Republic Risk: The Narrative Shifts Back to “Soft Landing” - Green Signals

This was the strongest shift in sentiment that we’ve seen since last March 2022, back when Jerome Powell suggested that the U.S. economy wouldn’t face a recession.

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.

Yesterday, the Consumer Price Index fueled a breakneck rally that pulled the S&P 500 out of neutral territory and propelled it into breakout territory. This was the strongest shift in sentiment that we’ve seen since last March 2022, back when Jerome Powell suggested that the U.S. economy wouldn’t face a recession. (It technically would). We saw strong breakout moves on many companies - and we can start focusing on various opportunities as they emerge. 

In addition, we’ve seen inflation cool in the United Kingdom and Japan’s economy slow down considerably. The former is a sign that the global rate hiking cycle is ending, while the latter suggests that the Bank of Japan will continue easing into the new year. That said, it’s important to note the market's wild swings over the last 18 months - and remind you that we are nearly back in overbought territory.