Whipsaw Wednesday – Wild Market Swings Continue

Notice we're not playing the Futures this week.

Last week, we were racking up $5,000 gains almost daily with our Futures calls but this week the market is just as wild but nowhere near as predictable due to Fed interference against the still MASSIVE UNCERTAINTY surrounding the virus.  As I often say to our Members: 

"We only like to play when we feel there's an 80% chance we will win – that way, we're only wrong about half the time and good money-management techniques can take care of the rest."  

So far, the S&P and the other indexes are simply consolidating under the Strong Bounce Lines (see yesterday morning's PSW Report for official levels) and, if they make a move over, it will be good proof of a bottom but, if they make a move back below last week's lows then, in retrospect, it will be very obvious that they were only consolidating for another 10% move down.  

Is the Fed's 0.5% rate cut enough to save us?  Well it wasn't when they had emergency rate cuts in August of 2007 (Dow 13,000 to 14,000) or in January of 2008 (Dow 12,000 to 13,000) or in October of 2008 + $800Bn TARP (Dow 8,000 to 9,000) – after which we fell from 9,000 back to 6,666 so forgive me if I don't get too excited about a 1,000-point, stimulus-driven bounce this week…

Another thing I discussed with our Members yesterday was how the Dow Jones has been manipulated since 2008 when Rupert Murdoch took over the company and made a series of changes that drastically boosted the index.  Bearing in mind that each Dow Component is price-weighted, not market-cap weighted, and adds 8.5 Dow points per $1 in share price – these are the substitutions that have been made under Murdoch:

  • AAPL (now $295) replaced T (now $37) 
  • CSCO ($41) replaced C ($66) 
  • TRV ($127) replaced GM ($31) 
  • UNH ($268) replaced KHC ($26
  • GS ($206) replaced AA ($13) 
  • NKE ($93) replaced BAC ($28)
  • V $190 replaced HPQ ($20)
  • WBA ($47) replaced GE ($11)

That's net +$1,035 in substitutions and,
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