When our momentum reading went negative last week, I didn’t know that we’d have the second largest bank failure in U.S. history occur three days later. All I knew was that it went negative… and that we got out of the way. 

We added a hedge with the Proshares S&P 500 ETF (SH) to our long-term portfolio, we took gains on Mosaic (MOS). We also secured a big win on Pangaea Solutions (PANL), which has been in a freefall from our stop. I sleep better at night by using my signal to eliminate my bias… 

But there’s a lot of panic and a lot of fear in this environment. 

And I want to address your concerns right now.

Something Broke. Now What?

The SVB Financial collapse is the “thing” that the Fed broke. 

But did the Fed really break it? 

It depends on how you define the person cracking the eggs. SVB’s financial conditions were largely due to a classic maturity mismatch. 

The company owned a significant amount of long-duration mortgage bonds at a time when its clients’ industry was experiencing the biggest drawdown in capital allocation in years. 

A classic bank run ensued. 

It’s bizarre to me that the bank’s investments – perhaps some of the most conservative and boring products on the planet in actually safe bonds – were the culprit. 

But given the Fed’s aggressive rate hikes, the value of those bonds fell, and the bank’s net asset value was stressed when one looked at the value of the bonds. 

This is another accounting scandal if we really unpack it. The banks don’t have to mark these bonds to market on their balance sheet. 

So, you know that the bonds are underwater, and the bank knows that the bonds are under water, but it doesn’t show up in their share price because the balance sheet doesn’t include these assets. 

Why banks are buying long-term duration bonds in a cash-intense business makes little sense. But here we are. 

Whether it was the accounting scandals of the Enron years, or the Dodd-Frank rules that addressed the Lehman efforts to keep toxic assets off their balance sheet, we always end up in the same place. 

The Fed creates perverse incentives… and the risk-takers find a work around. Then the moral hazard is exposed, and we have a dramatic effort to shore up the system. 

Why? Because no one bothered to revisit the very things that have caused so many other crises: Leverage, liquidity, and balance sheet tricks.

What Happens Now

Unless the Fed just starts dumping money from the sky, I expect that economic conditions will tighten. But the Fed is in a very tight corner. To do so would invite much more inflation, and would rival the soft default on debt by the Bank of England in October. 

Further tightening exposes an already weakening economy to greater liquidity challenges. 

What’s so interesting about this situation is that it wasn’t a bailout of shareholders: It was a bailout of the entire banking system – and they’re about to realize that there is far more exposure than they thought over the weekend. 

Everyone who is involved in this should lose their job, but we are not an accountable country. And we now have the people who created this crisis in charge of solving this crisis. It’s the same as it ever was.

With that said, if you have money in a bank don’t panic. You have deposit insurance for up to $250,000. If you have more than this in a bank, consider diversifying across various institutions. 

We’ll likely see banks find ways to partner with other banks to swap excess deposits. Of course, that just points out the pointlessness of the entire FDIC system. 

Meanwhile, as an investor, consider focusing on the long-term, and make sure that you follow my momentum writing so that you know when to hedge against downside. 

I give you this reading for free, every day, and it has shown stunning accuracy at pinpointing when to buy and sell. 

Again, it’s free. All you have to do is learn how to trade it. 

The good news for Tactical Wealth Investor readers is that they already have a copy of my “Six Ways to Trade Negative Momentum” in their hands. Become a member right here. 

To your wealth,


Garrett Baldwin

Market Momentum is Red

We’re well hedged, and we traded this very well from a long-term investor perspective. I’m not worried about the banks because the Fed will always backstop the economy. Do you honestly believe that we would have another Depression? No, we’ll just drop money out of the sky like always. But if you want to know where to put your money, you need to focus on the next 18 to 24 months. It all starts with our value and income plays over at Tactical Wealth Investor.  

First, the S&P 500 fell off a short-term high as momentum continued to break lower. Then, it retested that critical 200-day moving average at 3,940… and broke lower late Thursday.

We’ll see how the market performs over the next two weeks. 

After today’s jobs report, there are more questions than answers on what comes next. The Consumer Price Index (CPI) and the Producer Price Index (PPI) are set to bring fireworks next week. 

Then on March 22, 2023, we’ll get a decision from the Fed on interest rates. Before Friday’s jobs report, the probability of a 50-point hike on the Fed funds rate hit 80%. 

