Republic Risk: Profit Taking Continues... While The Fed's QT Fails

Today, we're on the long side with insight on the Fed's QT failures, updates on oil prices, questions about the consumer, a huge drop in insider buying, and what energy stocks to target                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more [Republic Risk: Profit Taking Continues… While The Fed's QT Fails]( Today, we're on the long side with insight on the Fed's QT failures, updates on oil prices, questions about the consumer, a huge drop in insider buying, and what energy stocks to target [Garrett {NAME}]( Nov 28 ∙ Preview   [READ IN APP](   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. As I noted yesterday, the overbought conditions for the S&P 500 ETF (SPY) gave us a reason to sell calls on existing positions and hedge against the downside. If you look at the daily reading on the MACD for the SPY, you’ll see that the rate of change is contracting, which could set us up for some worries ahead of the November jobs report. Meanwhile, oil did get a bit of a boost this morning after falling under $75.00. OPEC+ will kick off its meeting this week. --------------------------------------------------------------- Morning Notes: - Amid fluctuating oil prices and internal quota disagreements, OPEC+ is set to convene this Thursday to potentially deepen oil production cuts in a decisive move that could further influence global oil markets. This is an excellent opportunity to think about the companies you’d want to own in energy long-term if policy accommodates the markets. As we’ve previously discussed, we are fans of Crescent Energy (CRGY), Black Stone Minerals (BSM), Permian Resources (PR), and even BP Plc (BP).  - The Biden administration unveiled plans to bolster small businesses, allocating $50 million from the American Rescue Plan for over 10,000 firms and issuing $50 billion in loans this year, emphasizing underserved businesses. - The median price of new single-family houses in the U.S. dropped 3.1% in October to $409,300, marking the lowest level since August 2021 and representing an 18% decrease from last year's peak. It’s an interesting report because the Case Shiller Index - which measures all home prices - came in higher last month. All home prices increased for the eighth straight month despite higher interest rates. - Shein, the Chinese fast-fashion retailer valued at $66 billion, has filed for a U.S. IPO, aiming to go public in 2024. I bet you all can’t wait to own China’s version of TheRealReal. - Did you sell covered calls on existing positions? If not, I’ve compiled a quick guide explaining how they work at the end of today’s letter. --------------------------------------------------------------- Dear Fellow Expat: Good morning. After a long night fighting this virus, I’m a little behind this morning. While I didn’t have any fever dreams about Monetary Policy - as I expected, I did have unusual dreams that I had to keep waking up and putting quarters into my fan to keep it running. Dream within a dream. And seriously - who brings a bag of Two Bits to bed? The good news is the fever broke. We have a string of Fed member speeches today. Of the four speaking today, Michael Barr (the Fed’s second vice chair) speaks at 1 pm and 3:30 pm. The 3:30 pm speech will likely fuel some reaction heading into the last 30 minutes of trading. Meanwhile, Consumer Confidence comes out at 10. This will be a very important report to pile on top of last week’s five-day shopping holiday. Finally, before we get to the meat of today’s report, I highlight the news over at [Zerohedge](. They note that the [Fed’s Quantitative Tightening (QT)]( isn’t working. This is something I’ve said for about 12 months. But they dig deep into the numbers and discover that despite the Fed cutting its balance sheet, the bank’s reserves are surging.  Zerohedge, Bloomberg Why does this matter to your portfolio and trading for the rest of the year?... Keep reading with a 7-day free trial Subscribe to Postcards from the Florida Republic to keep reading this post and get 7 days of free access to the full post archives. [Start trial]( A subscription gets you: The Republic Risk Letter - (Morning) Weekend Postcards (The Week Ahead) and Access to Full Archive An Update When SPY and IWM Readings Turn Positive/Negative   [Like]( [Comment]( [Restack](   © 2023 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()