June 2020 Video Call (Archive)

TRANSCRIPT

Hello, and welcome to the June video call. If this is your first time, if you’re a new subscriber, welcome. We’re recording from the basement of my restored farmhouse since our offices are still technically closed. Thanks to the quarantine. If you’ve been here before, welcome back… you know, the drill. Today, I’ve got a lot in store. I want to talk about some big advancements with Codebreaker Profits. I want to say congratulations to Alpha Money Flow subscribers. We took a gain of roughly 225%, maybe even 250% based on your entry price, just yesterday. We entered a trade last Friday and it zoomed up later in the day Friday and had a really big day, about 12% gain in the stock on Monday and our options just flat out so tripling your money. So congratulations on that.

We’ve got lots to talk about in the Codebreaker world. There’s new rollover trades, I want to get into that. Thank you very, very much for sending me your questions. I got dozens and dozens. I won’t be able to go over all the very specific ones today, but there’s certainly a lot of themes that I’ll be able to hit. So we’ll go over those in pretty good detail in just a minute. First, I want to talk about kind of the macro theme in the market right now, what I’m looking at, what I’m concerned about, what are the opportunities, that sort of thing. We’ll start with, I think the worry of the day stocks are down pretty big today and it’s the same theme we’ve been hearing about since really early January, even late December of the coronavirus. I’d looked at the latest numbers, the testing data, I don’t know, I’m not an epidemiologist, I’m not a doctor.

I don’t know the true facts, but what I can do is read charts, read data. And what I’m seeing is still a lot of headline risk. A lot of politics involved. Here in Pennsylvania, for instance, we’ve had a slight uptick in positive test results, but we’ve had a huge uptick in testing. For example, there’s two nursing homes nearby in this county. They’re testing everybody, the sick, not the sick, everybody in the nursing home, workers, people that live there, patients. Everybody’s getting tested and they’re finding coronavirus. A lot of the people 60, 70% I think are asymptomatic, meaning they didn’t know they were sick. Even the older patients aren’t showing symptoms. But then because they are technically positive and they were tested. They’re added to the roster. Even so are the number of patients that are positive here in Pennsylvania and especially in the county I live in is falling.

So that’s good news. The state is largely open, people are being smart and taking precautions, washing their hands, wearing masks when appropriate, standing apart when they can and making smart decisions, excuse me. But of course you’ve heard Texas, California. Some of those bigger states are seeing bigger numbers. And again we have to keep an eye on the statistics and there’s definitely an uptick in numbers, which isn’t great, but there’s also a huge surge in tests. That’s something we want to keep an eye on. In a minute, we’ll look at how that’s affecting the stock market and some technical variables there. But that’s the big headline risk right now. So the flip side of that, bad news for the last decade or so has been good. So in that case right now, what’s happening with the coronavirus numbers. Even the stock market could ultimately be very good if you’ve been following my editorial, either in Manward Digest, Manward Letter.

And even here in our trading services, I’ve been talking about the idea that I’m very bullish almost in a negative way. So if you’re a Manward Letter subscriber, you’ve heard me talk about the idea of the long short in the long run. This is not going to end well. We all know that, we can’t take all this debt, $25 trillion in debt and keep piling it on and piling it on. We can’t keep fueling our stock market with stimulus. But until we get to that point, we can, and that’s what’s happening. We had the stimulus bill at $3 trillion. I think Washington has the ability to spend $6 trillion already allocated and only about half of what’s already been legally allocated has been designated.

So there’s still $3 trillion out there just floating around that hasn’t been pushed where it needs to go. And if that happens, if you read Manward Digest this morning, you’re going to see the banks are stuffed with cash. There’s just nowhere for all this to go. And eventually it’s going to flow into the stock market and we’re already seeing that. So we’re going to hit some technical barriers. We’re going to have some headline risks like we’re having today and this week. And I’ll show you in a chart in a minute why I’m not super concerned with that. Some of the barriers that we’ve hit this week and why I’m still very bullish longterm, six months, 12 months, things can be a whole lot better stock market wise. So that’s good. So let me share my screen with you.

