Reality Hits the Market Sooner Than Expected

The dollar is VERY strong right now, and that can shake up optimism.

Action to Take: Deteriorating technicals and heavy institutional selling demand a defensive stance to start the week. With over 70% of stocks now trading lower and technology under particular pressure, use this opportunity to sell covered calls against winning positions. Post-election winners like GEO Group (GEO), up 77%, are prime candidates—especially if you haven’t already trimmed the position. Or take gains.

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Momentum: Momentum is attempting to stabilize after last week's sharp reversal. The VIX's 11% surge to $16.35 suggests institutional investors quietly add protection, even as post-election winners try to hold their ground. Near-record earnings multiples and aggressive growth forecasts leave markets vulnerable to disappointment, particularly in technology, ahead of Nvidia's Wednesday report. Watch for the continued unwinding of crowded positions as reality tempers election optimism. The 10-year rules the day.

READING

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