Our February results for the US Investing Championship are out! Pristine Capital is in second place in the division with a +48.2% return through Feb 28th!
We said 2023 was going to be our year, and we meant it! Let’s continue to put one foot in front of the other this year, and see what the river brings!
-Andrew
Fed Wednesday
As we were expecting via prior research notes. The fed hiked interest rates by 25 bps today! The target range is now 4.75%-5.00%. That means the interest rate on money market funds is about to take a leg higher! Vamos!!! The market is now pricing in a 59.1% probability that the Fed will pause at the May meeting, and a 40.9% chance that the Fed will do another 25 basis point rate hike.
As always, let’s take a look at the market reaction to these developments via the lens of market generated information.
Treasuries
The ZN_F 10yr treasury futures put in a green candle and reversed yesterday’s losses. Treasuries initially zoomed higher as the banking crisis kicked off, and they are now consolidating in time, rather than pulling back in price. The financial system NEEDS treasury yields to stay low, because the lower treasury yields go, the more the unrealized losses on bank balance sheets shrink
This is especially important now that Janet Yellen threw out the idea of insuring all US bank deposits. It just wouldn’t be fair if we insured the ENTIRE banking system right? No way! Let’s only insure the too-big-to-fail large institutions and let the small ones fend for themselves. What could possibly go wrong?
Okay, I digress. Back to market generated information.
Equity Dashboard
Equities sprinted higher into the fed meeting, but sold off as sober reality of no future rate cuts seeped in!
We were well prepared for this scenario, and bot put options on the S&P 500 SPY ETF while the market was still green.
The S&P 500 failed at the resistance level we pointed out in last night’s newsletter
ES_F S&P 500 Price Action Analysis
The S&P 500 is trading above all key moving averages, and the angle of ascent is getting steeper! We are approaching resistance at the monthly value area high ~4,058 into tomorrow’s Fed meeting.
Let’s continue the discussion below. Goodnight free subscribers!
In the following sections of tonight’s update, I’ll cover my research in preparation for tomorrow’s trading session
✅ Trend Model Update - Our proprietary indicator that informs us on how aggressive/defensive to position in the market
✅Market Strategy - My trading plan
✅ Today’s Trade Blotter and Position Update
✅Daily Watchlist - We scan thousands of stocks and hand-pick the best reward/risk opportunities
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