Now is the time to start planning. What happens if this market REALLY sells off in the coming weeks? What do I do with my money? 

I want to show you that opportunities will form in the long term. And it all starts with the help of… who else?

Danny DeVito.

Other People’s Money

Everyone loves the movie The Big Short, the iconic tale about greed and the financial collapse of 2008.

People love the film Wall Street because of the chatter about “greed” being “good” and the fact that money never sleeps in the world’s economy.

My favorite financial film is Margin Call, which tells the tale of an investment bank ditching worthless assets before the rest of the market catches up to their scheme. The only character in the film with any level of redemption is probably a dog.

But if you’re a value investor, it’s hard to argue against the 1991 classic Other People’s Money. 

The film stars a slightly miscast, but still excellent Danny DeVito. 

He plays a fund manager named “Larry the Liquidator,” a notorious, activist shark who buys up shares in undervalued companies and then forces their sale to a bigger company.

Ben Graham and Warren Buffett would be proud of this character.

Larry targets a small-town conglomerate called New England Wire & Cable Company in the film. He also falls in love with the founder’s daughter, but that’s not really important…

When he meets the founder, he explains that he values all of the company’s assets at $125 million – the land, the fully funded pensions, the machines, and anything that could be sold at auction. 

In a worst-case scenario, the company might be worth $100 million or $25 per share. 

Larry’s looking for a bargain. And when he scanned a list of companies that looked cheap, he discovered that the stock was trading at $10 three weeks prior. 

“That’s a 10 for a $25 item,” he says. “What a sale.”

Larry sees a 150% upside. 

Welcome to the Liquidation strategy.

What Is This Strategy

Here’s how it works…

Larry values all the real estate, fixtures, equipment, and inventory. 

He comes up with what is known as the “rational liquidation” value of the company. 

That’s $25. That would be the tangible book value of the company.

In a market where things are falling, many companies start to trade under their liquidation value. This means if the company went belly up or sold tomorrow, the shareholders would receive at least the tangible book value of the company. 

Now, this might sound too simple, right?

But it’s a classic investing strategy that takes a rational valuation of the company going to auction… and determines what the company is worth at effectively scrap value. 

We use tangible book value to find some of these names and then assign a rational value of what it would be worth in a worst-case scenario. 

Excluding financials, real estate, and healthcare, 287 companies are trading under the tangible value. But let’s add a Z score – reducing the bankruptcy probability – and focus on companies that make stuff. 

27 names pop up with a Z score over 3 and operate at under 80 cents on the dollar. Now, add a strong F score, and you’re in business. 

We have two names that pop up. 

First, NAACO Industries (NC), a dirt-cheap value stock that operates in the coal and lithium mining space. It’s actually a member of our value stocks in the Tactical Wealth Investor. 

Second, Tandy Leather Factory (TLF). 

This stock trades for $4.40, but has a tangible book value of $6.15. It only makes $81 million a year in revenue, which means that institutions aren’t paying any attention. 

Its F score is 7, and its Z score is 4.19. Its debt-to-equity ratio is very low, and even fair value puts the stock around $5.10. 

Let’s put the stock at auction at a whopping 85 cents on the dollar. 

That’s a price of $5.22. 

And that’s an 18.6% upside from today’s share price.

Odds are you didn’t even know this opportunity existed.

So, let’s put it all together with Danny DeVito and a leather jacket.

You’re welcome, America.

A quick bit of housekeeping here before you go… 

IN CASE YOU MISSED IT: Starting around the middle of next week, WealthPress Hub will be coming to you under – and from – a new name: TradingPub. 

You’ll still hear from me every day. And I’ll continue to send you popular articles from other top market experts. 

I’ll tell you more about what you can expect on Monday. 

To your wealth,


Garrett Baldwin

Market Momentum is Red

The S&P 500 broke much lower, and remains red after the jobs report on Friday. There is a lot of action right now, with the markets facing the CPI and PPI numbers next week. Also, don’t forget that Quad Witching will hit us next Friday. If you’re tired of all this back and forth, consider going long with the best inflation-beating stocks. It all starts with our value and income plays over at Tactical Wealth Investor.  

Did you miss this week’s Roundtable with Don Yocham? Catch the replay video above…

And be sure to join us at 10 a.m. ET each Wednesday for the Trading Pub Roundtable, where our market and economics experts will discuss the biggest news affecting Wall Street price action — and how to trade it.

