Note: Summary notes of the meeting are below the video in this article.
Details
S&P and US 500 Trade Summary: Stephen Cox reported that they closed down the S&P trade and the US 500 trade the previous day, resulting in a profit that was 3% on one account and just under 2% on another account. (00:03:35).
Trade Tracker and Portfolio History Access: Attendees were informed about how to track their performance using the current system, noting that the data is updated daily. They can access the updated information, including the US 500 challenge results of up 5.44% versus the S&P 500 at 0.53%, in the knowledge base under "trades and portfolio history" (00:04:42).
Current Challenge Status and Metrics: The US 500 challenge is currently 18% towards the 30% goal, with detailed metrics showing an average profit per trade of 2.72% and an average trade duration of 12.5 days. Since there are no open positions, the focus remains on tracking past trade logs and detailed analysis (00:04:42).
New App and Supplemental Course Recommendation: Stephen Cox mentioned that a new app is being built to consolidate trade tracking for easier mobile access, which will present the information more clearly than the current method. They strongly encouraged those using XSP or the US 500 challenge to complete an extra course that serves as an additional layer of defence against assignment (00:05:43).
Justification for Early Trade Closure: The decision to close the S&P 500 trade early was due to the 75% harvest rule, which mandates taking profit off the table once 75% of the maximum profit is reached (00:06:45). This strategy reduces the time exposed to market risk and, in this specific instance, could have theoretically doubled the return by allowing them to exit and re-enter the trade (00:07:41).
Strategy for Next S&P Trade: The next trade will be initiated after a pullback in the S&P (referred to as "spy") to lower levels, targeting the 6,300 strike, which is 7% down from 6,800. This approach aims to achieve the 30% challenge target while maintaining a risk management plan, such as rolling out and down at 6420 to create a 2% buffer (00:08:36).
Moving Average and Trading Rules: Michael Carroll inquired about the simple moving average, and Stephen Cox clarified they use the 200-day moving average on a daily chart, emphasizing a new rule that prohibits initiating a trade if the market is below this average. This rule is intended to avoid most historical crash events, though it may result in less frequent trading (00:09:39).
Analysis of TLT Trade and Interest Rate Dynamics: Stephen Cox reported on an existing TLT trade set to expire in full profit tomorrow, yielding an $85 profit on a $10K account (0.85%) over approximately 28 days (00:10:37). TLT tracks 20-year treasury bonds and is inversely related to interest rates, meaning it offers a way to speculate on interest rate movements (00:11:41).
Discussion of Interest Rates and Fed Policy: The discussion covered a Bloomberg article suggesting the Federal Reserve officials were more hawkish (favoring higher rates) than dovish (favoring cuts), though better-than-expected inflation data since the last Fed meeting may have changed perspectives (00:13:48). Stephen Cox opined that interest rates are likely to move sideways, remaining between 3.8% and 4.6%, and they only foresee dramatic rate cuts if jobs data substantially worsens (00:16:37).
TLT Trading Recommendation: Stephen Cox recommended continuing to sell put options at the $86 strike on TLT, noting that recent lower inflation data has caused TLT to rally. This approach is seen as a less aggressive alternative to the S&P trade, especially given the stock's relatively low volatility (00:17:39).
Analysis of Flutter (Long-Term Stock): Flutter, a long-term stock, has performed poorly due to recent headwinds, including a new UK betting tax ($320 million headwind) and the rise of US prediction markets, which are structured to bypass state laws (00:18:43). Flutter is responding by creating a competing product, FanJuel Predicts, at a cost of $300 million (00:21:03).
Flutter Investment Strategy: Despite the challenges, Stephen Cox believes the selloff in Flutter is "way overdone" and presents a buying opportunity, though they would not average in further until after the upcoming earnings report (00:22:19). For new investors, they suggested averaging in with half the intended amount now and reserving the rest for post-earnings averaging, regardless of whether the stock drops or rallies (00:24:30).
