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Before you Trade Today: Know the Economic Calendar! Also See This Weeks Most Anticipated Earnings (Note: Red Indicates an Earnings Loss [Not Miss] Consensus), Yesterdays Insider Buys & Yesterdays Unusual Call Options Volume.

INSIDER BUYS / UNUSUAL CALL VOLUME / UNUSUAL PUT VOLUME

TODAYS COMMENTARY Get a Cup of Coffee & Enjoy Catching Up!

Inflation: Inflation was expected to roll in at 7.2% yesterday. That’s what the market priced in. The actual print was 7.5% … & though it took a bit of time yesterday, the markets did not react well. I had mentioned in Wednesday’s newsletter to “consider an inverse market ETF at some point today to hedge.” (See under “Earnings Excitement). It turned out to be prophetic. I am certainly happy that I pounded the issue so much over the last two weeks that our subscribers knew well in advance to adjust accordingly. I’m aiming for just enough market exposure to benefit from some solid green market days while keeping some cash to the side on oversold reliably profitable companies. I’m also selling options against some of my positions (Like POWW), while I’m waiting for the eventual turnaround. Remember I have videos on how to do this … & I have more on the way.

In this market there are four primary contributors to inflation. 1. Lax Federal Reserve QE & low interest rate policies which encouraged borrowing & artificially increased demand. 2. Government spending & stimulus. 3. The supply chain bottleneck. 4. Increasing energy prices. The Fed will eventually raise rates to cool things down, a divided Senate is somewhat saving us from additional government spending, the supply chain bottleneck continues (Particularly in Canada), & energy prices continue to soar. Of all of these issues the easiest to resolve is energy prices. President Biden can, if he wanted to TODAY, remove restrictions on mining & drilling. Don’t hold your breath. Energy costs fuel inflation in each step of the supply chain & is one of the largest expenses to individuals, firms, & logistics providers.

Remember that the issue with inflation is it leads to conditions of which people with limited income are forced to economize on their needs & cut back on their wants. When you spend more on rent, utilities, gas, food, hygiene, transportation, insurance, clothing, & medical care/coverage, that’s less you can spend on other discretionary items. As a result firms can realize reduced margins, although, in some cases revenue can go up. In short, a 7.5% increase in YoY margins results in no real gain in purchasing power/value from the year before. Nevertheless, in many cases debt is easier to pay down with increased nominal revenue, even though, the real value of cash is less (which can help with high debt firms over time).

Buy List Update: Well I didn’t add to the BUY LIST yesterday & I’m not adding today. I find that Friday’s after a Thursday panic are awful times to establish new positions. Still, a solid 1x (Don't do the multiples folks), inverse ETF is an excellent way to hedge against downward pressure. And though I know many of my subscribers are scrapping for new ideas, WE MUST REMEMBER, that money not lost is just as good as money earned in this market.

Today: Consumer sentiment & monetary policy will be released today (See the economic calendar above).

Headwinds Ahead: I have a responsibility to warn my subscribers that bullish companies are going to be increasingly hard to find in this environment. I therefore owe it to you to scrutinize my picks more than ever as a result of REAL headwinds. The quick turnarounds we were accustomed to in the past are simply not going to happen in this economy. A swing that may take a month or two last year may take a quarter or two this year. Therefore I think it prudent to buy in slow & only average down when it hurts. Most companies remain profitable, but an adjustment in long term valuations & expectations are necessary. I will trade accordingly.

Lots of Red Still on the BUY LIST: The BUY LIST has greatly recovered but still red in many areas. There’s some solid value there! Check my work, look over the financials. No stocks added today. I assess uncertain market conditions in todays market due to inflation numbers being released today. It isn’t worth the risk. There is plenty of solid picks & we have plenty of market exposure across multiple sectors. If the market pumps, we’re good (and I’ll look for shorts), if it dumps, I’ll look to add another play.

AVERAGE STATS ON ALL STOCKS ON THE BUY LIST AS OF MARKET CLOSE 02/07/2022 (FINVIZ & YCHARTS)

• Average Trailing PE: 10.27 vs S&P (25.00 est)

• Average Forward PE: 8.50 vs S&P (22.35 est)

• Average PS: 0.75 vs S&P (2.85 est)

• Average PEG: 0.72

• Average PB: 1.72 vs S&P (4.38 est)

• Average Current Ratio: 2.26

• Average Insider + Institutional Investment: (84.27%)

• Average Debt to Equity: 0.49

• Average P/L on the BUY LIST as of 02/11/2022 -6.62 (Value at a Discount Amid a Market Pullback)

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Significant News Heading into 02.11.2022:

• Stock futures point to further losses following a steep sell-off spurred by hot inflation

• Stock futures point to further losses following a steep sell-off spurred by hot inflation

• European stocks slide after red hot U.S. inflation print, hawkish Fed comments

• Asia-Pacific stocks lower as investors react to hot U.S. inflation report

• 10-year Treasury yield inches lower but holds above 2% as inflation spikes

• U.S. inflation data is like a ‘punch in the stomach’ for the Fed, says Citi economist

• UK economy grew 7.5% in 2021, mostly recovering from its pandemic plunge

• Economists say the worst of China’s regulatory crackdown is over

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PAID CONTENT IN THE PAYWALL BELOW:

• 15 Stocks near/at/above the Buy Zone (Waiting to Swing).

• 56 Stocks on the Price Based Assessment Watchlist

• 13 Stocks on the Stocks Under $20 List (Read the Warning/Disclaimer)

• 6 Stocks on the Highly Speculative Highly Volatile Small Cap List (Read the Warning/Disclaimer)

👉CLICK HERE TO SEE THE DETAILS OF EVERY STOCK ON THE BUY LIST (AND SEE THE PRICE ASSESSMENT BASED WATCHLIST / THE STOCKS UNDER $20 LIST & THE HIGHLY SPECULATIVE LIST)

LOGIN INSTRUCTIONS: You will need to login to see the detailed list. The “email login link” will send the link to login directly to your inbox (Click the link & it will automatically log you in). You can also choose the “login with password” option. You will need to set up a substack password for this option.

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