In this week’s roundtable, we covered:

• Liquidity and a tight Fed: Financial conditions continue to loosen despite the Fed’s tightening
• Celeste is seeing some interesting shifts in how investors are positioning between growth and value
• Garrett sees some incredible buying opportunities in several key resource stocks
• And much more…

Be sure and tune in every Wednesday at 10 a.m. ET for the Trading Pub Roundtable with Don Yocham!

As expected, Powell threw the markets a bone by stating that the Fed Open Market Committee is still debating between a 25-point or 50-point Fed Funds rate hike during its two-week meeting. 

Powell’s appearance overshadowed another big development for the markets. 

While everyone focused on a surprise drawdown on U.S. crude oil inventories (helping to push prices up), Warren Buffett’s Berkshire Hathaway (BRK.A) made headlines. 

The conglomerate purchased another 5.8 million shares of Occidental Petroleum Company (OXY), boosting its holdings to roughly 22% of the stock. 

Occidental is one of my favorite stocks to trade. 

And today, I’ll show you one of my favorite options strategies to boost income, increase your chance of winning and the specific metrics that catch my attention. Let’s dive in.

Occidental Has a Steep Upside

Occidental is a major player in oil production in Texas. If you’re a baseball fan, prepare to see a lot of Occidental advertising on the jerseys of the World Series Champion Houston Astros. 

The company got a pop this morning up to $63.50. 

But with momentum weakening in the process, the stock has pulled back under $62.00 today. Occidental has an average price of $73.00 from Wall Street analysts with a larger upside of $84.00. 

I think the upside is higher. I say $90.00, and it’s largely based on a very simple metric. 

When the company’s debt gets back above Investment Grade, it’ll be a very attractive opportunity for institutions. 

Occidental is right below Investment Grade, sitting at BB+. As the company continues to pay off its debt, increase its dividend, and buy back stock, it’s going to be even more attractive. 

OXY currently has an F score of 7, but it’ll increase that figure due to buybacks in the future. In addition, it trades at a very low Enterprise Value to Earnings Before Interest and Tax (EV/EBIT) of 5.6x. 

Its net margin is north of 36%, which is historically strong against the industry and its relative historical performance. 

And then there’s Warren Buffett. 

Berkshire Hathaway has permission from regulators to buy up to 50% of the company. Knowing how and where Buffett buys the stock is very important. Take a look at the chart below. 

Occidental has been a terrific momentum stock in the last 15 months. 

However, it bottomed out on three occasions in the last year.

First, during the massive hedge fund dump during June 2022. 

Second, during the global liquidity challenges in October 2022 (thanks a lot, United Kingdom). 

And third, a recent downturn linked to a lack of financial interest in oil from commodity traders due to recessionary concerns. 

In each case… Buffett has bought the stock.

Berkshire isn’t buying up shares when the stock pops above $70.

Berkshire is stalking – waiting to buy OXY when it gets back around $60.

Here’s the recap of Berkshire’s buying activity over the last year…

You should follow this pattern as well.

How do I Trade OXY?

You could build a trove of OXY stock like Berkshire if you’d like, but there are better ways to trade it.

The best way is to sell a put spread on OXY in positive momentum conditions. So, when capital is flowing into the market – and the energy sector, I like to go back down into the $50s and sell spreads. 

I start by going out 45 days on OXY and find an attractive price where I’d be content to own the stock. Given that Buffett has liked buying the stock around $58, I keep my eye on the $57.50 put.

If I sell that put, and the stock falls under that level, I’ll be assigned the stock. However, I am betting that it either won’t get to that level, or I’LL GLADLY buy the stock because it’s likely set to rebound (when Buffett likely makes another purchase). 

Typically, if I’m selling a $57.50 put, I will need to put up a significant amount of margin. In the case of OXY, the April 21, 2023 $57.50 put costs about $1.37. 

This means, I’d only generate about 2% on my return if I just sell a cash secured put. I’d also need about $5,613 in margin. 

That’s not what I want. 

So, I can buy the $55 put and protect myself in the process. If the stock falls under $55, the most I can lose is the margin between the $55 and $57.50 spread. 

If I sold this spread, I’d require about $194 in margin to make $56 over the next 45 days. That’s a 28.9% return with a probability of profit of about 74%. 

