postcards from the florida republic: An independent and profitable state of mind.
A quick note on a stopover as I speed up I-95 into the weird and wild American political pickle factory…
I wanted to quickly discuss the state of market momentum. As I noted, we had a signal on Tuesday that told us the Nasdaq 100 was negative. Since then, the rest of the market is breaking lower.
Buying pressure has dropped…
And now the selling has commenced. Four sectors have broken down in the last 48 hours, including materials - which I warned about on Thursday afternoon. As I said in Flashpoint Trader on Thursday afternoon, signals were also negative on Thursday for financials, real estate, and energy. All three are now Red.
It seems there’s more to come. With interest rates rising at the central banks in the United Kingdom, Switzerland, Turkey, Canada, Australia, and elsewhere… inflation will remain persistent. The Fed has more rate hikes coming in the year ahead. That will weigh on equities at a time that investors have little incentive to buy stocks.
The chart to the left comes from the Financial Times. It shows that we’re in a situation where Treasury bonds, corporate paper, and the S&P 500 are all paying the same yield of 5.6%.
Want stocks right now?
Today’s short is in the consumer cyclical space. Casinos are getting hammered today, including Caesar’s (CZR) and MGM (MGM).
Hedge In This Environment
If you’re a long-term investor, now’s a good time to think about adding hedges. That might be the ProShort S&P 500 ETF (SH) or, for the more experienced, aggressive traders out there, a leveraged inverse ETF like the ProShares UltraPro Short S&P 500 (SPXU).
To your wealth,
Garrett Baldwin
Florida Republic Capital (Available on Substack)
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, consultant, and political risk analyst with decades of trading experience and degrees in economics, cybersecurity, and business from Johns Hopkins, Purdue, Indiana University, and Northwestern.