Republic Risk: Portfolio +18% V. S&P 500 at 11%

It's been a good five months to start the year... but we're heading into the Red on the S&P 500.

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

The Treasury auctioned another $44 billion in 7-year notes yesterday, again with disappointing results, raising concerns about potential liquidity issues. This marks the third consecutive auction with weak demand, compelling primary dealers to purchase more bonds than expected. This scramble for capital is contributing to a negative undercurrent in the market. As yields rise, keep an eye on the yen and yuan for signs of a capital injection, especially as the yen nears the 160 level, where the Bank of Japan is presumed to have intervened.

Meanwhile, you must see this chart. This is the S&P 500 Weighted Index - a benchmark against what we measure our portfolio. This has been at its lowest since the bear market lows in 2009. This proves how disjointed these markets are and distorted by top-heavy crowding in tech stocks at the top of the food chain.

What to Do Today: Keep hedging. This market is under pressure and doesn…