Things I Think... I Think

Momentum is cracking in a few key places. But narratives are starting to build - and with them - interesting trades around key technical levels.

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Dear Fellow Traveler:

Finally… the weather has improved here in Maryland, and I don’t have to carry a sweater everywhere. The May rain has given way to a beautiful start to June. With my daughter wrapping up First Grade today…

It will be a lot of whining that she’s bored, which is just code for “Let’s go to the pool.”

This summer isn’t too busy. I’m heading to Fort Knox next week for an investigation…

We’re making a trek out to Tahoe with my parents…

And we have a scheduled trip to Chicago that I might cancel because I don’t want to be there during Lollapalooza. I may delay it until the Oregon v. Northwestern football game in September (which won’t end well for NU football)…

That’s the first thing I think: Don’t be in Chicago during Lollapalooza. It’s brutal.

What else is going on?

No. 2: Time to Short Tesla? Not Yet…

With Tesla now sitting just above its 20-day moving average, this is where I start to have some fun.

I focus on the Direxion Daily TSLA Bear 1X Shares (TSLS) if the stock breaks under that moving average.

Riding this company's up-and-down wave has been a lot of fun over the last six months. Now that he’s on the outs with Washington, we could see another shift in media coverage around Elon Musk.

Keep a close eye on the Blue and Orange Line below… because those technicals are ripe for exploiting. If we break above those levels, it could be a sign of challenges ahead for Tesla (TSLA), especially after that post-April 23 momentum swing that took the stock from $250 to $366 in less than a month.

Narratives do matter… because they help feed momentum.

The key is to get out before them and ride the wave until it breaks.

No. 3 - A Narrative Shift on Airlines Feels Ripe

With Delta Airline hugging its 20-day Exponential Moving Average, an interesting upside trade is on tap.

Pay attention here… We’re just entering the summer months. We’re just entering vacation season. The economy, by all accounts, isn’t facing a recession.

Americans are still spending, and a narrative is building that could turn these stocks into solid, short-term rebound candidates.

The narrative: Lower oil prices are good for airlines and cruise stocks.

Ah, yes, that tailwind story.

I think the narrative is nonsense. What matters is momentum, price action, and insider buying. Last month, we saw many 13F filings centering around airline stocks. But recent developments are positive. Recently, I’ve received a wealth of offers from Delta (my preferred airline) and Southwest (my airline of necessity).

Delta is hovering right above their 20-day Exponential Moving Average. So too are some of the cruise lines (NCLH)…

If you’re a trader, they make for compelling trades that, sometime soon, you’ll see in Barron’s or CNBC, the “Cheap Oil Trade” story starts to emerge.

It’s momentum and insider activity that are providing the support…

A basic financial story is enough to engage the retail trade.

This is ripe for an in-the-money call or for owning the stock for a short period, with a tight stop back at about $48.00.

If it doesn’t stay above that range, just let it go.

That’s trading. Tight discipline…

No. 4: Kratos Is Pure Momentum

As I noted a few weeks ago, Kratos (KTOS) is the one name that benefited from the proposed Golden Dome spending… and the ongoing swell of defense spending…

There is strong momentum here, and if you were trading it, look at the Relative Strength Index (RSI) and Money Flow Index (MFI), which are currently moving toward overbought levels.

Long-term owners should consider selling calls on these positions soon if the stock hits $41.00.

There could be some pullbacks.

What great momentum, though.

No. 5: They Tried

My opinion of Scott Bessent hasn’t changed. I think he’s just realizing now that the reality of the markets isn’t going to change. Whether they like it or not… they’re going to keep spending.

Remember - a system is designed to achieve the outcomes it produces continuously.

They cannot put the Genie back in the bottle, even though they tried. I can see it in the faces now of people like Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg.

These PayPal Mafia guys were idealistic and hopeful that the government would get itself under control.

But the Empire Struck Back.

This House Bill was altered in wild ways… and the Senate doesn’t seem to understand fiscal reality either.

When Bessent said the other day that the U.S. will never default on its debt, I felt that sobriety kick in…

Because I’ve heard that defeat before: From Janet Yellen… Jack Lew… Steve Mnuchin… and Timothy Geithner…

It’s what you say when there’s nothing left to say…

The reality that they tried to do something different, but they remain at the mercy of the bond market… What’s more intense is that they stay at the mercy of the debt system that emerged decades ago and continues to go parabolic.

All roads point to more borrowing… more money printing… more currency debasement… and more crises from time to time. It’s not going to stop…

And we can’t wish that it will just go away.

You have no control over politics, but you have a battle plan to protect your wealth, build cash flow, and take advantage of monetary inflation.

You’ll sleep a lot better at night.

Stay positive,

Garrett Baldwin