Now, this is strictly an educational trade. Why? Because momentum is negative. But if we go positive, and capital flows into the market, this would be a great trade for three reasons.

1. If the stock goes up, the value of the spread goes down. As a result, we make money.
2. If the stock just trades sideways, the value of the spread will decay. As a result, we’d make money.
3. If momentum is positive and the stock pulls back, we’d be happy to own it at a lower level. But if momentum goes negative, we can just cut our losses and look for an opportunity to reenter this position. 

Rather than expose ourselves to $6,100 in equity risk today, it’s really clean to trade these put spreads and seek optimal gains. 

This trade itself offers an annualized return of 234% – meaning you can do this over and over again in the optimal conditions – and make nice gains on lower-risk strategies.

To your wealth,


Garrett Baldwin

P.S. Head’s up that change is a-coming to this WealthPress Hub free newsletter. We’re sprucing up with a new name and new look. I’ll be sending you more information on this in the coming days!

Market Momentum is Red

The S&P 500 tested the 4,000 level a few times today, but it’s finding resistance. These rejections have been sharp and swift, and investors need to pay close attention. When momentum is red, things can sell off quickly. These little rallies are designed to pull people back into the market so that funds can sell. Remember, the purpose of a market is to sell. 

Did you miss this week’s Trading Pub Roundtable with Don Yocham? Catch the replay video above…

And be sure to join us at 10 a.m. ET each Wednesday for the Trading Pub Roundtable, where our market and economics experts will discuss the biggest news affecting Wall Street price action — and how to trade it.

In this week’s roundtable, we covered:

• Fund flows crossed the line: What tone do equity outflows set for stock markets over the next twelve months?
• Shaking the bear market funk: What could possibly shake stocks loose from the doldrums and put them on the “Higher for Longer” path.
• What about war will markets ignore: Hear how our market experts handicap “War and Rumors of War” in their trading strategies.
• And more!

Be sure and tune in every Wednesday at 10 a.m. ET for the Trading Pub Roundtable with Don Yocham!

P.S. Tom’s Earnings Afterburn Report – just $4.95!

If you can follow five steps, you can take advantage of legendary trader Tom Busby’s most powerful trading strategy for 2023. 

Capital is flowing into the money markets, and U.S. consumers are pouring money into one-year bonds offering a 5% return with no risk.

Eventually, I expect the “Buy the Dip” algorithms and statistical arbitrage crowd will tire out. The market is clearly in a downtrend dating back to the February 2 top. 

After our signal went negative last Tuesday, I’ve remained net-short in this market. 

That said, it’s important to have a list of stocks to buy when the market does find a bottom. 

As we kick off March, now is a good time to eye this critical watch list of stocks with strong F & Z scores.

Why The F Score Scores Big

Each month, I look at three different metrics to help build a list of low-risk, high-upside stocks given their rock-solid balance sheets.   

• The Piotroski F-score
• The Altman Z-score
• A valuation rank

Let’s start by finding positive financial growth and low debt exposure.

That’s where the Piotroski F-Score succeeds. 

The F-score is a NINE-POINT system that rewards each company for meeting a certain criterion on its balance sheet. 

The F score is a critical measurement of management’s performance. 

How are companies improving their balance sheets year over year? 

And how are shareholders enhancing shareholder value?

If the company meets all nine criteria, it has an F-score of 9. 

That means it’s perfect.

The Altman Z-score is a weighted average of five metrics to determine whether a company might go out of business. 

If a company falls below 2.6, it has a risky balance sheet. 

That risk is tied to a balance sheet that likely has lots of debt or weak cash flow. 

We are looking for stocks with a Z-score of 3 or higher. 

This is pure forensic analysis. 

But let’s add one last element to this. We want our stocks to have attractive valuations. We don’t want to trade at 15 times sales. We don’t want to have a negative book value or negative EBIT.

So, we aim for stocks with attractive buyout values. 

And using EV/EBIT, we come up with this list.

These Stocks Look Perfect

This month’s list is a little troubling to be honest. 

There’s a lot of focus on energy producers, refineries, agricultural commodity manufacturers, and affordable housing.

These are the things that are “working” in our economy. It’s a list of the bare essentials – potential evidence that consumer spending is stressed. 

These stocks aren’t just centered around what’s working in the economy. 

A large stake of them have significant geopolitical upside should we witness an escalation in the Ukraine war. The downside here on energy and agricultural commodities is very low.

