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Sep 27, 2022

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Let’s dive in!

The markets are poised for an early bounce.

Let’s talk about why and how to play the situation.

Here’s my playbook.

Why a bounce & why now?

What’s driving this. Both the Fed’s Bostic and Evans are reportedly getting nervous that the Fed is hiking too far too fast. That’s rich but it’s what they’re saying.

What’ll happen next. Traders will seize on this and drive prices higher in an attempt to suck in FOMO-driven retail investors who will then be perfectly positioned to fuel another rug pull. Could be a day or several but that’s moot.

How to play the situation. I talk constantly about being “in to win” and learning how to trade around core positions. Contrary to what most people think, they are not mutually exclusive.

If you’re a trader …you have a very short window this morning to buy call options on your favourites or the indices before volatility shifts to the upside. If you’re not options savvy, this is one of the very few situations where triple leveraged upside bullish ETFs could work. Plan on exiting both at the first sign prices stall to avoid becoming a bag holder.

If you’re an investor … you can use the updraft to do a little weeding to take profits on stocks you’ve been accumulating throughout the downdraft – you have been, right??!! Then redeploy that into core holdings as a way to continue to build defensive positions.

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Just 10.78% of stocks above 200SMA; odds favour the bounce

What’s happening. Just 10.78% of stocks are above their 200 day average. The 10-day advance/decline line hit a record low and breadth over the past 10 days is the weakest in a decade.

Why you should care. Big money is keenly aware of the odds as are their computers, many of which are programmed with the 200-day SMA in mind. The low advance/decline line and breadth stoke the fire for an “outlier” reversal.

I hope you’ve got a line in the water. I wasn’t kidding when I said the markets are “stupid oversold” last week on CNBC. (Watch)

So stupid the absurdity almost makes sense

Driving the news. Celsius, the bankrupt crypto lending company has a new plan to come back from the dead: issue a new cryptocurrency called the IOU token.

Sources report a leaked voice recording of employees talking about doing exactly that in addition to having only a simple Excel sheet to track billions of dollars in company assets. (Read)

You almost have to respect the absurdity.

BTW, Bitcoin is back above $20,000 while Ethereum has retaken $1,396 as I type.

Owning a tiny – emphasis on tiny – bit of each makes sense while the so-called crypto-winter continues IMHO.

No such thing as coincidence: Nord Stream 1 sabotage

Making headlines. The EU is investigating leaks in two undersea Russian gas pipelines in the Baltic Sea. Copenhagen is pointing the finger at Russia. Russia is pointing the finger at the EU. (Read)

Operators report unprecedented damage which, of course, points to even higher prices this winter. The time to restore operations is presently unknown.

The time to buy stocks that will help Europe muddle through this mess is upon us (again).

One Bar Ahead® readers have been on board with one of ‘em since last September and it’s easily outperformed the S&P 500 over that time frame. No guarantees that’ll continue of course but with news like this it’s hard to imagine that won’t be the case!

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Japanese engineers fit googly eyes to a self-driving car

I’ve been closely involved with Japan for more than 30 years and if there’s one thing I’ve learned in all that time, it’s that Japanese engineers are often super creative. Quirky, but super creative nonetheless. (Read)

This made me laugh, but I can totally “see the point” – pun absolutely intended.

Be sure to watch the video. (Watch)

Bottom Line

People think trading and investing is all about the exit, but that's not true. Getting your entries right is where it really counts.

Now let's get out there and MAKE it a great day!



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