We’ll dive into some specifics of what I’m looking at. We’ll look at those charts I promised, and then we’ll dive into the questions and I’ll give you some answers to all those questions that you sent me. So let me share my screen and we’ll go from there. All right. Now I’m sharing my screen. Here’s that chart that I promised to show you, and this is just a… You can see here the S&P 500 over the last six months or so. You can see the big downturn, but what I wanted to show you is right here. So if you’re a Codebreaker subscriber, you recognize these lines, these are K.I. Channels, and they are a big, big trend indicator and kind of act like… The best way to think of it as the guard rails along the road. If we get above the guard rail or hit the guard rail, we tend to get pushed right back in into the road.

That’s what stock crisis tend to naturally do based on this formula here. It’s Wall Street’s algorithms, all the technical indicators push things together. So what we saw is we got below that guard rail, bounced way below it, got above it. And then as we’d expect, we stuck above it. And then the interesting thing and the bullish thing, this is always very bullish. When we get above this midline, this mid channel marker and start balancing above it. Then you can see here, right at the end of May, early June, things got really hot. Everybody was talking to us how great the bull market was turning out to be and how surprising. And then boom, we went above that upper K.I. Channel. That’s an indicator that things are getting overheated and that they’re going to come down.

And if you look down here, we can see RSI bumped above the overbought level and confirm that idea. So just as we’d expect things dipped, they went below that mid channel line. They went back above it. And then this is where we’re sitting now. So really just from a technical standpoint, all the headlines and the fear, the politics, the coronavirus numbers aside, what we’ve had over the last couple of weeks is 100% to be expected. So the volatility we’ve seen over the last few days is to be expected. So I’m not concerned with it. Of course, the coronavirus numbers, any shutdowns, anything crazy related to that can do what we saw back here in March. But I don’t expect that. I think we’re in good shape. We’re going to bounce a lot around this line. It might flatten out a little bit over the next few weeks, but as long as we can keep bouncing above that mid channel line, we’re going to be in pretty good shape. So I’m bullish from that sentiment.

So if you’re new you probably haven’t seen the CNN Fear and Greed Index. As I say, every month, I don’t do a whole lot with CNN, but I do enjoy their synopsis, their summary of various indicators, measuring fear and greed. So as you know, my favorite one is the put and call ratio. It just shows kind of what traders are betting on right now. I love this called the devil horn formation that we saw earlier this year, and that’s gone away. This was showing that puts, we’re selling it at this point, which is pretty rare more than calls. So there was a very bear sentiment, very negative sentiment on the market going into the year, which certainly makes sense. Now we see that peak again, as we go back to this chart, this is showing where the calls were certainly over or outnumbering the puts that’s this section right here on the chart.

Now we’re starting to see the puts creep back up, but the ratio is nowhere near, as fearful as it was just a few months ago, going into that, that March and dip. So it’s elevated fear and greedy… Or CNN still says it’s greedy. I’m not super concerned there on what we’re seeing, seems to be pretty natural. Stock price strength, this is just new 52 week highs versus lows on the NYC. So anytime this line is above zero, we’re seeing more highs on the stock market than we are lows. So we want to be seeing those more highs. That’s bullish. Right now we’re just barely above that. But we are seeing new highs in a lot of places, especially tech stocks, the NASDAQ’s hitting new records. Apple’s doing very well.

So that’s good. Of course, there’s companies going bankrupt and having a heck of a tough time right now. So there’s a big gap between the winners and the losers. That’s what makes this market ideal for something like what we’re doing. Stock-picking and really sorting the good from the bad. In a normal market, I’ve always said, go buy the S&P 500 SPY and hold onto it. That’s your baseline portfolio that works a lot of times, but right now that advice, isn’t the greatest. You want to be picking instead of the shotgun approaches, we say, you want to have a rifle pinpointing the very best stocks. That’s kind of what this chart showing. Safe haven demand, as I mentioned last month, I’m not touching anything, any charts or using any ratios based on bonds as a metric for gauging the sentiment of the market, the bond market is simply to manipulate it right now.