Here are your top F and Z score stocks for March:

If you’re ready to take your investing to the next level, check out our latest addition to Tactical Wealth Investor.

The Mosaic Co. (MOS) is in our portfolio. Shares are up more than 27.5% to start the year when we launched the newsletter. Our January pick has popped 20%.

Now, it’s March, and we’re adding to our income portfolio as markets look a bit stretched. You should check it out. 

We just picked up shares of one of the best private investment companies in the world – paying a dividend of more than 9.5%. 

Even more important, this company will actually benefit from higher interest rates. (It’s not a bank)

To your wealth,


Garrett Baldwin

Market Momentum is Red

Momentum remains red right now, and we’re currently hedged with the Proshares S&P 500 Short ETF (SPY) for the Tactical Wealth Investor. 

The markets continue to bleed off in a trend of lower highs and lower lows. It feels like we’re building up for a very ugly selloff as the February jobs report approaches. But we’re making money elsewhere with our long-term value and income portfolios. Join me right here at a special discount price. 

NVIDIA (NVDA) may have stolen the headlines Thursday…

But the only rule is momentum. 

Today, the Dow Jones turned negative for the first time YTD as capital gushes out of the market. Yesterday, we witnessed a sucker’s rally, followed by an early squeeze. 

After sucking retail investors back into all of the fun junk stocks once again, funds started dumping all over again.

My indicator turned negative on Tuesday morning. Even though we witnessed some squeezes in the last 24 hours, conviction is what matters. 

We’re now starting to see serious concerns about rising interest rates, a recession, and the obliteration of the “no landing” narrative. 

With momentum negative, investors and traders alike need to know how to properly hedge this market. Let’s discuss those critical tools to save you money and protect your principle.

NVDA Is the New Cisco

Retail traders are buying up NVDA even though it trades at 133x earnings, 23x revenue, saw a 21% drop in revenue, and venture capital funding is really under pressure. 

Everyone keeps arguing that NVDA will dominate the world of AI startups in the future, as those companies will need to use the semiconductor giant’s chips. Okay… well, those startups get capital from venture capital companies. 

And venture capital fundraising has been terrible for six months. 

Do you see why I’m beating my head against the wall over this one?

NVDA is starting to trade with the same cult-Like approach to Tesla (TSLA) a few years ago. But it also feels very similar to Cisco (CSCO) back in 2001. 

Back then, any mention of networking and advanced internet delivery propelled CSCO’s valuation into the stratosphere. The problem is that the company had to eventually grow into that valuation while facing a recession. 

The stock has never come close to its Dot-Com high near $80.

Something tells me that NVDA will eventually run out of tricks. Two years ago, it would rely on cryptocurrency speculation to goose the stock. 

Yesterday, the company’s executive team mentioned Artificial Intelligence 75 times during its conference call. Eventually the magic will wear off.

Turning Negative

Markets stopped paying attention to NVDA at 10:40am this morning. Our outflow signal flashed red at that moment, and the S&P 500 took a nosedive. 

This is the second big signal in the last few days of funds using short-term pops to sell into strength. 

I remind traders that the market trend in weakening conditions is lower highs and lower lows. Any short-term squeeze is typically met with a wall of selling by larger institutions trying to get out of positions. 

Retail investors tend to get suckered into short-term, low-volume rallies. 

If you want to get a sense of how serious the buying is in the market, pay very close attention to the relative volume of the S&P 500 ETF (SPY) during the lighter trading hours of the day. 

Anything under 80% or 0.80 signals that the rally is due to machine buying and squeeze activity. Typically, those rallies are not sustainable. 

In this environment, it’s important that investors understand how to manage their portfolios. When momentum goes negative, there are a few different things that you can buy or trade to hedge against your portfolio positions. 

