A naval version of the Iron Dome to protect ships and sea-based assets was deployed in 2017. The system determines whether a rocket is on course to hit a populated area; if not, the rocket is ignored and allowed to land harmlessly.

What is David’s Sling?

David’s Sling system is designed to shot down ballistic missiles fired from 100 to 200km away.

It was developed and manufactured jointly by Rafael Advanced Defense Systems and the US company RTX, formerly known as Raytheon.

The system is also designed to intercept aircraft, drones and cruise missiles.

What is the Arrow system?

The long-range Arrow-2 and Arrow-3 interceptors, developed by Israel with an Iranian missile threat in mind, are designed to engage threats both in and outside the atmosphere.

It operates at an altitude that allows for the safe dispersal of any non-conventional warheads.

State-owned Israel Aerospace Industries is the project’s main contractor, while Boeing is involved in producing the interceptors.

Israel said it had used the system on October 31 last year to intercept a surface-to-surface missile fired from the area of the Red Seas towards its territory.

Boeing and Israel have a long history that goes back more than 75 years – to the founding of the State of Israel.  Since then, Boeing has worked closely with Israeli and commercial and military customers and suppliers and has developed many lasting partnerships.

Israel has a large and modern air force and a successful commercial aviation sector.  The Israeli aerospace industry in the public and private sectors provides a high level of innovation and expertise in the design and manufacture of a wide variety of defence, space and communication products.  Its position as a world aerospace leader makes Israel an important market and partner to Boeing.

El Al = Israel’s flagship airline.

QI CORNER

SOMETHING TO THINK ABOUT

Cheers

Jacquie

(CHINA INFLATES WHILE THE U.S. TROUNCES INFLATION)

September 30, 2024

Hello everyone

WEEK AHEAD CALENDAR

Monday Se,pt. 30

9:45 a.m. Chicago PMI (September)

10:30 a.m. Dallas Fed Index (September)

1:55 p.m. Federal Reserve Chair Jerome Powell speaks on the economic outlook at the National Association for Business Economics’ annul meeting in Nashville.

Earnings:  Carnival

Tuesday, Oct. 1

5:00 a.m. Euro Area Inflation Rate

Previous:  2.2%

Forecast: 2.0%

9:45 a.m.  S&P PMI Manufacturing final (September)

10:00 a.m. ISM Manufacturing (September)

10:00 a.m. Construction Spending (August)

10:00 a.m. JOLTS Job Openings (August)

Earnings: Lamb Weston, Nike, McCormick & Co.

Wednesday Oct. 2

8:15 a.m,. ADP Employment Survey (September)

9:30 p.m. Australia Trade Balance

Precious: A$6.009B

Forecast: A$6.1B

Earnings:  Conagra Brands

Thursday Oct. 3

2:30 a.m. Switzerland Inflation Rate

Previous:  1.1%

Forecast: 1.1%

8:30 a.m. Initial Claims (09/28)

9:45 a.m. PMI Composite final (September)

9:45 a.m. S&P PMI Services SA final (September)

10:00 a.m. Durable Orders (August)

10:00 a.m. Factory Orders (August)

10:00 a.m. ISM Services PMI (September)

Earnings:  Constellation Brands

Friday Oct. 4

8:45 a.m. Hourly Earnings preliminary (September)

8:30 a.m. Average Workweek preliminary (September)

8:30 a.m. Manufacturing Payrolls (September)

8:30 a.m. Nonfarm Payrolls (September)

8:30 a.m. Participation Rate (September)

8:30 a.m. Private Nonfarm Payrolls (September)

8:30 a.m. Unemployment Rate (September)

Welcome to October, a traditionally turbulent month in the markets.  Many see the markets approaching exhaustion, and poised for a pullback of 5% to 10% before the bulls reassert themselves.  (That’s a great time to scale into stocks where you want to add weight).

But maybe that is just wishful thinking on their part, so they can add to their portfolio. The market still shows a good bullish structure.  Any pullback should be seen as an invitation to scale in.

The release of the US Personal Consumption Expenditures (PCE) Index for August showed annual inflation came in at 2.2%, lower than the expected 2.3% and certainly a step down from July’s 2.5%. 

The US Dollar Index (DXY) retreated to 100.40 on the news release and should continue to gradually fall toward the 100 zone. 

With inflation cooling, and the 50bps rate cut behind us, the chatter is now about what the Fed is going to do in November.  Will it be 25 or 50 bps?

