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At the Edge of Chaos: The Fed is About to Tinker with QE – and Stocks and Bonds Could Get More of a Boost

As I’ve suggested over the last two weeks, the stock market was poised for a breakout. And the odds for more gains in the short-term are still well above average. As a result, I am still not bearish, but, as time passes, it seems plausible that the market

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As I've suggested over the last two weeks, the stock market was poised for a breakout. And the odds for more gains in the short-term are still well above average. As a result, I am still not bearish, but, as time passes, it seems plausible that the market may change its general tone over the next few weeks.

Of course, much depends on what the Fed does, especially if it alters the way it buys bonds and delivers its QE. And there is emerging talk that changes are coming. Certainly, the biggest positive influence for stocks would be that the Fed increases the amount of money it puts into bonds, which is still an unknown. Moreover, even if the Fed doesn't change the amount of QE but directs its purchases toward key areas in the yield curve, the likely decline in interest rates which could result from these maneuvers could have a positive effect on key market rates, especially mortgages, which is why the homebuilder stocks are showing signs of life and the lumber stocks continue their bullish advance as I describe below.

Meanwhile, after a torrid March, volume in the options market had fallen off some, resulting in a slower trading pace for stocks early in the week – until Friday, when the volume in the SPY options picked up, especially on the call buying side. This, in turn, tilted the expiration toward the bullish side, as the dealers were forced to hedge their bets and, in the process, bought stock and stock index futures.

Subsequently, unless something very dramatic happens, the Fed's ongoing QE is more likely than not to keep the uptrend in stocks intact. That said, it seems that we may be nearing a point where some areas of the market will see more selling while others may see positive money flows. Thus, the bottom line remains that success will still be about selectivity.

Option Bulls Returned to Market at Week's End

The three weekly expirations (M,W,F) for the SPDR S&P 500 ETF (SPY) last week were mixed, with Monday and Wednesday delivering lackluster volume and generally sloppy directional conviction. But, by Friday, the call buyers were more or less back in business and the directionally bullish expiration went off well for those of us long the market.

What this means is that, for now, the market remains in the hands of the bulls and that the odds of higher prices remain well above average. Next week may be interesting as Friday's monthly expiration would mark three weeks of very bullish action in the markets, and could be an opportunity for the market makers to take some money off the table.

Incidentally, check out my upcoming options presentation "How to Let Your StockCharts Lead You to Great Covered Calls," on StockCharts TV's Options 101 program this week. You can catch me on Wednesday April 14th at 12:30 Eastern Time. More details here.

ASGN – Breakout Shows that a House in Order is Better than Being a Household Name

Flash isn't always what makes a stock worth owning. And, in the case of the shares of midsize IT and government contractor ASGN Inc. (ASGN), this is the take-home message for sure, as the stock delivered a nice chart breakout on 4/9/21. Certainly, ASGN is not a household name, but it does have its house in order as its business recovers amidst expectations of increasing revenues due to government contracts. The company offers cybersecurity, website design and artificial intelligence, along with management and related services to health care.

According to the company's most recent earnings call, EBITDA and free cash flow for its most recent fiscal year were above analyst expectations, but not above management's expectations. In fact, the company's moves during the COVID pandemic's most troublesome period were more than adequate to continue and to deliver year-over-year growth in two of its business segments. Moreover, other areas of the business, especially due to acquisitions, were able to show sequential growth and were nearing breakeven point.

Moreover, the company now expects to grow its business due to the White House's push toward IT modernization in the government, especially in defense and social services. And, with a $2 billion contract backlog in place and the addition of recent government contracts in place, the revenue stream should remain in good shape for some time.

The options data for ASGN is directionally bullish, which is a nice confirmation of its technicals where Accumulation Distribution (ADI) and On Balance Volume (OBV) suggest the stock is under aggressive accumulation. A decisive move above $102 could take the stock 5-10% higher in the next few weeks, barring an all-out market meltdown.

I just recommended an interesting option trade based on MSNT. You can access it and the rest of my model portfolio with a FREE trial here.

I have positions in ASGN and MNST as of this writing.

NYAD Makes New High along with SPX, NDX

The New York Stock Exchange Advance Decline line (NYAD) caught up to the S&P 500 (SPX) and made a series of new highs last week, confirming that we are still in an uptrend for stocks. More encouraging is the fact that RSI has not moved above 70 for NYAD yet, suggesting that stocks can still climb further. Moreover, even if the 70 area is breached, the market can stay in that overbought state for some time. In fact, what we've seen recently is that readings above 70 are more likely to lead to consolidations, not necessarily full-blown corrections. Of course, there is no guarantee that this will repeat, but it is worth noting.

Thus, as long as NYAD continues to make new highs, remains above its 50- and 200-day moving averages and has its corresponding RSI reading remain above 50, the trend remains up. This combined set of observations has been extremely reliable since 2016.

