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Last week, we closed out a 98% gain and a 112% gain with my Wave Indicator. Get it now.
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Monday March 10th
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“To be alive at all is
to have scars.”
– John Steinbeck
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Happy Monday folks! A lot of storm clouds on the horizon in the markets this week.
To start, the Yen:
It’s rising. Last week, the Bank of Japan officially ended eight years of negative interest rates. I talk about the Yen a lot, because it’s the basis of the Yen carry trade, which is the global liquidity instrument. He won’t retread ground here; but basically:
Yen go up, markets go down.
For many moons have I been talking about Trump wanting a recession, wanting the markets to fall. This is playing out on our charts in real time:
SPX is down now below the 200 DMA. This hasn’t happened in a VERY long time. Typically, a fall below the 200 is a bearish sign on equities. When sell-offs like this occur, it’s important to not let recency bias cloud our judgement. For instance, looking at the current levels of 5668, it seems like we should be looking for a bounce. After all, this is currently -7% selloff.
However, let’s zoom out.
Now, you see that this recent sell-off only takes us back to levels of September 2024. Six months.
In other words, we could still see major additional down legs. In all honesty, I wouldn’t be surprised if we tip down to SPX 4,500 these next 12 months. That’s about a 26% sell-off. Seems like a lot, and it is, but again, that would only take us back to December 2023. So, about a year and a half or so of reversion.
On the trading side, this volatility is excellent for day traders. We’re seeing many dips and rips on the intraday timeline, meaning any long or short positions could pay off nicely.
In terms of particular names, let’s get into a few this week:
DG
Dollar General should benefit if America does head into recession. Buyers will be on the lookout for cheaper goods, which Dollar General specializes in. The stock has also been battered recently, in my opinion, too much. So, I think a recovery is in order.
Plus, we have a call signal that got printed by my Wave Indicator today. Earnings are on Thursday, so this could be a tricky position to enter right now. However, the risk to reward could be great.
I like the 17 APR 25 $90 CALL options.
PLTR
This stock has been in a very big sell off over past few weeks. However, I believe that the sell-offs are getting shallower. You can see with my Wave Indicator that the price is finding support at the longer-period moving average.
I could see a bounce to $100 on the horizon for PLTR soon. 21 APR 25 $100 CALLs can be had for under $2. A good risk:reward in my estimation.
I will have more trades tomorrow. I was out this weekend with the missus, so didn’t have as much time to get setups.
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Testimonial of the day
Russ T. about Wave Indicator:
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To Better Trading,
Alex Reid
