Market whispers - We were ready for last week's potholes. Were you?
Markets: Beachman's portfolio tactics based on his read of the markets
Last week, the markets were volatile, chaotic and worrisome. The SP500, the Nasdaq and the Dow Jones, each lost about -2% on Fri itself.
If you were caught off guard, then you likely did not read our recent writings.
Here, we were prepared. We executed on our portfolio plan, trimmed some of our positions and made money on them in other ways. We even profited from a Nasdaq short as well as VIX calls.
We knew the potholes were coming…we were ready to navigate around them.
Welcome to the Beachman community, where we follow the most pertinent market signals that you need to know as an investor…AND…the context and the key takeaway for each of these developments.
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Table of contents
Overall market conditions
Beachman recommends
Beachman’s portfolio stance
Important dates
Market signals
Bottomline
Overall market conditions
Trend: Holding key support.
Risk level: High.
Investor sentiment: Fearful.
Beachman recommends
Each week, I share a recommendation for an app, a book, a website, a podcast, a publication, a movie…anything that I find interesting and useful from an investing and financial management perspective. I don’t get paid to do this. Beachman’s Newsletter has and always will be an ad-free publication. So here goes…
Patrick Boyle
Patrick Boyle publishes regular YT videos (also available in podcast format) on a variety of economic and market topics. I love his dry sense of humor as he methodically dives into an issue, an event or an economic phenomenon that most likely we as investors should be tracking. His recent episodes on US tariffs and Deepseek were particularly interesting.
Beachman’s portfolio stance
Mostly long.
3 long trades in place (See current trades at Beachman’s Salty Trades).
Trimming some positions as part of my Q1-Q2 portfolio tactics.
Important dates
Feb 26th - NVDA Q4 earnings report
Mar 21st - Quarterly options expiration. Triple witching with over $1T in options expiring.
For short term trade ideas, check out Beachman’s Salty Trades.
On the daily, you can find Beachman in three places…
Beachman’s Substack chat line here
Beachman’s Substack feed here
Beachman’s Threads feed here
Please check out the must-reads listed on the About page and the Roadmap page.
Market signals
The SP500 took a bit of a tumble lower last week, but held critical support at 6,000ish which is the 50dma and coincides with a large pocket of PUT options positions (support). There was constant selling throughout Fri, but it flattened out right before market close with a slight hint of a rally after hours. We need to monitor conditions on Mon to see if investors come in to buy the dip. They tend to start buying the dip on Tue…let’s see if this time is different.
About 50% of stocks in the index are above their 200dma and vice versa…markets are at a fork in the road.
The JPM CALL collar at 6,165, expiring on Mar 21st, now provides a bullish magnet to the upside.
The Nasdaq is in a less risky spot because it has a bit more cushion to the downside. But it has to hold the 510 and 489 levels.
Small caps are barely holding onto their 200dma. Investors have been selling them since late Dec. These stocks are most sensitive to interest rates and market liquidity.
Both, the US$ (DXY) and 10-year LT interest rates are still trending lower. Typically this would be bullish for stocks, but not so under today’s macro economic conditions because investors could be seeking safety assets. Markets are nervous about inflation rising again, about an economic slowdown and the negative impact of new tariffs and layoffs. On the flip side, some of the largest holders of US bonds like China, Japan and the US Federal Reserve are still selling their holdings. So the tug of war continues…
Bitcoin is still stuck in the $90k to $110k range, as it waits for new crypto-friendly US policies. Interestingly, last week’s volatility did not deliver too much damage. This is a bullish sign for this particular king of crypto…not so much for the rest of the blockchain universe.
What else am I watching?
We are seeing more layoff announcements from both the US federal government as well as businesses. Jobless claims are rising, but they do not fully reflect the negative impact of these recent developments. The Mar jobs report (due Apr 4) is likely to show the first real signs of a rise in unemployment.
So now we need to pay closer attention to the weekly jobless claims data, retail sales numbers, housing trends and any metrics about the health of the US consumer.
We are also playing close attention to the Japanese market - their macro, their rates and their currency. Remember last Aug’s carry trade-related crash?
Thirdly, and perhaps most importantly, this week all eyes are on Nvidia’s Q4 earnings report.
Bottomline
It is easy in today’s fintwit driven markets to get caught up in the narrative. There were lots of reasons to sell on Fri…the story about a new virus that took Moderna’s stock higher…rumors about Microsoft cutting it’s AI infrastructure capex spend which impacted some AI stocks…consumer sentiment hit a 15-month low…the housing market reported a dismal Jan which was -50% lower than already negative estimates..high fliers like PLTR, APP, HIMS and AXON lost air on news specific to their businesses.
Astute investors in the Beachman community track markets at a much more informed level, using earnings reports, valuations, technical signals and options driven data.
This helps us better prepare for potential paths ahead and, more importantly, buy the dip and raise cash at more opportune moments.
Warren Buffett famously said that investors should be “fearful when others are greedy, and greedy when others are fearful.”
Cheers.