The Fed Chair Powell speech on Monday may give us an inkling what the numbers will be later in the year, so investors will be listening closely.

Policymakers and Investors are laser-focused on the health of the jobs market, so the September jobs report released this Friday will be monitored closely.  Now that the Fed seems to have conquered inflation for now, it will turn its attention to the labour market.

Last Tuesday, China’s central bank unveiled a large stimulus package designed to restore confidence in the troubled housing market and to lift the country’s sluggish economy.

Among Beijing’s moves:  A cut in short-term interest rates, allowing banks to hold less money in reserves, lower interest rates on existing mortgages, and a plan to inject billions of dollars of liquidity into the stock market.

China’s flailing economy has slowed construction in the country.  But the stimulus announcement last Tuesday gave many stocks a lift.  Caterpillar (CAT) and Freeport-McMoRan (FCX) jumped by late Tuesday trading. Luxury retailers also posted good gains.

Despite the positive immediate impact, most economists believe the stimulus package won’t be enough to lift China’s weak domestic demand.  More measures will be needed to bring about significant improvement in China’s economy. 

We have held Xpeng (XPEV), a Chinese EV company, in our portfolio since March this year.  It has rallied well in the last couple of weeks and should continue to rally into year-end & into 2025.

MARKET UPDATE

S&P500

Uptrend still in progress. Last week the market reached its long-standing inverse Head & Shoulders upside target of 5,735.  If we look at the market through an Elliott Wave lens, the S&P500 is still interpreted to be rallying within a Wave 5 move from (the August 5^th low of 5,119), and actually has the potential to reach the mid 6,400’s over the next weeks/months before the market reaches total exhaustion. 

Support = 5670/5640

Lower Support level = mid 5,500/5,400

GOLD

Further upside potential.  Gold can rally to $3000 and beyond in the weeks/months ahead.

Support = $2,630/$2,600

Next Resistance = mid $2,700’s.

SILVER 

Silver will also rally well.  Keep scaling into the recommended precious metal stocks regularly (every month) and go long LEAPS on any significant pullbacks. 

Zooming out to clarify the bigger picture on gold, we can see gold is headed for $10,000+ by 2030. 

BITCOIN

Rally in progress.

Bitcoin completed a complex correction with its August 5^th low of $49, 577.  Since that time, we have seen the coin advance in its Wave 3 move.

Initial target is $68,250/$68,500 & then ~ $70,000.

I am looking for Bitcoin to soon break out of its bullish flag pattern with a strong rally to the upside. 

Zooming out to look at the bigger picture, Bitcoin still has the potential to extend toward the $127,000 level over the coming months, and there are targets way beyond that in the coming years.

Short term support = ~ $64,200/$62,350

PSYCHOLOGY CORNER

CONRFLICTS CORNER

Israel has killed Hezbollah’s leader, but this may bring us one step closer to an escalation in the conflict and draw in other nations. 

QI CORNER

QUIRKY CORNER

SOMETHING TO THINK ABOUT

Cheers

Jacquie

(WHAT’S UNDERVALUED IN THE STOCK MARKET?)

September 25, 2024

Hello everyone

We are in the final week of September.  Fall has begun, and Spring in the southern hemisphere is witnessing a plethora of blooms occupying gardens.

We will also soon be entering the festive season, where most people are looking for bargains.  But, if we stay out of the proverbial well-marketed company shops, and bypass their products, and look at the stock market instead as a place to go shopping, where might we find value?

THE SALE CORNER

Real estate, communication services, and energy stocks are among the most undervalued categories.  With a P/FV ratio of 0.89, energy stocks traded at an 11% discount.  Communication services stocks also traded at a discount, with an average P/FV ratio of 0.85.

Look at:

(CCI) Crown Castle International (Wireless Communication Service)

(DUK) Duke Energy (Energy)

(XOM) Exxon Mobil (Energy)

(BHP) Broken Hill Proprietary Company Limited (Energy) Investment in alternative energies will drive Energy stocks higher.  Also, a slowly recovering Chinese economy will be good news for (BHP) and its shareholders.

(NEE) NextEra Energy (Utilities – industry electricity)

Stock has severely underperformed in the past and is trading at a very attractive valuation.  It will service the AI revolution.

(O) Realty Income (Real Estate) REITS are a play on falling interest rates and investment in data centers.

