Dear Reader,
One of my favorite things to do is read Seeking Alpha articles.
I’ve spent a lot of time this week reading articles with outrageous bullish price outlooks on stocks like NVIDIA (NVDA), ChargePoint (CHPT), and Rivian (RIVN). I’ve dug deep into the long-term outlook for Ark Innovation Fund (ARKK). And I’ve listened to people tell me that the Fed would pivot… that we’d see a massive move up to 4,500 by Q3.
And then – I do one thing. I look at whether there are more sellers than buyers… or more buyers than sellers. I determine if money is leaving the market or entering the market.
I determine – using a very simple equation – if we are entering a Hyper Momentum turn.
Because if we go negative – and we just have… then all of those projections are useless.
In fact, I’m shorting all of these things right now. You should too.
It’s Time to Go Red
We’re now officially red in this market – and a wall of institutional capital has left the party. Markets have shed about half of the 2023 rally, and remember that higher interest rates should knock out the rest at some point.
All that short squeezing must come to an end. And while short-term, low-volume rallies will occur, the undercurrent of this market has been selling hard since Thursday.
With momentum in the Red, we now take direct aim at the junk companies with high price-to-sales multiples, the ETFs full of frothy crap, and the broader indices. There are various ways that we do this.
The purest way is to check out Hyper Momentum Trader. Here, we’re stepping up to the poker table in the optimal conditions to short the market and taking shots at the companies that will suffer the most from higher interest rates and retail panic.
We entered four new positions yesterday with massive upside.
Right now is a very difficult time for the S&P 500. Why? Because six-month interest rates just hit 5%. In comparison, the yield of the SPX is the same.
Institutions will gladly take the risk-free six-month bond over the threat of equity risk. But unfortunately, retail investors don’t see the market in this fashion – which is why so many of them are about to get stuck holding a bag of terrible assets.
Today’s Momentum Reading
Recap: The World’s Biggest Indicator (Momentum) is Red…
While there have been a few short-term pops today, momentum is squarely red. Of course, the low-volume environment makes short-term squeezes possible. But it doesn’t change that we have now wiped out half of the 2023 rally, and there is more to come. With rates now likely heading north of 5%, it could get very ugly with momentum Red. This is where retail investors typically start to panic and sell without any risk management strategy.
Flashpoints I’m Watching
Flashpoint No. 1 – Will China Join Russia?
President Xi Jinping is visiting Moscow. The question is whether China will provide any weapons or financial support to Russia. Tensions are heating up once again, and it’s a big distraction from the state of the U.S. economy, which continues to face new headwinds. Xi said that China is ready to “join forces” with Russia to defend its national interests. After Putin and Xi issued a statement, the two started cooking their own food. Seriously…
Flashpoint No. 2 – Cash Problems
There’s a real possibility that NVIDIA (NVDA) stock absolutely falls out of the sky over the next week. In addition to the stock trading at outrageous multiples, its rival Intel Corporation (INTC) just slashed its dividend by 66%. Intel said it is now in cash-conservation mode, which should worry a lot of semiconductor investors.
Flashpoint No. 3 – Wealth Destruction
When we look back on Congress over the last three years, let this be the legacy of their outrageous spending that fueled breakneck inflation. Redfin says that U.S. home values fell by $2.3 trillion during the second half of 2022. This is catastrophic to the wealth of most Americans, whose net worth is largely parked in the equity of their homes. Again, housing looks like it might face a new test in the coming months as interest rates rise. Good thing we have all these economic geniuses running everything. Good thing that inflation was “transitory…” /shrug.
Today’s Trade
There’s been a nice gain on the SPXU February 24, 2023 $15.00 call.
Now is where the fun really starts. Buy to Open the Virgin Galactic (SPCE) $5 put for March 3, 2023 for $0.20 or less. This company should be bankrupt, but people keep buying it.
What You Missed
Today’s FOMC minutes release coupled with major earnings like Nvidia has the Bulls on edge.
Traders watch these market moving events for clues for where stocks are going next.
Very often the market reacts differently than many folks anticipate.
That’s why I keep a close eye on my hyperturn signal.
I don’t look at any one event, economic report, or indicator.
Instead, I analyze critical momentum triggers like capital flows, volume spikes, and sentiment shifts just to name a few.
I stack these triggers together to get a full picture of what’s going on and where the market is most likely headed next. (see what the signal says now)
And it’s been extremely accurate.
Every hyperturn I’ve identified over the past 18 months was followed by a market move, with an opportunity to capture incredible gains.
For my money, it’s the best tool you can use to trade right now for a shot at spectacular profits.
Click here to see for yourself.
Stay Liquid,
Garrett
