Republic Risk: Quantifying The Market Before Turkey Week

Gobble, gobble. We head into the best day of the year (Friday) with a head full of steam and strong momentum. Liquidity has improved thanks to the Fed and the Bank of Japan. So, now what?

Equity Index Strength Is GREEN on the S&P 500 and GREEN on the Russell 2000

Each morning, we assess the full 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, build trades around positive sectors, or take inverse positions against indices. When it is positive, we focus on short-squeeze stocks, companies with improving fundamentals, and trading/investing around the actions of corporate insiders.

We took a break from the ongoing rally on Thursday and turned to positive gains in premarket hours. Energy stocks continue to sink and struggle under the pressure of fund selling. But sectors like real estate and utilities (sensitive to interest rate hikes and benefiting from speculation around the Fed) are rebounding. Friday has been the best day of the year for the markets, and it’s a PERFECT day to focus on any mean reversion.