It was a bearish time on Wall Street this past week, yet it didn’t seem like the market was moving much. It looked like it was moving in a low-volatility, orderly sell-off pattern in the major indexes.
And I attribute this attitude to what I call the “pump” the Federal Reserve has on the economy, which has me questioning what trades investors should watch the week of Sept. 20.
Even though individual stocks and indexes are sluggish and tired, the constant flow of cash coming from the Fed has to find some place to go.
And that has me looking at my first trade in Cathie Wood’s ARKK.
3 Trades Every Investor Should Watch the Week of Sept. 20
I mentioned on Monday that I’ve been correctly fading Cathie Wood, CEO and CIO of Ark Invest, for a while now.
I have a pairs trade for my Money Link strategy going on right now with her ARK Innovation ETF (NYSEArca: ARKK), and I’m shorting this fund.
When I break down ARKK, I see a chart that looks like it’s going to test the May 2021 low of $100 soon… And that tells me the money is flowing straight into the iShares Russell 2000 ETF (NYSEArca: IWM).
For this upcoming week, however, I’m looking for an even bigger sell-off in ARKK. And there’s a good chance we’re going to see some fireworks in this name since there will be an artificial suppression in the options market — after Friday’s expiration — as the market makers try to keep their inventory buoyant.
And that’s not the only trade I’m on the lookout for this week…
The Consumer Price Index came out on Monday — rising by 0.3% in August — and now everyone assumes that this number is exactly what the Fed needs to keep the money pumping into Wall Street.
However, the market did not act accordingly to the CPI data at all…
You’d usually expect interest rates to go lower since the Fed now has the opportunity to continue what it’s been doing to keep rates low — since apparently there’s no inflation.
Yet the 10-Year Treasury yield is moving in the opposite pattern that I’m seeing in the ARKK trend. There’s an explosive move to the upside in rates that’s waiting to detonate, and it’s going to wreak havoc on the traders that are caught offsides…
But this next trade is setting up for an even more parabolic move to the upside soon.
Learn more about what three stocks to watch the week of Sept. 20 by watching my video below!
As always, send any trading questions to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
