J-Pow Tries To Blow The Froth Off The Markets

Hey there Income Hunters,

 

I knew how important yesterday’s Federal Reserve meeting was … 

 

However, I never thought random dots on a plot would be the shock that came out of the meeting … 

 

What am I talking about? 

 

The chart below illustrates the March 17 meeting versus today’s meeting.

 

First, let’s clarify that the dots are each committee member’s individual rate-hike forecast.

 

There are 17 dots for each year, and after the latest meeting, the majority of members are forecasting TWO rate hikes in 2023!

 

Of course, J-Pow stated succinctly that these dots may not be a great forecaster of future moves …

 

But they do still suggest two rate hikes in 2023 … 

 

 

Uncertainty spooks investors … They went from believing the Fed would keep a fire lit under the market for the foreseeable future, to uncertainty of what they may do next …

 

As I showed in this morning’s Power Income live event, margin debt has been soaring, and investor allocations are 70% in equities. So how does this uncertainty shift investor psychology? 

 

One thing for sure is more selling will create greater opportunities for squeeze plays … 

 

Speaking of which, you do NOT want to miss today’s event with Mark and Andrew on exactly what a short squeeze is, how to identify potential squeeze plays, and why the squeeze-fuelled Meme Mania is unlike anything we’ve seen before.

 

Squeezes just might be the hottest topic of the year, so be sure you’re ready to squeeze some profits out of them!

 

Here’s a direct link — they go live at 11 am EST!

 

Now, back to business …

 

I have a few high-growth, low-yielding stocks that are ripe for bear options strategies to share with you …

 

Higher Interest Rates Crush Low Yield Stocks

 

There are two factors that could crush high-growth, low-earning, low-yield stocks:

 

      1. High inflation hurts low yielding stocks because investors only care about their inflation-adjusted returns. So, for example, with inflation at 5%, TSLA’s returns would actually be -4.24%.
      2. Higher interest rates will now be an alternative choice for investors, which is a negative for low-yielding growth stocks.

 

 

Netflix Inc. (Ticker: NFLX) Is An Ideal Short Candidate

 

Netflix’s valuation is sky high, and the shares closed at $492 on Wednesday. Their fair value is $250, and their sector just became a lot more competitive with the Discovery (Ticker: DISCA) merger, and Walt Disney Co. ‘s (Ticker: DIS) recent success in streaming.

 

They also don’t offer a dividend, so you are totally relying on momentum in the stock’s price.

 

The NFLX chart below shows a nice downtrend with lower highs and lower lows.

 

I own a NFLX September 450/400-strike put spread. I am playing for a breakdown from the $480 level, which would bring a ton of selling in. It has been stubbornly holding the low end of the range, but the Fed results may change that …

 

SPDR Select Sector Fund (Ticker: XLF)

 

The big banks hate higher borrowing costs, so they’re another sector to keep an eye on for bearish strategies.

 

Higher short-term interest rates mean that banks’ profit margins narrow.

 

You see, their loan demand comes from home buyers, and their source of funds comes from deposits … 

 

So, when they have to pay depositors high rates while longer-term rates are not changing, banks make less money. 

 

There are other factors that could pressure bank returns, including the June 28th rule that will eliminate bank dealings in gold derivative products … Please read Archegos Failure Is A Preview Of What’s To Come for more details…

 

XLF is definitely rolling over, and the bounce off the 50-day MA is a good opportunity to set up a bearish strategy … 

 

 

Bring It Home

 

Well, it was certainly a crazy day in the markets yesterday … 

 

We haven’t had one of those in a while. The next couple of days will be key to see what kind of follow through flows we see … 

 

This will test your patience and your ability to make adjustments … 

 

And remember, uncertainty leads to hedging and larger short positions, which is a prime environment for short squeezes. Be sure you’re at today’s event to get the details on what could be a pretty easy way to make some serious money in this new environment. 

 

Click here for direct access — they’re going LIVE at 11 am EST.

 

And as always …

 

Trade With Passion My Friends,

 

Griff

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