The Nasdaq 100 index (NDX) also caught up to SPX and, along with NYAD, has made new highs confirming the uptrend in stocks.

The S&P 500 (SPX) is now firmly leading the market after making a series of new highs. Support for SPX is now above 4000, with another band of support near 3930 and 3970.

Good news! I've made my NYAD-Complexity, Chaos chart (featured on my YD5 videos) and a few other favorites public. You can find them here.

Big Move Ahead Likely in Bonds

Stocks are still benefitting from what seems to be an intermediate-term consolidation in what is now a fairly clear pause in what has been the quietest bear market in U.S. Treasury bonds, probably in history. In addition, the trading range now for the U.S. Ten Year note (TNX) remains between 1.4 and 18%. That said, TNX continues to test the key 20-day moving average area, which could lead to a test of its 50-day moving average if the support at the 20 fails to hold. A fall below the 50-day moving average support level would put yields in an intermediate-term downtrend.

However, the U.S. 30-Year T-Bond yield (TYX) has fallen less than TNX, which suggests traders are still concerned about inflation but, given the potential for some difficulties in getting the infrastructure package through Congress, (at least without some changes that could decrease its inflationary potential), TYX may consolidate in a narrower range.

Still, the key remains what happens if and when TNX reaches 2% and TYX reaches 3%, how the Fed responds and then – of course – how stocks respond. For its own part, TYX is trading below its 20-day moving average, with the Bollinger Bands shrinking and the bond ETF options delivering a neutral message.

Finally, the price of lumber (LUMBER) continues to skyrocket, which is pulling along the lumber stocks, such as Louisiana Pacific (LPX), and homebuilders, such as KB Homes (KBH). Indeed, supply, demand and pricing power remain on the side of those two sectors of the economy, another example of how the markets, the economy and people's lives are intertwined in the MEL system.

To learn more about bonds, lumber, and homebuilders and more, check out my recent Money Show presentation: The Trade of the Year. Check it out here, and consider a Free Trial to my service (click here).

I own shares of LPX and KBH as of this writing.


Joe Duarte

In The Money Options


Joe Duarte is a former money manager, an active trader and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best selling Trading Options for Dummies, rated a TOP Options Book for 2018 by Benzinga.com and now in its third edition, plus The Everything Investing in Your 20s and 30s Book and six other trading books.

The Everything Investing in Your 20s and 30s Book is available at Amazon and Barnes and Noble. It has also been recommended as a Washington Post Color of Money Book of the Month.

To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit https://joeduarteinthemoneyoptions.com/secure/order_email.asp.

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COVID-19 may never go away, but practical herd immunity is within reach

It is unlikely that we will reach full herd immunity for COVID-19. However, we are likely to reach a practical kind of herd immunity through vaccination.

The level of immunity needed — either through vaccination or infection — for practical herd immunity is uncertain, but may be quite high. (Shutterstock)

When people say that we won’t reach “herd immunity” to COVID-19, they are usually referring to an ideal of “full” population immunity: when so many people are immune that, most of the time, there is no community transmission.

With full herd immunity, most people will never be exposed to the virus. Even those who are not vaccinated are protected, because an introduction is so unlikely to reach them: it will sputter out, because so many others are immune — as is the case now with diseases like polio and mumps.

The fraction of the population that needs to be immune in order for the population to have “full” herd immunity depends on the transmissibility of the virus in the population, and on the control measures in place.

It is unlikely we’ll reach full herd immunity for COVID-19.

For one thing, it appears that immunity to COVID-19 acquired either by vaccination or infection wanes over time. In addition, SARS-CoV-2 will continue to evolve. Over time, variants that can infect people with immunity (even if this only results in mild disease) will have a selective advantage, just as until now selection has mainly favoured variants with higher transmission potential.

Electron micrograph of a yellow virus particle with green spikes, against a blue background.
The B.1.1.7 variant of the SARS-CoV-2 virus. Over time, variants of concern will likely continue to emerge. NIAID, CC BY

Also, our population is a composition of different communities, workplaces and environments. In some of these, transmission risk might be high enough and/or immunity low enough to allow larger outbreaks to occur, even if overall in the population we have high vaccination and low transmission.

Finally, SARS-CoV-2 can infect other animals. This means that other animal populations may act as a “reservoir,” allowing the virus to be reintroduced to the human population.

Practical herd immunity

Nonetheless, we are likely to reach a practical kind of herd immunity through vaccination. In practical herd immunity, we can reopen to near-normal levels of activity without needing widespread distancing or lockdowns. This would be a profound change from the situation we have been in for the past 18 months.

Practical herd immunity does not mean that we never see any COVID-19. It will likely be with us, just at low enough levels that we will not need to have widespread distancing measures in place to protect the health-care system.


