Market whispers - What else is there to be said?
Markets: Beachman's portfolio tactics based on his read of the markets
There comes a time when there is not much else left to be said. No new words of wisdom. It’s all there in the open for everyone to clearly see.
It’s almost too late to plan for these developments…not while they are already happening or happened. Investor emotions are high and risky actions are likely.
Since early Feb, we have been warning that 2025 is going to be different. We have been talking about the massive potholes that are ahead for the global economy, for US companies and for the stocks that we follow. We, here in the Beachman community, have been navigating through and around these craters. You can find all my recent writings on these topics here.
Sure feels like 2022. The key difference is that 2022 was macro driven..meaning we could follow leading macro indicators to understand where markets are likely to head next. This year, macro indicators are quickly becoming lagging indicators.
So we are at a point where there is nothing else left to say…to plan…it is just doing from here on…being flexible every day…being like water.
This is not a macro driven economy anymore. This is, now, a news driven market. Things can change depending on which side of the bed a few men in DC wake up. Maybe they see a squirrel climbing a tree and decide to tariff peanuts. Hold on! There is an oval-shaped cloud in the sky and they forget about peanuts. Let’s tariff avocado toast.
There is no certainty about the path forward. No one knows what to expect. Businesses are frozen in terms of investment and growth plans. Markets are constantly in price discovery mode and they hate uncertainty. Under such conditions, they get blown around in the wind.
As investors, this is not the time to F.A.F.O.
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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: Lower and held key support at 200dma.
Risk level: Very high.
Investor sentiment: Extremely 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…
Jurrien Timmer
Jurrien Timmer is head of global macro research at Fidelity. He regularly publishes his findings about global markets on Twitter. I find his posts to be very timely and informative. They are data driven with both a short term and a long term perspective, depending on the topic. Unlike many other fintwit, he does not push out tens of posts each day flooding your feed…just the most pertinent info relevant to that particular moment in the markets.
Beachman’s portfolio stance
Mostly long.
Surgically bought the dip recently, while partially hedged on the side.
Trimming some positions and raising cash in line with my 2025 market roadmap.
4 trades in place (See current trades at Beachman’s Salty Trades).
Important dates
Mar 12th - Feb CPI inflation report.
Mar 14th - US government shutdown deadline.
Mar 19th - US Feds interest rate decision and economic projections (dot plot).
Mar 21st - Quarterly options expiration. About $1.1T (delta notional) in options expiring.
For short term trade ideas, check out Beachman’s Salty Trades.
On the daily, you can find Beachman in three places…
Beachman’s Substack chat line here
Beachman’s Substack feed here
Beachman’s Threads feed here
Please check out the must-reads listed on the About page and the Roadmap page.
Market signals
The SP500 continued lower but held key support at 5,730ish which is the 200dma. Longer term buyers (not short term 0DTE traders) seem to be stepping in now in small, but encouraging numbers. There are slightly fewer stocks at new 52-week lows as compared to the beginning of the week. Small green shoots…
5,650 and the large JPM collar strike at 5,565 (which expires on Mar 31) are the next levels of must-hold support. The latter would be -3.5% from current levels and a total -10% correction from recent highs…if it happens.
The Nasdaq is in a more precarious spot, having lost -6% YTD and is now below its 200dma. There was tech selling all last week, barring Fri afternoon. We have to remember that the Nasdaq tends to have a lower quality of stock in its stable as compared to the SP500…arguably the best 500 companies in the world.
Small caps have lower to go, imo. They are well below any reasonable support under terrible macro conditions for these small to medium sized businesses. A death cross is imminent on the chart below. These stocks are getting rerated lower in terms of future earnings and cash flows.
The US$ (DXY) is very oversold and due for a bounce. We are now hearing that the US administration wants a stronger US$ and a lower 10-year bond…not sure how this is going to happen.
That said, here is a very troubling signal that needs attention.
Several times this past week, US stocks were lower, US bonds were lower and the US$ was lower…all at the same time. The concern and big question is whether these are emerging signs of capital leaving the US.
The 10-year LT interest rate bounced higher last week off deep discount levels. It is threatening to keep climbing. Remember, higher rates are not good for stocks.
Bitcoin…oh boy. The week started on great hopes that the newly announced US strategic crypto reserve would be buying crypto. But hopes were dashed. This turned out to be a sell the news event and this weekend, Bitcoin is struggling to hold onto its 200dma at $83.3k. In comparison, Gold seems to be holding up better. BTC still has work to do to earn trust in the portfolios of Main Street investors.
What else am I watching?
Options markets have gone very negative. On the SP500 chart above, you will notice that upside CALL resistance and downside PUT support have both been reset much lower than previous levels. Digging into data for the next quarterly options expiration (Mar 21st), we started the year with a 4:1 CALL to PUT ratio…many more bulls. Now the bears are in command with a 2:1 PUT to CALL ratio. Hedging via PUTs are very expensive now (more demand) and traders are hanging onto their hedges for longer. Will some of this tension release this week and before Mar 21st?
Jobless claims continue to creep higher than expected and new job openings tanked in Feb…not a good harbinger of future consumer spending. So far this year, employers have announced 221,812 job cuts, the highest YTD total since 2009. It is up +33% from the 166,945 cuts announced during the same period in 2024.
Inflation reports this week will likely show continued higher ticks in the cost of living. Remember these are Feb reports which could be biased to the upside and may not fully reflect any negative macro signals yet.
Recession probabilities are rising. JPM predicts a 31% chance, GS is at 23%…both of these are up 2-3x from last year. Recently announced tariffs could reduce US GDP by about -1% and raise inflation by about +1%. In fact, the “stagflation” drums are being dusted off from closets, in case we need to beat them.
Bottomline
A few weeks ago, I wrote to my readers that the shit could hit the fan soon. Well this past week, some of that shit splattered across markets and our investment portfolios.
This market is bruised and it will take several weeks to repair the wounds. This is not the time to make major bets or one risks getting sliced and diced.
You can prepare all you want, but one is never fully ready for when markets drop lower. It is a gut punch any which way you think about it.
So the question remains as to how to better prepare and position for what could be coming ahead.
In the Beachman community, we have a plan and we are executing against it.
Cheers.