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Monday March 31st
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“The world is full of magic things,
patiently waiting for our senses
to grow sharper.”
– W.B. Yeats
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Happy Monday everyone!
Thank you to everyone who tuned into the live stream this morning.
Our levels for SPX this week:
On the low end, we have support at $5,407. On the high, we have $5,618.
We started the week with a hard gap down. Even though there’s been some recovery today, we’re still really “down” on the day.
It’s important to note what’s going on under the hood of the markets. Donald Trump is reorganizing the global economy. I talk about this a lot, but the powers that be have spent the last fifty years turning the American economy into one of of consumption, rather than production.
The dollar is our chief export. It’s the basic of international trade, it’s used to buy oil (petrodollar), and many other countries finance their debt with USD. This is excellent for the top 1% of American elites. Stocks and housing have pretty much been in one long uptrend.
However, the rest of Americans get left behind. Many studies point to the wealth that has been created by the American system compared to say, Europe. Many folks will throw out the fact that Europeans earn far less in salary than Americans. Which is true if you’re using the average. But when you strip out the top earners from the economy, you realize that the average salary of Europeans at about $40k per year is not all that different from most Americans outside of that top shelf.
Except in America, you have very little safety net like the Europeans do. Our country is a brutal place; many barely survive, and if you fall, there is nothing to catch you on the way down.
Understanding this is important. Because unless this is fixed, there will be social unrest. Trump’s policies are trying to fix it. Will it work? We’ll see. However, one thing is for certain:
The neoliberal world order is shaky. For America to reinvent itself, the global economy will have to undergo massive change. For the megacaps, this means the days of offshoring and constantly-optimized supply chains will be threatened. These megacaps are what drive the “market” to a large extent. As they fall, so too will the markets.
Now, with that in mind, you can start to understand why the markets are falling. Not just that, but as this system is reorganized, volatility is going to be here to stay.
Onto some picks for the week.
I’m still bullish defense stocks.
GD
General Dynamics is expensive, but you can see the X-Pattern forming on the bottom right there. The Wave Indicator was triggered last wednesday, with a profit target of 272.50, which I think we can hit.
LMT
Lockheed has a volume shelf at around $442.
Waiting for the X-Pattern to show up and a break above that price, but if that happens, we could be heading towards $456 or so.
Another theme is the fall of pharmaceutical stocks. RFK Jr. is making serious changes to the health policy of the U.S. These companies are already beaten down, but could fall further as we extricate ourselves from the grip of Big Pharma.
PFE
I would be waiting for Pfizer to drop below $24.68 for a put, or bounce off of it for a call.
Talk tomorrow.
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Testimonial of the day
Matthew about the Calendar Club:
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To Better Trading,
Alex Reid
