Full Steam Ahead

Today’s the day that I’ve been waiting for. After sitting on dry powder, many opportunities exist to put money to work. From a technical standpoint, the Archegos Capital event spooked the market.   Full Steam Ahead Dear Reader, Today’s the day that I’ve been waiting for. After sitting on dry powder, many opportunities exist to put money to work. From a technical standpoint, the Archegos Capital event spooked the market. This was the second time this year that concerns about institutional investors have fueled a big sell-off. You might recall the GameStop short squeeze fiasco – which fueled a huge swing to cash in February. Then, the chaos fueled by a renegade family office pounded the markets and fueled a massive surge in volatility on the Russell 2000. Well, it looks like these worries are about to wane. And that's good news. So, what am I watching today? First, the 5-13 EMA for the S&P 500, which we discuss regularly, is positive. This indicator is one of many that I check each day. But it's important because it provides a little bit of an on-off switch for the market. With momentum positive, I can start to attack the market. Let’s talk about how I plan to do it. The Reopening Trade I’m expecting that there is going to be a very impressive rally in the months ahead. Over the weekend, JPMorgan and Goldman Sachs analysts made a big prediction. They expect the U.S. economy will see the strongest economic growth of their careers this quarter. There is roughly $3 trillion in "dry powder" or cash sitting on the sideline at institutional firms worldwide. The U.S. is experiencing three million vaccinations per day. These headlines are all very positive. We'll likely see a big swing back into a variety of reopening stocks. I'm talking about hospitality, restaurant, health clubs. But I also really like the banks at the moment. One of the major trends that we have to address is comparing the Post World War II economy and today's economy. History doesn’t repeat itself. But it does rhyme, to quote Mark Twain. So, I look at the post-WWII era, and I put my economic historian hat on. In both situations, we saw a sharp decline and recovery in manufacturing. In both situations, we saw a big jump in Public Debt to GDP. The post-WWII era gave us the Employment Act of 1946 and the GI Bill. Today, we're talking about a massive Build Back Better plan that would inject trillions into the economy. Like that period, the Federal Reserve has been very accommodating. Banks are better capitalized than we've seen in years. And banks are sitting on a lot of cash thanks to a huge uptick in savings. So, I'm looking at this situation, and I see a financial sector that looks very strong. The only threat at the moment appears to be these renegade firms like Archegos that can implode a balance sheet. Looking ahead, there’s another reopening trade outside of cruises, hotels, theme parks, and more. It’s in the banks. And tomorrow, I’m going to take you through the best way to choose a banking stock for the coming months. Enjoy your day, Garrett {NAME} © 2021 Godesburg Financial Publishing, Inc. DISCLAIMER: COMMUNICATIONS FROM GODESBURG FINANCIAL PUBLISHING (GFP) AND EMPLOYEES ARE FOR EDUCATIONAL AND INFORMATIONAL PURPOSES ONLY – NOT INVESTMENT ADVICE: GFP and all the services it offers are for educational and informational purposes only and should NOT be understood to be securities-related offers or solicitations. None of GFP’s communications should be considered or used as personalized investment advice. GFP recommends that you speak with a licensed professional before making any investment decision. 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