A Quick Reminder Amid Today's Change in Momentum

Postcards from the florida republic

An independent and profitable state of mind.

 

Two days ago, I commented on how to trade negative momentum. Today, an incredible rate of change reading put us squarely into that territory.

I said the need to start hedging a few days ago after the MACD turned negative and early signals flashed in the wake of Apple’s earnings report.

What is causing such strength in selling pressure… and a drop in buying?

It could be anything. My hunch is that hedge funds have been selling since the recent Double Top confirmed at the start of the month.

But there are other pressures at play. Worries about declining liquidity, Japan’s Yield Curve Controls, questions about China’s real estate market, the first Core inflation increase in a year, and the recent downgrades in banks by Moody’s.

There appears to be a significant risk for anyone silly enough to buy long-term bonds right now.

The iShares 20 Plus Year Treasury Bond ETF (TLT) has been falling in a steady pattern since July 19. Meanwhile, don’t be shocked to see volatility increase in the coming days while we look for larger selloffs in highly shorted names that have recently squeezed (Think Carvana). We don’t know how long this could last, but I don’t want to be the guy without a chair when the music stops. It’s easier to sell calls on existing positions and sell them if the stock pulls back than sit around and do nothing.

Meanwhile, keep in mind that whatever happens, they will print more money and increase the Fed’s balance sheet in the future. We’re not getting off this financialization and monetization train - no matter how hard we try.

Updates from the Florida Republic

There’s a lot of change in the Florida Republic. My wife returned to teaching today for the first time in six years. And now, my daughter has entered Kindergarten.

Garrett Baldwin - Nautical Wheeler

Today was the first day. Meanwhile, we’re trying to figure out the logistics of launching Republic Research in the coming weeks - with a broader scale. Hopefully, I’ll know much more in the next seven days, but stay tuned.

Finally, some interesting news. It turns out that Florida has THREE U.S. Senators.

Tommy Tuberville, who used to coach football at Florida, has apparently moved across the state line to the panhandle. Take it away, MSN:

Tuberville’s office says his primary residence is an Auburn house that records show is owned by his wife and son. But campaign finance reports and his signature on property documents indicate that his home is actually a $3 million, 4,000-square-foot beach house he has lived in for nearly two decades in Santa Rosa Beach, Fla., located in the Florida Panhandle about 90 miles south of Dothan.

Now, as I said, the Florida Republic will gladly hand over the Panhandle to Alabama during its formation. The Republic - as a land mass - would have a border wall in Gainesville and run all the way to Amelia Island.

So, technically, we’re willing to give Alabama its Senator.

Stay positive,

Garrett Baldwin
Secretary of Finance