Republic Risk: Hell Week Ahead

Beware the bull trap, focus on energy, and expect the dollar to continue increasing.

Equity Storm Watch Is YELLOW on the S&P 500 and RED on the Russell 2000

Last week, we witnessed some of the strongest fund purchasing in technology stocks in years, giving me short-term optimism into this earnings week. I think we’ll see a continued squeeze and likely a bull trap into the Fed meeting. From there, it’s just a matter of how much the algorithms feel like squeezing out the rest of the market. 

There are much deeper challenges ahead in the financial markets. These rallies and rebounds can last much longer than we expect, and I can’t advocate for shorting, given the rapid responses and difficulty of such timing. Ahead of the Fed meeting, I would anticipate some continued strength, but we are seeing a broadening weakness in liquidity, which isn’t bullish for the equity markets. The trend of selling is evident, with 64% of stocks under their 50-day moving average.

What to Do Today: We’re entering a 72-hour period that typically follows a pattern of lower volume but drifting tow…