Well... That Was Something...

Oil spikes, tariff talk, and a 2.5% day on the Russell 2000...

“Solid gold crown is shining, we're blinding like some diamonds.” - RZA

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Dear Fellow Traveler:

I just concluded my conversation with The Compound and Friends this morning.

We had a very spirited conversation about private credit, monetary policy, why this market won’t go down… (and then, spoiler alert… it did immediately after the taping.)

They’ll run the interview tonight… Here’s their YouTube channel.

As we tried to make sense of this sideways market, despite the fact that so many names are up this year in industrials, defensives,

Michael Batnick asked us… what could it take for this market to go down.

And I think I answered the question… but I always end up with a better one when I think about it an hour or two later…

The answer was in my phone.

My friend - a former oil trader of size - is concerned about the diesel markets.

A big spike in diesel prices would likely fuel recessionary fears right away, as we have seen in the past. I had expected this war to not last that long, and I think the market felt the same way…

We’re near two-year highs on diesel prices.

State of Momentum

As I’ve been saying since February 26… Give me liberty… and give me VIX 25.

We’re almost there now… For all my chatter this morning about it being too quiet… we have just increased the noise.

Over at Capital Wave, I’ve been tracking momentum… and our signal has largely been negative since January 28 - with a few tests at Yellow. But we can see, since I started the data set, that there has been a slow, persistent burn lower.

Today was the day it really went… after starting the day at -13…

Our numbers now show a minus 22… and things on the Russell 2000 are getting hit harder and harder, likely reflecting concerns about the economy.

Stocks that are breaking out are now few and far between. It’s Netflix (NFLX) and Valero (VLO). On the downside though… It’s still heavy in the private equity, regional banking, and some consumer defensives (Campbell’s and General Mills look bad).

I’m paying very close attention to what insiders are doing in the regional banking space… I don’t think we’re at the bottom there, and I’m looking for the Regional Banking ETF (KRE) to go oversold on the Relative Strength Index and the Money Flow Index before trying to buy anything that is in breakdown territory.

There’s a lot going on this week… I’m getting hammered by seasonal allergies… and trying to play catchup on a few things. Be sure to check out the show tonight…

I’ll be hitting the ground running again come Monday.

We’ve been extremely cautious heading into March. That doesn’t change. Now, we have to start looking for the possibility that our number of breakout stocks moves toward 0, and look for strategic opportunities for a squeeze play when it arrives.

Stay positive,

Garrett Baldwin