Goldman initiates coverage on Apple after years on the sidelines-doh!

Good morning! 👋

It’ll probably be a quiet week ahead of the Fed, but then again, who knows.

The US 10-YR is down to “only 3.944%” this morning as I type, which gives big traders an excuse to stay on the gas a bit longer. At least until Powell starts yapping, anyway.

Stay frosty.

Stay focused.

And, above all else, stay calm!

There is very little happening right now that we haven’t seen before.

History shows very clearly that there IS a path forward where profits are concerned. So it’s important that, as investors, we play to that.

Here’s my playbook.

Why I think there could be a short-term dive this week

The super-savvy Stuart Varney asked me this morning what I thought the chances were that the markets take a short-term dive ahead of the Fed and the jobs report.

“Pretty good,” I answered.

As usual, there’s another angle, though.

It’ll be just that… a short-term dive that continues to refine a longer-term upside drive that’s still very much in play. (Watch)

For investors operating without a plan, this’ll have a terribly scary impact. Many will undoubtedly interpret a drop as yet another reason to stay on the sidelines.

For investors with a plan, it’ll be an opportunity.

Almost always is.

When in doubt, zoom out!

More evidence the dragon is coming to dinner

I’ve been hearing anecdotally for a while now that Chinese companies are hanging on to their USD as a hedge against potentially volatile yuan movement. The West is reporting that as a defensive play being run by savvy CEOs keen to protect offshore exposure. (Read)

There’s another side.

Nothing in China happens without a reason, a lesson I’ve learned over decades of up-close and personal experience with and in mainland China itself.

Beijing just announced a 5% growth target, which the West is interpreting as a sign that China’s cautiously turning the lights back on after COVID. The real story is that Xi Jinping’s crew wants to ensure government control by NOT emboldening a new generation of entrepreneurs who challenge the status quo, à la Jack Ma.

Think about it.

China clearly wants to dethrone the USD, so building reserves (at Beijing’s direction) gives ‘em additional liquidity and hard currency access that could be used at the worst possible moment… like, oh, I dunno, when the Fed blinks.

What I would give to be able to buy the digital yuan at the moment as a way to get ahead of this!

Meanwhile, I’m gonna stick with Western companies because of China rather than incur the risks of investing in China if that makes sense.

How to adjust your charts to get a handle on the next big challenge

You’re not imagining things if you think volatility has gone off the rails the past few years. Nor are you alone in questioning why the VIX is busted.

Here’s at least part of the problem: zero-day-to-expiration options.

Many investors haven’t heard of ‘em, but chances are good that you’ve already felt their impact.

CNBC reports that “daily notional volumes in these 0DTE options that track the S&P 500 index [have] exploded to reach a record $1 trillion, according to JPMorgan data ... Goldman Sachs called the record volume in these fleeting contracts ‘staggering.’”

Yep.

There are two ways to look at this.

1. You can throw up your hands in desperation or disgust—even both—if you want.
2. Or you can get busy.

My preference is #2… getting busy.

The rise of zero-day-to-expiration options will create uncertainty and volatility that could make your head spin if you were looking at the details.

“Zooming out” to daily or even weekly bars on your charts can help you pinpoint price points at which there is statistically significant overlap.

Why is this important?

Because that’s where Wall Street’s computers are likely to pivot.

Pick your strategy and get to work!

Goldman initiates coverage on Apple??!! 🤦♂️

Goldman says Apple can rally 30% based on services businesses and has initiated coverage with a “buy” rating.

Two thoughts cross my mind: a) where do these ding-a-lings find the gall? And b) we’ve been talking about this since Apple put in a 52-week low at $124.17 on January 3.

Do the math.

AAPL is already up 16.42% off 52-week lows. Another 30% from here means $199 a share. The dang stock is trading at $155.26 as I type, which means anybody buying now because GS thinks it could rally will have missed nearly half of what could be a total run of about 60% to $199 if they’re right.

Not for nothing, but Goldman has finally said “buy” Apple after years on the sidelines and having missed a 300% advance. (Read)

Sigh.

I think the target is higher, incidentally. Upgrade to Paid

Altria isn’t just blowing smoke

This time it’s different.

NJOY is one of a handful of companies whose products have clearance from federal regulators. It’s also the only pod-based e-vapor product with market authorization from the FDA.

OBAers, of course, have been ahead of the story all along. Altria is one of 3 stocks and 5 ETFs in the OBA Fund Folio and could be a super addition for income-oriented investors. Upgrade to Paid

Bottom Line

Your job as an investor or trader isn’t to figure out where the markets go next.

It’s to recognize that they’re in motion, then act on the signals created when that happens.

There’s always a way into the fight.

The right stocks and strategies can make all the difference in the world!

Buy the best, ignore the rest.

As always, let’s MAKE it a great day!

Keith 😊