What to look for (and do) in the markets today
Sep 21, 2021Good morning!
What a difference a day makes. It’s obviously too early to tell if this is a dead cat bounce or just the calm before the storm, but we have an ace in the hole that can help.
The Master Market Indicator™ or MMI for short.
I spent 30+ years developing the MMI and I want to share it with you today along with an excerpt from yesterday’s client note so that you can see for yourself just how powerful a tool the MMI or a tool like it can be in the right hands when the markets get dicey.
First, though, please watch my take on yesterday’s action ahead of the bell with Stuart Varney and pay special attention to what he said about me and buying dips … “that I’ve been right for ten years.”
Then, take a hard look at this chart and my commentary.
Now, I am NOT sharing this chart with you to brag. I make my share of mistakes. In fact, I am wrong plenty, just not a lot with this kind of stuff.
It doesn’t matter whether you use the MMI or a tool like it … that you have an indicator capable of consistently helping you sort through the chaos and keep emotions out of the equation does.
That’s the important point and what most people miss.
They want to invest, to trade, to be “in the markets” but fail to recognize the benefit of serious experience or tools like the MMI that can help them on the journey.
The other thing I run into a lot is that people crave big profits but are too cheap to pay for the benefit of experience or a mentor who can help them minimize mistakes.
Education, experience … understanding how the markets actually work can make a monster difference in your results. MONSTER!
Anyway, I’ll get off my soapbox now.
**By the way: You can access the MMI™ if you'd like to use it in your own trading by visiting this link or gain access to One Bar Ahead™, my investing research journal here. There's no pressure, no hype, and no gotchas; I don't operate that way.Here’s my playbook for today.
1 – Dead Cat Bounce or a real rebound?
Too early to tell. That’ll depend on how much “sell” is left in the system at open. Futures were up 300 in overnight markets but have since dropped back to just 200 as I type roughly 45 minutes ahead of today’s session.
A rise in ten-year yield to 1.38% or higher suggests inflationary concerns (and a return to Fed Watch). A fall in yield this morning suggests global investors remain skittish.
Either way, focus on opportunity.
2 – What’ll happen next with Evergrande
Reports are flying that Beijing is unlikely to bail out Evergrande. That’s not quite right IMHO. I’ve spent more than 30 years in the region and think the West is misunderstanding (again).
Beijing won’t save Evergrande in the Western sense of a bailout.
First, Beijing doesn’t move pre-emptively so Chinese policymakers are waiting for signs of financial stress so they can exert control.
Second, a bailout will mean bringing vast portions of Evergrande’s portfolio under State control, realigning debt in the social good and more. The control is key because that’s what Beijing wants. How much wealth is destroyed does not factor into the equation.
Third, there is a very real possibility that Evergrande execs get a long walk in the Gobi Desert or via the Chinese prison system. Or, simply “disappeared” as was the case for a copper trader and his family years ago and others I’ve heard about who caused China economic pain.
We will know Thursday; that’s when there are two big interest payments due (from Evergrande).
3 - Flights to Europe cheapest in years
People are betting that the travel industry will recover. That may be true but cheap flights don’t necessarily mean big profits. Just less losses.
4 – FedEx releases earnings after the bell today
Where the company has been isn’t as important as the guidance about where it’s going. The company is raising shipping rates by an average of 5.9% starting January 3rd. The company is hiring 50,000 employees to meet pent up demand.
Shares are trading at a six-month low. Sell cash secured puts?
5 – That’s cool. I can’t wait to watch
Normally I don’t watch a lot of TV, but the incomparable Mike Rowe is back with a show about how America works. I love the guy and can’t wait to watch. The first show is about the lumber industry which is near and dear to the Pacific Northwest where we live. On Fox Business Network.
Bottom Line
People think about next steps when they’re talking about investing in companies. What they fail to realize is that investing in incrementalism will kill your portfolio.
Redefine the game or you will lose!
I’ll be with you every step of the way.
As always, MAKE it a great day.
Keith
