Republic Risk Letter: Energy Selloff or Capital Rotation?

Energy stocks are back in a short-term crossroads, with price momentum declining. Is now the time to be contrarian in the face of bearish sentiment?

Equity Index Strength Signals

RED on the S&P 500 and RED on the Russell 2000

Each morning, we assess the total flows of the market by measuring statistical metrics on a very specific number of stocks to determine broader sentiment and the momentum trend. When these readings turn red, we focus on cash, trade positive sectors, or take inverse positions against indices.

We’re still red today, but we see strength this morning again in the defense stocks as geopolitical tensions are escalating in the Middle East.

Look for investors to shift from macro to micro over the next few days with tech earnings leading the way.