John Deere and Caterpillar Market Assessment: Stephen Cox reviewed John Deere and Caterpillar, concluding that the potential for profits based on global reconstruction (Gaza, Ukraine) has already been factored into the share price (00:24:30). They would consider selling if they owned the stocks, as current prices and analyst forecasts suggest a likely correction back toward the moving average (00:25:35).
S&P 500 as an Alternative to Tech Volatility: In response to Clive’s search for less volatile alternatives, Stephen Cox suggested the S&P 500 due to its diversification across financials, energy, and technology sectors. They are bullish on the S&P because the recent sell-off in tech may set up a rally when capital eventually flows back into that sector later in the year (00:26:30).
Economic Concerns Regarding AI and Jobs: Stephen Cox expressed concern that the job losses resulting from AI, especially in customer service and marketing, could become a trigger for economic trouble in the US within the next 12 to 24 months (00:27:31). They stressed the need for the membership to monitor monthly jobs data closely (00:28:33).
Discussion on US Treasury Bonds: Clive raised concerns about global players potentially dumping US treasuries (00:29:37). Stephen Cox countered this, citing Hank Paulson’s book, which recounted China refusing a Russian proposal to sell off US debt to avoid self-harm, concluding that dumping debt on a large scale makes no economic sense unless used as a tool of war (00:30:51).
Oil Stocks and Geopolitical Risk: The discussion moved to oil stocks in the context of potential Middle East conflict, with Stephen Cox noting that many have already moved in anticipation of higher oil prices. They recommended Slumberge and Halleburton, which provide technology and infrastructure for oil drilling, as conservative plays that benefit from higher demand (00:32:46) (00:35:08).
Risk Associated with Russian Oil: Stephen Cox identified a significant, often overlooked risk to oil prices: a potential agreement between Russia and Ukraine could result in Russian oil returning to the market, increasing supply and causing prices to drop (00:33:49). They acknowledged, however, that developers they work with have no faith in current peace talks (00:35:08).
Technical and Fundamental Analysis of General Dynamics (GD): Michael Carroll asked about General Dynamics (GD), and Stephen Cox noted that technically, the chart shows a healthy consolidation after making a new high, which is encouraging (00:36:32). Fundamentally, they found the stock to be fully valued, with a high price-to-earnings multiple of 20 and a forecasted growth rate of only 5% on sales (00:38:44).
Bitcoin Outlook and Supply Concerns: Stephen Cox, who does not trade or follow Bitcoin, predicted a retest of the recent low, which could lead to a drop to 55,000 (nearly 20% lower) if it fails to hold. Their main concern is the long-term impact of quantum computing on the supply side, as it could solve the underlying computational problems quicker and potentially increase the supply dramatically (00:40:50).
Technology Stock Watch List: Stephen Cox continues to hold off on buying several technology stocks but expressed interest in Dell, Nvidia, and AMD (00:41:59). They noted that news of a new order from Meta has tied Nvidia down for years, and while the market questions if the good news is already priced in, they believe the stock will grind higher after the current consolidation (00:43:01).
Gold and Silver Trading Strategy: The current range for silver is wide, and Stephen Cox suggested that a retest of the low is possible, which would be 20% lower, though a retest of the recent highs (15% higher) is also plausible (00:43:01). They advised treating silver with a "trader's hat on," operating within the wide consolidation range, and only holding gold as a long-term investment (00:45:10).
Valuation of Oracle and Salesforce: Oracle and Salesforce are considered extremely cheap due to concerns over new AI tools that could simplify code writing for developers, negatively impacting demand and pricing for existing CRM products. Stephen Cox is waiting for consolidation and more confidence before investing in these software stocks, preferring the immediate outlook for Dell, Nvidia, and AMD (00:47:11).
Final Summary and Future Actions: Stephen Cox affirmed that their core strategy is working and outperforming the market, and they will continue to apply new risk management rules to it. They are anticipating a market dip to put on the next US 500 trade and will alert members when they begin buying stocks again, focusing on tech names like Dell, Nvidia, and AMD, and diversified stocks like Amazon and Mastercard (00:46:10) (00:48:19).
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