Dear Reader,
It feels quite odd, doesn’t it? A week ago, momentum turned Red.
I projected that the S&P 500 was on its way to 3,900 – and that the SPY would hit 390.
It didn’t happen all at once. It happened slowly. It was a burn.
A real burn of lower highs and lower lows.
While Bloomberg kept chattering about resistance levels, and CNBC allowed the Bulls to feature outrageous calls, I quietly remained strongly convinced of a market heading lower.
I held my puts on companies like Plug Power (PLUG) despite the decay. Shares are off 12.5% today at their peak, and Hyper Momentum options are up nicely. We still have a lot of work to do on our other positions – but this market is really under strain. (Come get a slice of Green during Red conditions)
Sometimes, I feel like I’m just talking to myself.
I go on air, I explain what Momentum means.
So, let me do this once again… and save you money.
Red Means RED
I have a reading that assesses the state of each index. Pick whatever index or stock exchange you want – the rules don’t change. This morning, it went as follows…
Now, look at the volumes today of the market – the big candles down as institutions dump.
Look at what has happened since February 2… when I called the top.
And look at what happened last Tuesday when I said, “We are Red.”
Were you buying stocks in the last week? Going long? Purchasing calls?
Are you down right now?
This is why you need to trade momentum.
The BEST way you can maximize the upside of these names is to trade with me at Flashpoint Trader. And if you’re ready for when the market does finally find its bottom, we have a list of 20 stocks to trade, calls to own, and indices to purchase when we get the next movement to Green momentum in this market. That’s over at Hyper Momentum Trader(click here for more information).
Today’s Momentum Reading
Recap: The World’s Biggest Indicator (Momentum) is Red…
I don’t think I need to repeat myself much right now. We are moving back into a negative channel, despite the Buy the Dip crowd trying to squeeze every dollar out of this market. I stress that you should try to trade some of these reversions – which I covered at Midday Momentum and Flashpoint Trader on Wednesday. This is an extremely tricky market – and you want to have a plan. Be cautious, as we are not in a full selloff mode just yet. At some point, the stat-arb buyers will stop, especially as funds continue to sell into strength. For now, I’m being highly cautious because a huge drop lower could come at any time.
Flashpoints I’m Watching
Flashpoint No. 1: Housing
Mortgage rates continue to climb, and now homeowners are in a pickle. Demand for mortgages hit a 28-year low last week, and applications fell another 6%. The real problem right now is affordability. I know that a lot of people had 14% to 18% mortgages in the 1980s. Focus on this. If you have a mortgage of 3% right now after refinancing or because you bought when rates were low – think about what the cost of your home payment would be if you had to pay 7.5% today. Could you afford it? For anyone who buys a $400,000 home, that interest payment might be an extra $1,000 per month or more. I’ll talk about housing today because opportunity will emerge. But we have to be very patient.
Flashpoint No. 2: Global Selloff Pending
The narrative is catching up to my momentum switch last week.
JPMorgan’s global trading desk warns that a move under 3,900 could spark a global selloff. Here goes: “A break there has the potential to feedback into western markets as global macro sentiment may sour. Even after the recent setback, the S&P 500 Index still looks overvalued relative to the shape of the money market curve.” I anticipate a little gamesmanship along the way to a sell-off.
Flashpoint No. 3: Inflation Nation
Another day, another data point that should spook the markets. The Thursday jobless claims report showed another smaller-than-expected figure. Whether it’s delays due to severance or people finding jobs quickly, wage inflation will likely remain a problem. Tomorrow, the U.S. Jobs Report for February will arrive. I am just going to warn you now. Everyone is expecting the worst. Don’t be shocked if this market gets a bid and starts running – defying expectations. Those rallies tend to come in the afternoon – so look for a lunchtime reversion. The trend is still squarely to the downside over the next two weeks.
Hot Long Shot
If this market is on the verge of a Global Risk Selloff – then you’d want to Buy-to-Open the Proshares S&P 500 Short ETF (SH) March 17, 2023 $16 call for $0.15 or less. This ETF goes the opposite of the S&P 500, so a call goes up when the index falls. Play responsibly, this is a long shot.
What You Missed
The smartest and most professional money makers rely on income-generating trades as it is the safe money. Andrew Giovinazzi is a strong believer in income-generating trades, as they make up around 70% of his personal investments and all of the dollars he manages.
Andrew has discovered a unique trading mechanism that outperforms the typical growth target of 7% per year by returning 8% every 14 days.
He is hosting a session on Wednesday, March 8 at 8 p.m. to demonstrate how he has accomplished this feat. However, the strategy requires individuals who can allocate $8,000-$10,000 to income generation.
Andrew’s strategy only needs one market setup to work, and it has been successful in 93 out of the last 94 months, with one new trade per week. For the past seven months, he and his team have been implementing this strategy, resulting in an average return of 8% per weekly opportunity.
So, we want to welcome individuals who understand the importance of building their foundational wealth and want to enter the domain where the wealthy make their income to join us on Wednesday night. Andrew is going to introduce a new approach to building wealth through income-generating trades.
8×14 Wealth
“The richest investors in the world strive for 7% per year.
I’ve been averaging 8% every 14 days since mid-2022.”
Join Mark Sebastian and Andrew Giovinazzi on
Wednesday, March 8, at 8:00 p.m. for 8×14 Wealth.
** By RSVPing to this event, you’re confirming that you meet certain requirements of our ideal attendee **
Hope to see you on March 8th at 8 pm ET for Andrew’s exciting new strategy reveal.
Stay Liquid,
Garrett
