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Dear Fellow Traveler: I just concluded my conversation with The Compound and Friends this morning. We had a very spirited conversation about private credit, monetary policy, why this market won’t go down… (and then, spoiler alert… it did immediately after the taping.) They’ll run the interview tonight… Here’s their YouTube channel. As we tried to make sense of this sideways market, despite the fact that so many names are up this year in industrials, defensives, Michael Batnick asked us… what could it take for this market to go down. And I think I answered the question… but I always end up with a better one when I think about it an hour or two later… The answer was in my phone. My friend - a former oil trader of size - is concerned about the diesel markets. A big spike in diesel prices would likely fuel recessionary fears right away, as we have seen in the past. I had expected this war to not last that long, and I think the market felt the same way… We’re near two-year highs on diesel prices. State of MomentumAs I’ve been saying since February 26… Give me liberty… and give me VIX 25. We’re almost there now… For all my chatter this morning about it being too quiet… we have just increased the noise. Over at Capital Wave, I’ve been tracking momentum… and our signal has largely been negative since January 28 - with a few tests at Yellow. But we can see, since I started the data set, that there has been a slow, persistent burn lower. Today was the day it really went… after starting the day at -13…
Our numbers now show a minus 22… and things on the Russell 2000 are getting hit harder and harder, likely reflecting concerns about the economy.
Stocks that are breaking out are now few and far between. It’s Netflix (NFLX) and Valero (VLO). On the downside though… It’s still heavy in the private equity, regional banking, and some consumer defensives (Campbell’s and General Mills look bad). I’m paying very close attention to what insiders are doing in the regional banking space… I don’t think we’re at the bottom there, and I’m looking for the Regional Banking ETF (KRE) to go oversold on the Relative Strength Index and the Money Flow Index before trying to buy anything that is in breakdown territory. There’s a lot going on this week… I’m getting hammered by seasonal allergies… and trying to play catchup on a few things. Be sure to check out the show tonight… I’ll be hitting the ground running again come Monday. We’ve been extremely cautious heading into March. That doesn’t change. Now, we have to start looking for the possibility that our number of breakout stocks moves toward 0, and look for strategic opportunities for a squeeze play when it arrives. Stay positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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