Read more: COVID-19 variants FAQ: How did the U.K., South Africa and Brazil variants emerge? Are they more contagious? How does a virus mutate? Could there be a super-variant that evades vaccines?


What level of immunity (either through vaccination or infection) we need for practical herd immunity is uncertain, but it may be quite high. The original strain of SARS-CoV-2 was highly transmissible and transmission is thought to be higher still for some variants of concern.

Empty vials of Pfizer's COVID-19 vaccine
To achieve two-thirds immunity, 90 per cent of the eligible population would need to be vaccinated or infected naturally. (AP Photo/John Locher)

The amount of immunity we need will also depend on what level of controls we are willing to maintain indefinitely. Continued masking, contact tracing, symptomatic and asymptomatic testing and outbreak control measures will mean we will require less immunity than we would without these in place.

Some estimates suggest that we may need two thirds of the population to be protected either by successful vaccination or natural infection. If 90 per cent of the population is eligible for vaccination, and vaccines are 85 per cent effective against infection, we can obtain this two thirds with about 90 per cent of the eligible population being vaccinated or infected naturally.

The United Kingdom has already exceeded these rates in some age groups. Higher rates are even better, because there is still uncertainty about the level of transmissibility and vaccine efficacy against infection (although research shows they are very good against severe disease). We don’t want to discover that we do not have enough immunity through vaccination and have another serious wave of infection.

Emerging variants

A sticker reading 'I'm COVID-19 vaccinated' from Vancouver Coastal Health
Booster vaccinations will hopefully allow us to maintain long-term practical herd immunity against future variants of COVID-19. THE CANADIAN PRESS/Jonathan Hayward

Higher vaccine uptake will mean there are fewer infections before we reach practical herd immunity. The remaining unvaccinated individuals will be safer, protected indirectly by the immunity of those around them. Outbreaks will be smaller and rarer, and there will be fewer opportunities for vaccine escape variants to arise and spread.

That said, variants of SARS-CoV-2 will continue to emerge, and selection will favour variants that escape our immunity. Vaccine developers will continue to broaden the spectrum of the vaccines that are available, and boosters will hopefully allow us to maintain long-term practical herd immunity.

It’s possible that an immune escape variant will emerge that is severe enough, and transmissible enough, that it will cause a new pandemic for which we do not have even practical herd immunity. But barring that, while we may not be free of COVID-19, we can be confident that in the not-too-distant future it will be manageable when we return to near-normal life.

Caroline Colijn's research group receives funding from the Natural Sciences and Engineering Research Council of Canada, Genome British Columbia, the Michael Smith Foundation for Health Research, the Public Health Agency of Canada and Canada 150 Research Chair program of the Federal Government of Canada.

Paul Tupper's research group receives funding from the Natural Sciences and Engineering Research Council of Canada.

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UK Government Adviser Says Mask Mandates Should Continue “Forever”

UK Government Adviser Says Mask Mandates Should Continue "Forever"

Authored by Paul Joseph Watson via Summit News,

A UK government adviser and former Communist Party member Susan Michie says that mask mandates and social distancing should…

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UK Government Adviser Says Mask Mandates Should Continue "Forever"

Authored by Paul Joseph Watson via Summit News,

A UK government adviser and former Communist Party member Susan Michie says that mask mandates and social distancing should continue “forever” and that people should adopt such behaviour just as they did with wearing seatbelts.

Michie, who is a Professor of Health Psychology at UCL and a leading member of SAGE, said such control measures should become part of people’s “normal” routine behaviour.

"Vaccines are a really important part of pandemic control but it is only one part. [A] test, trace and isolate system, [as well as] border controls, are really essential. And the third thing is people’s behaviour. That is, the behaviour of social distancing, of… making sure there’s good ventilation [when you’re indoors], or if there’s not, wearing face masks, and [keeping up] hand and surface hygiene."

"We will need to keep these going in the long term, and that will be good not only for Covid but also to reduce other [diseases] at a time when the NHS is [struggling]… I think forever, to some extent…"

"I think there’s lots of different behaviours that we have changed in our lives. We now routinely wear seatbelts – we didn’t use to. We now routinely pick up dog poo in the parks – we didn’t use to. When people see that there is a threat and there is something they can do to reduce that [to protect] themselves, their loved ones and their communities, what we have seen over this last year is that people do that."

Michie’s comments once again emphasize how many scientific advisers have become drunk on COVID-19 power and never want to relinquish it.

“Unsurprisingly, Channel 5 News made absolutely no effort to scrutinise these claims. The programme’s presenter raised no objection to the idea that mask-wearing and social distancing could continue “forever”, resorting only to friendly laughter,” writes Michael Curzon.

