Transcription
QQQ just hit all-time highs, and Paul Tudor Jones, hedge fund billionaire, says that this run is replicating the dotcom bubble. I'm going to address that. I'm going to look at some data and historical price points to show you where this market is headed. And then I'm also going to talk about two stocks that I'm buying going into earnings for October.
So, let's go ahead and jump into it. Now, remember, this is not financial advice. I'm just sharing what I'm personally doing for educational purposes only. Results may vary.
Now, if you take a look at the portfolio, you could see that we're near all-time highs. And if you do want to see me hit my 8-figure goal and follow along that journey, be sure to be subscribed by clicking the subscribe button down below this video. And if you get any value out of this video, I would appreciate it if you hit that thumbs up button for me. I appreciate you being here and watching all my videos.
Now, let's go ahead and dive into it. Realized gain loss for the day. We hit about a $968 profit on the day. Obviously, results vary month-to-month and day-to-day. Uh, but that was a nice covered call that we took off of Meta.
Okay, now I'm not the only one doing it. If you take a look here at my private mastermind, Options Trading University, we now have 419 clients here that are all that I all work one-on-one with, uh, sharing their inspiration, as you can see. Um, nice uh wins today and uh clients sharing inspiration. Obviously, results vary based off account size and risk tolerance, but it's nice to see um these in the group.
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So, let's go ahead and dive into it. Now, Paul Tudor Jones, he says ingredients are in place for a massive rally before a blow-off top to bull market. Now, I do agree with him that key ingredients are in place for a massive rally, but a blow-off top? I don't know about that. I guess we're we're going to have to wait and see and kind of analyze what he's talking about.
So, he says he believes the bull market still has room to run before it reaches its final phase, right? Doom and gloom. Dot-com bubble in late 1999, reminiscent of the setup leading to it. Uh, of course, there's a lot of doom and gloom headlines, of course, when the stock market's hitting all-time highs, right? And then when the stock market's at all-time lows, right, there's, you know, people saying, "Hey, you know, maybe this isn't the end. It could keep going lower." It's just, it seems like a lot of these news outlets just continuing uh continue pouring out doom and gloom.
But I do want to kind of address something he said here. So, he said the difference between now and 1999, right before the dot bubble, is the US fiscal and monetary policy. Jones noted the Federal Reserve had just begun a new easing cycle, whereas rate hikes were on the way before the market top in 2000. And the US is now running a 6% budget deficit, while in 1999 there was a budget surplus.
So, key, the key point there is that they were starting to increase interest rates into that dot bubble. Okay? And that is what caused it, in my opinion.
Now, if we look at every single past crash or bare market, really big bare market, whether it's the dot-com bubble, the '08 housing crash, or even the 2022 inflation-induced bare market, all three of those were caused by the Fed increasing interest rates and taking liquidity out of the markets. Okay? And I'm going to show you the exact chart of why that is and why I think that this run can last a lot longer because we're at, we're already at a high Fed funds rate, right? And we have a lot of ways to go down.
So, I'm going to show you a few charts here. Okay, so the CME Fed watch tool, this is what I look at to see if we are getting interest rate cuts. That because that indicates to me that we do have a bullish market and more liquidity coming into the market because if businesses can borrow at cheaper rates, consumers can borrow at cheaper rates, the money tends to flow back into the stock market.
So, uh, we have two rate cuts on the way this year, October and December, and then potentially one in March next year and then another in July, uh, or even September, some between one of those two months. But we have rate cuts, more rate cuts on the way. Okay? And that's bullish for the markets.
Now, if we took a take a look at the US government 10-year Treasury yields, okay, this is a risk-free asset. Meaning the government, they pay out a coupon. If you buy the bond, they pay out a coupon for basically, you know, giving them money, right? And why is it risk-free? Well, because if you believe the US is going to be solvent or they're going to be fine in the future and they're going to be able to pay out these Treasury yields, then, you know, you're good to go, right? So, this is where investors go to get risk-free returns, right? Um, based off the yield.