The federal reserve is buying things. They’re moving interest rates up and down. You can’t tell much in there. You can tell the difference between a corporate bond yield and junky yield, but that’s about it. And that doesn’t tell us much right now. So these two charts we’ll skip. Momentum, this is a good one. You can see this 125 day moving average, just kind of thins out the volatility and shows where the market’s been roughly over the last six months. And you can see, we bounced down to the moving average in early June. We’re back above it now. So that’s good. That adds some support to that mid channel line. I talked about in that S&P 500 charts. So this is adding… It says it’s fearful here. I don’t think so. I think it’s adding some good support to our thesis.

So the VIX. The VIX has climbed. This is a volatility index. Here you can see the 50 day moving average. We bumped up against it and we’re seeing some bouncing there. I don’t think we’re going to bounce above that 50 day moving average. Moving average in the VIX, there’s not a ton of technical support there, it’s more headline driven. But there’s certainly some, and we’re seeing it in that chart. I don’t think the VIX is going to soar unless we see a real rash of truly bad coronavirus figures instead of just kind of headline driven figures. But this chart just summarizes it all. And just kind of puts a graphical compilation of all the data above. You can see we’re well up into the greedy side of things, but we’ve dipped a little bit back. But I’d say if we pick this probably the 50 level here as the mean we’re right there and that makes sense, given the market action.

So the next week or two are going to be critical if we dip below, if we start getting some negative figures, we’ll dip below this. I don’t think we’re going back here into the teens, but we can get down to 35, if we get rational numbers. More likely, I think we’re going to bounce back up and stay between this 50 and 70 range for a few weeks. That’s good. Pretty much, whether you’re an Alpha Money Flow subscriber or Codebreaker subscriber or both. That sort of sentiment is what I’m expecting. That’s why I had the portfolio geared towards for the next month or so. So before we get to the questions, let me just show you some more Corona virus things here. I mentioned at the beginning testing versus positive results.

So that’s really where I think we have to measure things. So here’s Pennsylvania. You can see the testing has certainly surged in recent weeks and the number… So here’s Pennsylvania, you can see the testing, the gray line has certainly surged in recent weeks and really the positive cases down here in the smaller number it’s increased, but it hasn’t gone at the same rate as the testing. So that’s good. You could see Florida, we’re seeing a little bit uptake in positives there, but about the same trend with testing across the board. Interesting, if you go the whole way down here to Puerto Rico, I hope it’s an anomaly, but the testing has gone flat. I’m not sure what’s up with that, but I’m assuming that’s an anomaly in the data. If not the folks in Puerto Rico should be angry, because something’s not right.

But even here in California, you can see testing has gone way up and the state that’s making a lot of headlines. The positive results are going up, but again, not to the same level. So ultimately I think that’s good. We’ll see what that looks like over the next couple of weeks. But I think this latest sphere isn’t going to drive to a bunch of shutdowns and worries, like some folks and even some investors are thinking right now. Again, we’ll see where it goes over the next few weeks. I think I’m right. I hope I’m right. But time will tell. Now the main thing is I hope you’re staying safe. All right. So let’s get to those questions. Let me bring in my handy dandy PowerPoint here. So you can see the questions on your screen.

Okay. There we go. So I got, let’s see, seven or so questions here, not all of these are related to the new Rollover Trades, but if you’re a Codebreaker subscriber, you’ve heard about these Rollover Trades. It’s an idea that I beta tested over the last couple of months and just had tremendous results with. We did a total of six trades, four of them were good for triple digit wins. The biggest winner was the 718% gain in three weeks. That’s really, really good. I’m really excited about the research for this and there’s a lot of questions rightfully. So I want to get to those because I want to make sure people stay excited and really know what’s going on. So how do rollovers work? Why is this strategy successful? So I won’t get into it in much depth here.

If you’re a Codebreaker subscriber, all the information is on the website in the reports. Please read that report in detail, and then send me your specific questions with that. I don’t want to bore the Alpha Money Flow subscribers that don’t have access to that or unaware of what’s what we’re doing over in Codebreaker. But real quickly, a quick synopsis of this idea is that millions of dollars, billions of dollars every month go into options. It’s how the big hedge funds, the big institutional investors, the banks, it’s how they hedge their portfolios. It’s how they speculate. It’s how they leveraged their bigger bets. So every third, Friday of the month, those options expire. So we just had that last Friday, we had the June options expired. So investors have a few options when that comes.