1. Proshares S&P 500 Short ETF (SH): This ETF is an inverse ETF that trades at a -1 to 1 performance of the S&P 500. For every 1% that the S&P 500 falls, the SH will gain 1%. When S&P 500 selling picks up, I prefer to purchase an equal weighted stake of SH to my other positions in a long-term portfolio. I don’t want to sell my long-term positions, but I do want to hedge against a downturn. SH is relatively inexpensive, and it’s a tool that I just employed on my value and income portfolios at Tactical Wealth Investor.
2. Options on the Proshares S&P 500 Short ETF (SH): There is an active options chain for this ETF. If you purchase the in-the-money call for the following month (March 17, 2023), you can replicate the performance of 100 shares of the ETF with a small amount of capital. The only difference is that it will require some ability to pay for time in the options chain. I don’t like to use spreads largely because it caps the potential upside of the trade.
3. ProShares UltraPro Short S&P500 (SPXU): Finally, there is the high-octane trade. The SPXU is an inverse 3x ETF that makes 3% for every 1% that the SPX declines. This is a way to hedge against larger positions against much bigger declines that typically come from negative momentum events. I don’t like to own a lot of this, and I prefer to never hold it over the weekend. But it’s a very good tool for day traders and individuals who have a lot more risk tolerance in this market. 

Over at Tactical Wealth Investor, we don’t need to sell our stocks in a panic. Instead, we add our short-term negative hedge on the S&P 500 with an inverse ETF. At the same time, however, we also focus on companies that are very cheap based on academic metrics and provide inflation-beating dividends. 

In fact, while the market has sold off strongly since February 2, our top shipping player Pangaea Logistics (PANL) is up roughly 9%. And shares are up 21% since we added it to the portfolio.

To your wealth,


Garrett Baldwin

Market Momentum is Red

Momentum was very negative today despite the mid-afternoon reversion. That said, with an ongoing weakness in the market, investors should steer clear of trying to buy the dip. Investors should continue to focus their attention on where value and income exists in this market. You can do so over at Tactical Wealth Investor.

The bottom line of what we’re seeing is a response to the economy with all of its very large pieces and parts.

The problem is that studying it all is daunting for most traders, and it takes us away from our main focus: making money.

To help you quickly ascertain market direction and economic responses, here’s a bare-bones tip to keep in mind…

The U.S. dollar, as shown on this Barchart of $DXY, provides a smooth summary of reactions to the whole economic enchilada.

Currently, a return up to the 200-day moving average at $106.46 is a notable target. What will be most interesting to me is the reaction to this resistance area, especially given that support at the 50-day moving average is not too far below.

Be informed as you anticipate future price action.

Take a further step back and note how beautifully $DXY used the 50-day as support from March 2022 until mid-October.

Around that time in October, the S&P 500 began a nice run up from a bear market bottom. But right now…

The S&P 500 is at a crossroads.

A few weeks ago, the 200- and 50-day lines crossed. And they’re about to be retested in multiple ways, as you can see in the green circle on the chart.

It’s worth noting that the green trend lines drawn have also converged at the crossroads.

Where do you think the market will move after the crossroads are encountered? Well, the answer is worth like a million bucks.

Use a process like this to help you make sense of the economy, and in turn make more cents. I know you can!

It takes a dollar to make a dollar.

One simple way to play this activity and keep your head in the economic activity at the same time is with the Invesco DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP). The options are thin, but the ETF is cheap, currently around $28 a share.

Think and win!

Celeste Lindman

P.S. Calling All People Looking For a New Way to Trade

I’m not signing you up for an overnight shift, or having you pick up extra hours. You don’t need any exotic financial trading…

In fact, Jack Carter of Jack Carter Trading, wants to show you his speedy way of targeting this income, right here, right now.

Go Here to Learn His New Strategy

Did you miss this week’s Trading Pub Roundtable with Don Yocham? Catch the replay video above…

And be sure to join us at 10 a.m. ET each Wednesday for the Trading Pub Roundtable, where our market and economics experts will discuss the biggest news affecting Wall Street price action — and how to trade it.

In this week’s roundtable, we covered:

• Does the Federal Reserve have the guts to back up its hawkish tone?
• Is it time to start looking at trading gold and silver? Are precious metals even a safe haven anymore?
• Commodities expert Geoffrey Smith broke down some of the reasons behind growing pressure on food supply chains, and another major sign of a slowing U.S. economy. 
• What’s happening with volatility and the VIX, also known as the “fear gauge.” Is it broken? 
• Why options are driving stock prices right now. 
• And more!

Be sure and tune in every Wednesday at 10 a.m. ET for the Trading Pub Roundtable with Don Yocham!

Trading Pub Roundtable

P.S. Calling All People Looking For a New Way to Trade

I’m not signing you up for an overnight shift, or having you pick up extra hours. You don’t need any exotic financial trading…

In fact, Jack Carter of Jack Carter Trading, wants to show you his speedy way of targeting this income, right here, right now.

