Trading charts for Friday, March 10th
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Good morning and Happy Friday,
No charts this morning because there’s almost no chance that I start any new positions today or Monday with the jobs report at 8:30am EST today and the CPI report next Tuesday at 8:30am EST. Now add the current meltdown of Silicon Valley Bank and the potential contagion to other financial institutions in a similar situation where they have large unrealized losses in their investment portfolios.
Just too many potential landmines on the horizon to be trading right now. I suppose you could attempt some day trades today depending on what happens with the jobs report and whether we rip higher or dive lower but that’s not really the purpose of this newsletter. I’m trying to find stocks that we can hold for 3 days to 3 weeks, not 3 hours. I’m sure we’ll get some attractive entry points today but given the CPI report next Tuesday I’m worried about a potential selloff on Monday into that release.
Given this SIVB situation that popped up on Wednesday night when they announced a large stock/debt offering which took the stock down 60% yesterday and another 40% pre-market today has the FOMC nervous about going too far with the rate hikes if they haven’t already. We’re already seeing the 10Y yield pullback the past 48 hours and I think the likelihood of 50 bps from the FOMC in 2 weeks is now much lower unless the jobs report and CPI number both come in scorching hot. The FOMC has a dual mandate to maximize employment while keeping inflation low (ie price stability) but they also need to protect the financial/banking system.
I’m going into this jobs report with just 8 positions and 32% exposure, I have relatively tight losses in all of these positions, some of which I have moved up in the past couple days to lock in some gains. However stop losses won’t protect you if the market gaps down today on a hot jobs report. Although given that we’re now starting to see cracks in the banking system, I’m not even sure if a hot jobs number or hot CPI number will take the market down because the FOMC might be handicapped with their rate hikes. I think it’s possible we see SIVB acquired in the next 72 hours so hiking 50 bps after that kind of fire sale would be quite unprecedented.
This is not the time to be aggressive or greedy with your trading, better to play it safe and hold more cash while we wait for better setups and opportunities.