“Professor Michie’s co-panellist, a fellow scientist at UCL, Dr Shikta Das, said:

“I think Susan has made a very good point here,” adding that the vaccine roll-out has created a “false sense of security”.

She concluded:

“I don’t think we are yet ready to unlock.”

How’s all that for balance!

Perhaps unsurprisingly, Michie is known to be a long-time Communist hardliner and was so zealous in her beliefs she garnered the nickname “Stalin’s nanny.”

Her sentiment echoes that of fellow government adviser Professor Neil Ferguson, who once acknowledged that he was surprised authorities were able to “get away with” the same draconian measures that Communist China imposed at the start of the pandemic.

“[China] is a communist one-party state, we said. We couldn’t get away with [lockdown] in Europe, we thought… and then Italy did it. And we realised we could,” said Ferguson.

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Tyler Durden Sat, 06/12/2021 - 11:30

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Venezuela Says US Sanctions Blocking COVID Vaccines: ‘Global Health System’ As Geopolitical Weapon

Venezuela Says US Sanctions Blocking COVID Vaccines: ‘Global Health System’ As Geopolitical Weapon

Authored by Brett Wilkins via via CommonDreams.org,

Venezuelan Vice President Delcy Rodríguez has accused the US-backed international financia

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Venezuela Says US Sanctions Blocking COVID Vaccines: 'Global Health System' As Geopolitical Weapon

Authored by Brett Wilkins via via CommonDreams.org,

Venezuelan Vice President Delcy Rodríguez has accused the US-backed international financial system of blocking the country's access to Covid-19 vaccines under the COVAX program, even though Venezuela has paid all but $10 million of the $120 million it owes.

Appearing in a televised address, Rodríguez said Venezuela was unable to pay the remaining $10 million because it was being blocked from transferring funds to the Switzerland-based GAVI Vaccine Alliance, which directs COVAX. "The financial system that also hides behind the U.S. lobby has the power to block resources that can be used to immunize the population of Venezuela," she said.

Via Reuters

Venezuelan Foreign Minister Jorge Arreaza tweeted a letter from COVAX stating that it "received notification from UBS Bank" that four payments, totaling just over $4.6 million, were "blocked and under investigation."

Arreaza said that "Venezuela has paid all of its commitments," adding that "the bank has arbitrarily blocked" the country's final payments and calling the situation "a crime."

The vice president and foreign minister's remarks follow accusations from Venezuelan President Nicolás Maduro last week that "organizations of US imperialism" are engaged in an effort to stop vaccine producers from selling doses to the country.

"Venezuela might be the only country in the world that is subject to a persecution against its right to freely purchase vaccines," said Maduro, according to Venezuelanalysis. "Venezuela is besieged so that it cannot buy vaccines."

A mural in Caracas symbolically shows Venezuela and Russia uniting to defeat the coronavirus, with the caption: "We will beat Covid-19 together." Image: AFP via Getty

Successive US administrations have targeted Venezuela with economic sanctions that critics say have devastated the nation's once-thriving economy and have caused tremendous suffering for the poor and working-class people whose dramatic uplift was once hailed as the great success of the Bolivarian Revolution launched under the late President Hugo Chávez. 

According to a 2019 report from the Center for Economic and Policy Research, a progressive think tank based in Washington, D.C., as many as 40,000 Venezuelans have died due to sanctions, which have made it much more difficult for millions of people to obtain food, medicine, and other necessities. 

Maduro also denounced the World Health Organization (WHO) for its role in delaying vaccine delivery to Venezuela. The president had expected "many millions" of the Covid-19 jabs to be delivered in July and August. "The COVAX system owes a debt to Venezuela," asserted Maduro. "We made a deposit in April and we are waiting for the vaccines."

That $64 million deposit to GAVI came after a rare deal between the Maduro administration and Juan Guaidó, the coup leader recognized by the United States and dozens of other nations as Venezuela's legitimate head of state despite never having been elected.

Adept at circumventing US interference in its affairs, Venezuela turned to China, Russia, and Cuba to launch its mass vaccination program, which aims to inoculate 70% of the population this year. Earlier this month, the country reached a deal to buy and locally manufacture the Russian EpiVacCorona vaccine. Venezuela has also already acquired about three million doses of the Russian Sputnik V and Chinese Sinopharm jabs, and last month began clinical trials on Cuba's Adbala vaccine.

Compared to other nations in the region, Venezuela has reported a very low rate of coronavirus infections and deaths. According to Johns Hopkins University's Coronavirus Resource Center, there have been nearly 248,000 reported cases and 2,781 deaths in the country of 28.5 million people during the ongoing pandemic. Neighboring Colombia, with just over 50 million people, has reported more than 3.6 million cases and over 94,000 deaths.

Tyler Durden Sat, 06/12/2021 - 16:30

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