If their plays are out of the money, they might just let… They have to let the option expire worthless, but then they can go into the next month. They can buy that option again from June, they can buy July contracts. If their options are just barely in the money, they can roll it over. They can cash in, but regardless, there is a big wave of money that goes from the current month contracts to the next month. That’s what we’re tracking. That’s what we’re looking to see that money rolling over. So we’re getting in ahead of that. We’re looking at the companies that have seen large option volume and we’re looking to get ahead of that wave of money moving. We do that by buying in on the Thursday in advance.

So that takes us to the next question. How long are the buys good for? Can I still buy what you recommended last week? This is a question I got from a lot of them subscribers. They either miss the alert last Thursday, they just started subscribing to Codebreaker this week or they saw that the options are cheaper this week. Thanks to the stock market dipping over the last few days, they’re wondering, normally we get in on Thursday. Can they still get in on the Monday after, the Tuesday after, until right now, can I get in if options are cheaper? So the answer is, yes, it’s not ideal. So this week is a good example where you can get in cheaper and it’s not a bad idea. These options are still good.

They still have a lot of money behind them. So it’s good. Where the caveat would be as if the options jumped right out of the gate, which we saw on Friday for one contract, we saw the options really jump up and I don’t want you chasing those prices. If the contract jumps above my buy limit, move on. There’s other trades. I send weekly trades out to Codebreaker subscribers, move on, don’t chase it. There will be more. So what happens two weeks from now if share price dips, and we get another buying opportunity. I’d say, move on, try to stick with that Thursday buying price. That’s where you’re probably going to get the best price and the odds are going to be in your favor for that. Right now, if you want those three that I recommended last Thursday, you have my permission to go out and buy them there. They’re still good.

Don’t go above that by price and don’t chase it too far into the future. We’ll have another trade next month. If these didn’t work out for you, there’s many more. Like I said, the average gain on these, doing a historical analysis and our beta trades is over 150%. So be patient stick with it and don’t chase anything and don’t do anything you’ll regret later. So how long will we hold the option contracts? So again, this is in that report. Our goal is to hold it through the next expiration. So it’d be again through mid July. Again, if we get opportunity, if we see a 718% gain in the middle of the contract period in early July or something, we’re going to take it. We’re not going to be greedy. We have some big market swings, some big market movers happening right now.

If this coronavirus stuff goes south then these trades aren’t going to have the maximum potential we might have to get out early, where we might take our gains early. We’re not going to get greedy with these. So the goal is hold the contracts for the full month, take advantage of that full rollover momentum. But if we get a chance to take big gains earlier, we will absolutely do that, for sure. So we’ll move on to the next question. If I can get the computer. Okay. So this is one of our already addressed. We’re down on last week’s Rollover Trades, now what? So the trades really spiked up on Friday. Again, we saw a lot of momentum going into these, and then we got kind of the bear sentiment earlier this week and the trades are down. So now what? Do we sell? Do we panic?

Absolutely not. This is par for the course. We’ve seen this in the beta trades. Again, these are the stocks, these are the contracts with the biggest momentum behind them. So they’re going to move with the market, but as the market rebounds, which I think it will, which I’m very hopeful it will. The evidence certainly backs that up. These are the ones that are going to move the most once things start to really pop. Again we have a full month, don’t let two or three days of trading sway thing, stick with that Thursday buying option or buying opportunity, and then hold it through the month and just follow the instructions on that and you’ll be fine. Three days don’t make a month long trade. These trades are designed for a month. So we had to look at it from a week by week and month over month perspective.

In that case, I think we’re going to do just fine. Okay. This is one I get. So whether you’re in an Alpha Money Flow subscriber, or a Codebreaker subscriber, I get this question a lot. If I put out just an equity trade with an option or with the case of these Codebreaker Rollover Trades, I’m issuing three plays on average each month. So what if you only want to buy one, is there one that’s better for a stock versus option? Do I recommend one over the other? No. So if I’m putting something out, I weight them equally. Those three trades you could go in and pick any one of those. I like one just as the same as the next, as the same as the next. So don’t try to think, well, the one I recommended first is my favorite or the one I recommended third on the list is my favorite. That’s not the case at all.