So, right now, the yields are paying out about 4.15%. So, very attractive. That's why there's still a lot of people in bonds, okay? Um, because they're getting such high yields, they don't have to take on risk in the stock market.
Now, if we go back to 2008, okay, 2008, basically that's when the housing market crashed, okay? And there was a huge banking recession, right? Basically, the Fed started lowering interest rates from then, from let's just say 2009, okay, all the way until COVID of 2020. Okay? So, interest rates continued to go lower, and the stock market continued to go higher. Right? That was one of the longest bull markets in history from '08 or from '09, rather, all the way until 2020. Okay.
So, what are we seeing right now? Well, we're seeing that interest rates are already high. So, what's most likely going to happen is that interest rates will continue to be cut and Treasury yields will continue lower, right? I do expect probably in the next year or two a 10-year Treasury yield of somewhere between, let's just say, 2.75 and 3%. Okay? So, let's just say somewhere right here. So, we have quite a ways of runway for liquidity to basically come back into the stock market and push this market up higher. Okay.
So, that is just. And now, if the Fed turns and they say, "Hey, inflation is back, and we got to increase interest rates back up." Okay? That is when I will start being bearish on the markets and start basically shoring up cash, changing my direction of my wheel strategy with options, and, uh, you know, changing the whole strategy all around. But for right now, I see a very nice runway on the way. We have $7.48 trillion on the sidelines in money market funds ready to hit the markets. And that's kind of what I'm seeing.
So, yes, Paul Tudor Jones is right. The everything is set up for the market to really rally here. But as far as a blow-off top, I don't see that happening anytime soon, especially with companies like Google, Meta, Amazon being pretty undervalued right here.
All right, so let's go ahead and take a look at the markets. We hit new all-time highs on QQQ today. Uh, I didn't expect, you know, I said in last week's video on the update for Monday, I said, "Hey, you know, if we hold that 603, we could be heading up to 620." And that's kind of what it looks like. It kind of looks like where we're heading right now. So, I'm going to play it for that, right? And as we go higher here, I'm going to start taking some chips off the table and shoring up that cash because VIX is at 16. And I think this thing will break down into the 14s again, the high 14s, in which case I want to be 25% cash according to my VIX cash allocation levels.
Now, if you take a look at those, we could see that we're between VIX 15 and 20. So, there's still slight fear in the market. And the fear is really because people think that markets at all-time highs, you know, let's put on some protection because, uh, you know, we could have a crash right now. And while, yes, the market going to new all-time highs can indicate more fragility, uh, with any bad piece of news that comes into the market, right? It doesn't necessarily mean it's absolutely going to happen. So, that's why I stick to these levels.
Right now, I'm about 18% cash. I want more closer to 20 to 25. So, within this week, I will be shoring up cash, um, to just be a little bit more comfortable to take advantage of any dips in the market, okay? Because I believe that any dip will be bought up, in my opinion. Okay.
So, um, again, we may head, head straight to 620 or right, or this week, some for some reason, we break the 603 and we head back down, potentially to like the 590 area. That would be a good dip-buying opportunity right there to ride back up.
All right, so let's go ahead and dive into the couple stocks that I'm really looking at for earnings that are paying very high premiums and have very strong charts. So, the first one is CLS, Celestica. This is a newer addition to my portfolio. I really, really like this stock. They have a good moat around their business. Um, considering that, yes, they are involved in AI, but they're not creating the chips. They're actually creating a lot of the hardware around the data, data centers, the switches, things like that. Things that are very needed by this industry, but not solely, you know, they're not, um, going to be solely affected by, let's just say, China has some advancement in their AI chips, right? That that's going to affect Nvidia a lot more than it would affect Celestica.
So, I like Celestica. Uh, they make a lot of hardware components. So, you know, right now they're at the lower Bollinger band. Stock looks really good. Um, you know, they aren't overbought here. And the chart is beautiful. This is the type of chart that I want in my portfolio. Okay.