(GS) Goldman Sachs (Banking Services) Financial services sector will benefit from falling interest rates.

(JPM) JP Morgan (Banking Services)

Some of you may already have a few of these in your portfolio. 

PORTFOLIO UPDATE

Xpeng (XPEV)

Date Recommended: March 15, 2024

Price: $10.05 on 03/15

Targets: (from various analysts) $11.70, $15.40, $18.00

Rising EV company in China, which is poised to deliver new models in the 4^th quarter.

After the recommendation the price dropped, and the range traded for several months.  Recently it has started to rally with the Chinese attempts to stimulate their economy. In addition, the CEO recently bought 2 million shares. The P7+ is expected to give stiff competition to American EV maker Tesla (TSLA) as it boasts a vision advanced driver-assistance system that is comparable to the latter’s FSD (full-serve driving) system.  Analysts believe the new models being released this year could boost XPeng’s deliveries and become major sales drivers for the remainder of the year.    

Daily chart (XPEV)

WEEKLY CHART (XPEV)

Core Scientific (CORZ)

Date Recommended: August 7, 2024

Price: $9.71 on 08/07

Targets (from various analysts):  $13.00, $16.13, $20.00

Core Scientific is a leader in Artificial Intelligence and Blockchain technologies and provides the infrastructure that powers customers’ AI and Blockchain results.

Core Scientific, Inc. is showing rising earnings estimates.  A consequent rating upgrade fundamentally means an improvement in the company’s underlying business.  Investors’ appreciation of this improving business trend should push the stock higher.   

DAILY CHART (CORZ)

WEEKLY CHART (CORZ)

CRYPTO CORNER

This is for those of you who don’t own Bitcoin or Ethereum, or for those who want to add weight. Your percentage weight is up to you.  Anywhere from 1%-10%.

Recommendation: Scale into Bitcoin and Ethereum, and then transfer it to your decentralized wallet and just hold it there, and don’t touch it. 

I am not asking you to participate in any crypto projects that promise huge rewards.  Please avoid, it unless you want to lose your money.

This is a recommendation to buy the coin/s – pure and simple.  You will need an account with a crypto exchange to buy the coins.

If you look at the Bitcoin chart, you will see it is coiled up in a flag pattern, which it will eventually break out of to the upside. 

I have been buying small parcels of Bitcoin and Ethereum every month for several years. 

My decentralized wallet is Exodus.  That’s where I hold all my crypto. 

You will need to hold a “seed phrase” which is basically your password to that wallet.

Please DO NOT screenshot that phrase on your iPhone or your laptop.

Get a pen and write it down in a book.  In fact, write it down in two books.  One should go in a safe, the other in a safe place only you and your other half know about.  If you lose that seed phrase, you have basically lost your crypto.  Don’t contact me as there would be nothing, I could do to help you. 

DAILY BITCOIN CHART

In the Daily chart above, you can see I have drawn a blue line above the flag pattern and below it.  The square box shows the low on August 5 at $49,577.

The larger square box shows a lower support zone, situated about the middle of the flagpole.  If you look in the MACD section directly below this box, you will note that the MACD has dipped below the 0 line.  You will also see that I have drawn a line connecting three drops under the 0 line.  The next dip, after the third connected drop, is higher which represents the low in Bitcoin on August 5.   This represents a divergence.

Clearly, there is a great overall divergence on the Bitcoin chart. The line connecting the MACD dips below 0 is pointing down, while the line connecting the middle of the flagpole, and the flag pattern is pointing up.

We are now patiently waiting for a break-out from the flag pattern.

WEEKLY BITCOIN CHART

On the Weekly chart above, I have once again drawn the lines above and below the flag pattern.  On the underside of the flag pattern, you can see three distinct points I have connected.  (The two points make a third pattern).  I have circled the middle of the flag pattern to highlight a candlestick there, which is a pin bar, or a hammer.  A hammer found at the bottom of a range can indicate a potential bullish move, which has been illustrated here. (If the same candlestick pattern was found at the top of a range, it would be called a “Hanging Man”.  And that indicates a potentially bearish move may be about to happen).  The long candlestick that made the low on August 5 can be seen as a hammer, which also indicates bullish potential ahead.

QI CORNER

Alternatives represent investments in real estate, hedge funds, private equity, natural resources, and infrastructure.

SOMETHING TO THINK ABOUT

Cheers

Jacquie