They’re all equally weighted. If you only have enough cash to buy one, just pick one. Do some research on your own, figure out which one fits your strategy the best. Maybe you already own the stock somewhere else in your portfolio or you know more about it, or you rather follow it, use that. Do a little research on your own to see which one fits your style the most. But I don’t prefer one over the other. I would prefer if I recommend three, that you split your assets up or your capital up between the three of them equally. That’s usually the smart bet. And that’s what I have in mind when I recommend the trades.

So what’s the difference between trades based on K.I. Channels and our new Rollover Trades? This is one I get again from a lot of Codebreaker subscribers this week. So the K.I. Channels are what I showed earlier with the S&P 500 chart. And those are the recommendations I’m going to make every week. I see a lot of these on my screen every day. And then I go and do a further analysis on them and recommend what I think is the very best that week. So we do one of these a week. The Rollover Trades, or the new trades where I’m doing them once a month, right before the option expiration date. So they’re similar strategies. I use K.I. Channels. I use a lot of the same analysis to find those Rollover Trades, but I’m looking specifically at options with the Rollover Trades. I’m looking at option volume. Option volume is very big for the Rollover Trades, where it plays a part in the K.I. Channel analysis, but it’s not a big part of it.

Where it’s 90% of the equation and the Rollover Trades, it’s only 10% or so in the K.I. Channel. The normal weekly trades that we do. Again, as a Codebreaker subscriber, you have access to both of those. If you’re wondering which ones I prefer or which ones to do, the K.I. Channels or the more traditional that’s, what I’ve spent the last year or so really focusing on and delivering really good gains on. The Rollover Trades are newer. We just beta tested them. They’re very strong. So I liked them a lot. Again give them… It’s like choosing between two different kids. I love them both and I recommended taking advantage of both. K.I. Channel will come out every week. So it gives you ample opportunities to really learn the system, get some good training and get some really good results. I have really liked the way that system has performed in the current market. It’s treated as well, lots of triple digit gains. So I’m excited to build on that success with the Rollover Trades.

All right. This is one that I get every week without fail, anytime I ask for questions. Do you recommend trailing stops on your options plays? When should I sell? The very best advice I give on this is sell when I send you an alert that says to sell. We don’t do trailing stops on our options plays, because some folks have said the option is down 50%, I’m panicking. But tomorrow that option could jump back up 100%, 200% in a day based on just a three or 4% move on the underlying stock price. So if we use a 25% trailing stop on options, we’d be pushed out all the time and would certainly not maximize our opportunities. So sell when I say to sell, if we unload the underlying asset, if we hit the trailing stop on the underlying stock if it went down 25% from our high, then we’ll almost certainly sell the option.

But again, I will spell out an alert. I don’t want you to have to worry about your exit strategy. My role is to always know when we’re going to get out when we get in and that’s that trailing stop strategy. That’s what I found maximizes our option gains and our stock gains as well. So again, just follow that advice. I’ll send you alert, you don’t have to think about a thing. So that’s it on the questions, again, keep them coming. You can always email me at mailbag@manwardpress.com. I read everything that comes into the mailbag. I can’t answer specific investment advice, but I certainly can give general advice on the strategy and questions related to our services. So again, mailbag@manwardpress.com. Keep those questions coming. I’ll be back, if I see a lot of questions on the Rollover Trades, I’ll host another one of these calls.

We’ll make sure everybody’s on the same page with that, but go make those three trades. I’m very excited about them. I think the market’s going to turn around in the next few weeks, certainly by July when the Washington and the fed are looking at more stimulus. The stimulus that we passed in March or April expires in July. So there’s all sorts of talk of more stimulus. That’s going to be very bullish. I think by the time we talk next month, we’re going to bounce off those support levels and see some really good results. So stay tuned. Keep those questions coming. If you’re new, thank you very much. If you’re a long time subscriber, thank you very much as well. I hope you stay safe. I hope all is well. I’ll talk to you again next month. Thank you.