So, this is very important because, you know, if you're trading companies like, for instance, I like to bring up AMD, you know what I mean? I know this makes a lot of people mad. They had a massive gap up today. Great. That's great for the company, but then they sold off, right? It's just very volatile, downward trending for the past year. Very hard company to trade the wheel strategy on. If you want to buy and hold long-term, okay, that's fine, right? You just buy and hold and then hopefully in 10 years, it's higher than where you bought it. But for the strategy that I'm deploying, I can't afford to, you know, be holding on to shares that aren't generating me, uh, premiums every month.
So, CLS is a very nice stock to trade as far as the wheel strategy goes. And if you don't know what that is, I have a lot of videos on my channel about it. But basically, this company's looking good.
So, let's go ahead and take a look at the portfolio. Remember, this is not financial advice. I'm just sharing what I'm personally doing for educational purposes only. Results may vary. If we take a look at the portfolio, you could see my current position on CLS is $132K. So, I put my money where my mouth is. I believe in this stock. I have a lot of October 17th, 220s, and then I, I'm playing earnings week for October 31st. So, this is a crucial week. I will be adding more put options to this week.
But if we go to this week, October 31st, you could see the expected move is plus or minus $46. So, something to be aware of, right? This thing could go all the way down to potentially 190, okay? Or even 189 at the worst. So, if you don't want to get assigned on the stock, then you would go outside of that expected move.
So, uh, what I would do if I don't want to get assigned on the stock, but I want to play it for earnings and collect some premium, I would go to the 185 strike here. Okay? I would sell this put option for $430 bucks, which is a 2.6% ROI, potential ROI. Uh, results vary based off where the stock's at, um, you know, when I'm looking at this, but, you know, that's a pretty decent return in 25 days, right? But for me, I like the stock. So, I'm fine getting assigned somewhere up here at the 210, 220 range.
If I wanted to go to the 220s, I'd collect $1420, so $1420 for a potential ROI of 7%. Results vary based off where the stock's at, but you could see how, you know, playing earnings can definitely be, um, beneficial if you like the stock. Well, I like the stock here, so I'm fine getting assigned at 225 or 210, right? Um, and what would happen if the stock goes below that? I'd be forced to buy 100 shares at those strike prices. So, um, yeah, lots of premium there for the options that I like. And, uh, that would be, you know, the earnings play. Probably go to be safe, I'd go to like the 200, right? Collect a four, potential 4% ROI. Results vary there. Or I would go up to the 30 delta, which is the 215 strike, and collect a potential six, 6.2% ROI. Okay. Um, results vary on that as well. So, that's the first stock.
The second stock is SoFi. Okay. SoFi has earnings coming up as well. All right. I believe their earnings are, yeah, the last week of October. It's already at the lower Bollinger band. This stock is setting up for a nice setup. So, um, I like to get stocks when they're, you know, oversold.
And we're going to go to the portfolio and I could show you kind of what I have. I have $186,000 in cash-secured puts. All right. At the 26, 12, and the 25 level, I'm fine owning the shares there. But if I wanted to be safer right now, I would go October 31st. The expected move is $4.80. So, this thing could come all the way down to like, let's just say 22 to 21.50, you know, 21.50 at the bottom, right?
If I wanted to stay outside of that move, I would just go to the, um, you know, 21 and a halfs, which would I would get a potential 2.3% ROI. But for right now, I love this stock. So, I'm fine going to the 24 strike, collecting $113 bucks in 25 days for a potential 5% ROI. Results vary based off of where the stock is at. So that is where I would go. Okay.
So, lots of premium there for earnings. If you like the stock, again, wonderful chart on this company. That's the type of charts we want to trade. And the fundamentals are good. PE ratio of 53, and they're massively scaling into, you know, cryptocurrency, um, different forms of payments and stuff like that, and now options. So, I do like that. So, SoFi is going to be the second stock that we're really loading up heavily on.
If you enjoyed this video, please give it a thumbs up, and I'll see you in the next update on Wednesday.