Postcards: Enjoy It While It Lasts... and a Roundup on Insiders

Insider buying bounced back after the Fed's capitulation move and the growing expectation of rate cuts in the future. There are still a lot of challenges on the horizon, but wow... what a week.                                                                                                                                                                                                                                                                                                                                                                                                                 Forwarded this email? [Subscribe here]() for more [Postcards: Enjoy It While It Lasts... and a Roundup on Insiders]( Insider buying bounced back after the Fed's capitulation move and the growing expectation of rate cuts in the future. There are still a lot of challenges on the horizon, but wow... what a week. [Garrett {NAME}]( Dec 16   [READ IN APP](   Editor’s Note: Nothing lasts forever in this market. There are a lot of risks, and too many people are now pushing us into the highest levels in specific momentum readings since right before we witnessed an epic decline a few months later in 2021. Before Monday, [watch this presentation]( one of the greatest contrarian voices in the financial research industry. You’ll take away a lot of [information in this session](. Dear Fellow Expat: It was a nice, quiet day around the house. That was until my daughter started bouncing a rubber ball on the tile floors… forcing me to retreat to this office. She learned the card game Old Maid - and I nearly threw my back out stretching to grab a card. She must set up a pillow fortress to see every card and game. It’s a very strategic way to address the fact that she still can’t physically hold 18 cards. We, as investors, can’t lose track of the game and have to play the hands we are dealt - as we have a sentiment shift that was as strong as a key month for the markets on the back of two years of massive easing. We just saw the Dow, S&P 500, and Nasdaq 100 ETFs hit new total return highs, according to Syz Group and Charlie Bilello. The last time that happened was November 2021… and everyone should recall what happened in January 2022. We’re also at the most overbought the market’s been since November 2020. That said, there’s plenty of upside left on the monthly momentum moves. The Monthly MACD reading turned positive in June, and it’s been strengthening since. As I’ve said, long-term liquidity support has been robust, and central banks are not giving up. The monthly MACD reading for the S&P 500 ETF turned positive in June, and the RSI and MFI remain strong. Things can get even more irrational from here. Bloomberg suggests that FOMO will be rampant in the next few weeks, all while about half of S&P 500 stocks are sitting at overbought levels. You’d have to go back to 1991 for that buying pressure, writes Zerohedge. So, we’re truly in historic territory - and the narrative has shifted massively in just 45 days as monetary policy fuels dramatic shifts in sentiment - and has done so for the last 18 months. Liquidity across the financial system remains strong, and we’ve been in positive territory on our Equity Strength Signal readings since the first week of November. The S&P 500 3X Leveraged ETF (SPXL) is now up more than 25% since our signal change. As I remind you, when it comes to the data, the big part of the move has “[already happened]( It’s why we put our foot on the gas when the signals change and play a lot of defense when we start to get into these conditions. This is the difference between buying in April 2020 and November 2020. If you recall, the operating doctor asked me right before umbilical surgery if he missed the buying opportunity after COVID. I didn’t tell him the truth, but the Fed's sheer amount of monetary support fueled that reversal. China has been pumping money into its system, and the Fed’s been offering something Michael Howell has called “[Quantitative Support]( for the better part of a year. The real economy has taken a hit from rising rates. Still, the Treasury Department and the Fed have produced ample monetary inflation that will only accelerate at a breakneck speed in the years ahead. There’s a lot of debt to paper over in the next 18 months. The Treasury Department plans to auction off more than $100 billion on Monday and Tuesday in various duration bonds, plus more than double that in short-term bills. Good heavens. This only ends one way. With the continued destruction of the U.S. dollar’s value and the stock market's continued defense. This chart by Charlie Biello and referenced by Syz Group over the weekend is brutal to look at - especially for retirees and pensioners. The dollar's purchasing power is off 50% in 30 years, while the S&P 500 has gained 764% when adjusted for inflation. Don’t you think the market is your best defense against these reckless politicians and the Federal Reserve? “Inflation targeting” is a disaster for the middle class… and will only accelerate in the future - especially as we paper over debt and look for deflationary pressures in [technology like Artificial Intelligence](. They still haven’t figured this out… but it’s the most apparent story in economics and has been so for Wall Street. The rest of Americans? Well, they’ll have to rent a house from BlackRock. [Upgrade to paid]( And Now - The Insiders A funny thing happened on the way to the recent oil collapse. Insiders have been loading back up in the energy sector. That is telling because it was the only sector that didn’t take part in the incredibly strong amount of insider buying that happened at the end of October - a contrarian sign for a rebound on the horizon. The Blue Line is the insider buying-to-selling ratio in dollar amounts dating back to 2019. You can see that insider buying was very high during the Fed’s shift on COVID policies - when it printed trillions. But October’s insider buying-to-selling ratio was the strongest since central banks started pumping lots of capital into the system in October 2022. The insiders have called the bottom of every crisis since 2008. And they’re still buying. Warren Buffett purchased another $588 million in Occidental (OXY), leading to insider buying over the last ten days. But we’re still seeing aggressive buying from Energy Transfer (ET) Executive Chairman Kelcy Warren (the stock has a 9.1% yield), and he’s pumped hundreds of millions into the stock. In addition, the company's co-CEO just bought another $659,900 in ET stock. Other names with CEO/CFO buying include Black Stone Minerals (BSM), and this is a big bet by executives and a sign of confidence that the MLP won’t be cutting its yield. The CEO just bought nearly $500,000 in stock on December 7. [Upgrade to paid]( We look at these things daily in the [Republic Risk Letter]( and how we invest and trade. We combine Equity momentum with insight into insider buying, liquidity, and geopolitical risk to assess opportunities as they arrive. [Be sure to sign up today](. I’ll be back tomorrow with an update and a look at the week ahead. Stay positive, Garrett {NAME} You're currently a free subscriber to [Postcards from the Florida Republic](. For the full experience, [upgrade your subscription.]( [Upgrade to paid](   [Like]( [Comment]( [Restack](   © 2023 Garrett {NAME} 548 Market Street PMB 72296, San Francisco, CA 94104 [Unsubscribe]() [Get the app]( writing]()