Go Here to Learn His New Strategy

Retail investors pumped about $1.5 billion daily into the market, chasing the momentum rally ignited during the first week of the year. 

Now, they’re about to be stuck holding the bag. 

Suddenly the narrative has shifted back to recession, higher inflation, higher interest rates, and a breakdown around key support levels. 

Funny how that happens. 

Now that the S&P 500 and the Russell 2000 hit key support levels after a breakneck start, institutions gladly sell their stocks to retail traders chasing a rally. It’s a classic market flop. 

Momentum went negative yesterday, indicating that money is leaving the markets. 

Despite some short-term squeezes on crappy stocks, the undercurrent of selling remains strong. And that could be a problem for a lot of retail traders still holding the bag. 

Here’s what I expect will happen in the coming days. I’ve moved to cash. I’m waiting for another opportunity to buy back in. 

Let’s discuss this market.

Fed Minutes and Inflation

This market faces a string of tests over the next eight days. 

Today, we had the Fed minutes, which showed multiple members seeking a higher pace of interest rates to combat entrenched inflation. 

On Friday, we’ll likely see an elevated PCE Inflation number. If this figure comes in hotter than expected, the odds of a 50-basis point hike in March will zoom higher, while the market will likely move lower. 

Finally, we have a jobs report emerging next Friday. Oh boy. That could be a doozy. 

Even though large technology companies are laying off workers in droves, most employees are still on severance. Those job losses aren’t set to show up in reports for a few more months. 

Meanwhile, companies are still struggling to hire. 

These are the headlines. But none of this really matters. What matters is that there are more sellers than buyers. That’s it. 

As I noted during a recent roundtable, the biggest threat to the market was a large risk-off decision. On February 2, 2023, that process started.

Investors started dumping stocks long before we saw the CPI or PPI numbers. Long before James Bullard at the St. Louis Fed started talking. 

Long before we had any conversations about the Fed minutes. 

More sellers than buyers… more money out than money in. And it’s been evident in the basic daily chart on the Russell 2000. 

The Relative Strength Index, MACD, Money Flow Index, and ADX all suggest that capital is leaving the market quickly. 

And from here, it might get much uglier. 

Retail traders are now largely holding the bag, and they tend to sell without any level of discretion. They dump, and they dump fast as funds head for the exits. 

Meanwhile, when we see negative outflows, it’s easy to be tricked by short-term pops. These are typically short squeezes that take advantage of low-volume periods of the day. 

Be very careful as funds will use this period of time to sell into any short-term spike. 

Remember, the purpose of a market… is to SELL. 

This is a very important lesson. And when conditions get murky, funds cannot sell all at once. 

They need to wait for optimal conditions – meaning that squeezes give them a nice exit point. 

The result is a key trend in a negative environment. We tend to see lower highs and lower lows. 

Tomorrow, we’ll talk about the best tools to use to short the market. 

In the meantime, there is a lot riding on one last factor. 

Tonight, NVIDIA (NVDA) will report earnings. This stock trades at an outrageous PE multiple (88.6x) and an even worse Price-to-Sales multiple (over 13X). 

If NVDA misses earnings, warns about inventories, issues ugly guidance, or ends up slipping on revenue, the Nasdaq could experience a massive drop tomorrow. 

I’ve moved to cash. I’m staying patient. 

To your wealth,


Garrett Baldwin

P.S. It’s “Not a Time to Buy.” That’s what Marketwatch said today when discussing the frothy nature of the S&P 500 and the ongoing challenges of earnings compression. But there’s really good news… 

The article also noted that we might be heading into the best period for stock pickers in our careers. After January’s rally, we might be facing a strong pullback. I’m not worried about it. I built a defensive stock portfolio to weather these markets. The portfolios consist of deep value and strong income stocks that can top inflation. Even more important, I advised my Tactical Wealth Investor members of yesterday’s momentum switch on the fly and advised them on how to hedge their portfolios, make gains during any downturn, and when to double down. Go here to join Tactical Wealth Investor. 

Market Momentum is Red

Today, the market chopped around in a low-volume environment as we awaited the Fed minutes. The clear trend remains negative as investors continue to use short-term pops to dump shares. We’ll continue to eye this market for any short-term buying or forced buying. For now, the trend remains negative as investors expect the Fed to raise rates at a higher pace.