Yesterday, I mentioned Charlie Munger (aka “Mt. Munger”), the 99-year old almost-perpetual bull, and his prediction of trouble ahead in commercial real estate.
According to Munger, the banks are packed with bad loans.
Now, if you’ve been plugged into Penny Hawk for a while, you’ll know I’ve been buying puts on the SPDR S&P Regional Bank ETF (KRE) since January.
More recently, since the Silicon Valley Bank disaster, I’ve practically felt like a broken record with how often I’ve talked regional banks.
But wouldn’t you know it, we’re seeing headlines like this from Market Watch as the S&P 500 drops more than a full percentage point today…
This is a problem that isn’t going away anytime soon, and in reality, it’s evidence of a larger one that the market still appears reluctant to accept.
You see, regional banks – like a few other sectors – are in a group of ETFs that were on a downward trajectory of late while the rest of the market flourished. Now, as my sector summary show, there are always some ETFs on a downward trajectory.
The catch here is that these are sectors that almost always lead the market higher.
Check out my most recent sector summary – you’ll have a hard time missing financials…
It brings me no joy to say that this, combined with a host of technical indicators bubbling beneath the surface, are keeping me on the bearish side of things.
I’m not buying the momentary rally we’ve seen this past week or so.
But that’s OK, because with that conviction comes some pretty interesting trade opportunities when I broaden the scope of the lens out a bit.
In the clip below, I provide a detailed breakdown of what I’m seeing across not just the regional banking sector, but the other two ETFs that are similarly lagging at the moment.
Even better, at the end, I give the exact trade I’m placing to let all the profits the market can muster fall right into our hands.
There’s nothing wrong with being bearish while others are bullish – as long as the technicals support the stance.
But there’s no denying the fact that for things to turn bad, that implies volatility ahead. Lots of it.
And capitalizing on volatility is what I do best. The more there is, the better the chance to profit.
For instance, you’ve heard me talk about the software that’s being developed for me by the fine folks here at Money Morning LIVE.
Well, I’ve been using it in my Alpha Accelerators service, and the results are already extremely promising.
This software identifies the opportunities before there’s been a volatility moment.
And like I said, I’m expecting a lot of chop – and profit potential – in the weeks ahead.
May 02 2023