☕ A trade idea for the next 24-72 hours

Good morning! 👋 

The markets are once again in the red as I type after a massive 2-day swing caused by two seemingly contradictory inflation reports. 

That’s to be expected. 

This week’s ping-pong-like trading action is almost entirely technical, meaning it’s driven by a dastardly combination of computers trading so fast humans can’t keep up, passive indexing and 0DTE options. 

The smart move is to look beyond that. 

The business case for owning great companies is getting stronger, not weaker.

Don't take my word for it, though. 

Legendary NYSE trader Peter “Einstein” Tuckman agrees with me. 

You may know him as the most photographed trader in history because of his trademark appearance and the obvious resemblance. I simply know him as a brilliant thinker and kindred spirit. 

Anyway, Peter and I were aligned when the super-savvy Liz Claman asked us both how we saw markets yesterday as we headed into the closing bell. (Watch) 

Here’s my playbook. 

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1 – I told you to watch these 2 companies on Monday 

I suggested smart investors would be wise to watch two companies this week when I took to the air ahead of Monday’s opening bell with the venerable Stuart Varney. (Watch) 

Constellation and JPMorgan. 

The former would be a barometer of consumer confidence while the latter a strong performer based on trading and operations. 

Both beat. 

Both are selling off. 

I get asked a lot about why this happens and the answer is very simple. 

Big traders understand that individual investors who don’t know any better wait until after earnings reports to buy so they run prices up ahead of time to create FOMO. Then, when good earnings hit, they sell off like clockwork and laugh all the way to the bank. 

Keith’s Investing Tip: Always do what Wall Street does, not what it says.  

• Be early.  
• Buy well ahead of earnings.  
• Think like a winner, not a wannabe. 

JPM, btw, has returned 48.64% over the past 12 months versus the S&P 500 which has tacked on 27.30% over the same time period. STZ is the laggard at 18.24% but powering up – all according to koyfin. 

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2 – Brace, brace, brace 

As I was leaving the office last night, I caught wind of a rumor that increasingly looks to be true this morning.

Iran may strike Israel over the weekend. 

This could obviously throw a major spanner in things so be mentally prepared for some massive volatility if it happens. 

History suggests the markets will absorb the shock quickly if a) the situation remains confined and b) the strike is prosecuted in such a way as to avoid massive escalation which Iran has said will be the case.  

People often ask me if they should “sell it all” whenever stuff like this surfaces. 

Not unless you want to or need to for whatever reason. 

In fact, the opposite is true. 

One of my mentors drove it into my thick skull a long time ago... the best time to buy is when people are selling despondently. 

MyPOV: There is no doubt that the markets will get rocked if Iran attacks because the computers will unload faster than humans can keep up. That said and speaking bluntly, I wouldn’t spend a lot of time worrying about it either because the markets will be the least of our concerns if things escalate. So, you may as well continue to invest as if the sun is coming up tomorrow and cooler heads will prevail. 

Trade Idea: Buy a small, speculative amount of UVXY at market today, hold through the weekend and sell Monday come hell or high water. UVXY is a specialized, leveraged short-term ETF intended to correspond to 1.5X the performance of S&P 500 VIX Futures, not the VIX itself.  

NOTE: This is a speculative trade so do NOT try it if you have no idea what this is or aren’t prepared for a quick in and out win, lose, or draw. Stick to the great names we talk about constantly; yes, they’ll come under pressure but, chances are, will hold up better, fall less and recover faster if the SHTF. 

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3 – Oil jumps higher 

Brent hit $91.56 and WTI hit $87.05 earlier today as the rumor mill continues to suggest that Iran will retaliate against Israel. (Read) 

I still think $100 is possible. 

We’ve talked about the importance of owning dinosaur juice for a while now, so hopefully you’ve got that covered. 

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4 - You can’t make this stuff up  

Yesterday I made the observation that the world’s central bankers are like cows because they think alike and herd. 

Imagine my surprise when I woke up to news this morning that the Bank of England has announced a once-in-a-generation overhaul of its inflation forecasting models following a long-awaited review by former US Federal Reserve Chair Ben ‘helicopter’ Bernanke. 🤦‍♂️ 

Moo! 

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5 – German investigators “demanded” Palantir 

A few weeks back, German investigators “demanded” that they be allowed to use Palantir software when faced with rising terrorism threats. 

Now, there are 3 suspected Islamic terrorists in jail for planning to massacre people attending mass in the Düsseldorf area. (Read) 

Imagine that. 

Your product is so good that people demand to use it. 

And it works exactly as intended. 

$50. 

And btw, tip o’the hat to my colleague, the super smart Arny Trezzi who writes Palantir Bullets because he also picked up on the plotline here. 

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Bottom Line: 

85% or more of all buy/sell decisions are wrong - meaning investors buy when they should be selling and sell when they should be buying.  

Keep your emotions out of the equation! 

Especially now. 

As always, MAKE it a great day! 

You got this – I promise. 

Keith 😊