Stocks jumped in early Monday trading after regulators announced a sale of Silicon Valley Bank’s deposits and loans – but by midday the major indices gave back some of the early gains leaving investors to worry which direction the market is actually heading.
Frankly, I think it’s heading lower.
I don’t think the banking crisis is anywhere near being resolved because there are simply too many unknowns.
Once investors move beyond the day-to-day headlines causing such whipsaws in markets, they’ll start focusing on what’s really happening with the new bank term funding program, the overnight lending market, the eleven regional Federal Home Loan Banks, just to name a few. They’ll start to get a picture that doesn’t look all that great for stocks – or the chances of a soft landing for the economy.
In fact, in this week’s Total Wealth column, I’m going to be running down the myriad of negative conditions and circumstances the banks are facing – much of which have yet to catch the attention of the mainstream financial media. On [yesterday’s] Money Morning LIVE, I talked briefly with Garrett Baldwin about what’s coming down the road, and this week’s article is going to have my deep dive. Don’t miss it.
And also, don’t panic. There are plenty of ways to generate profits, even if stocks are heading lower, and that’s why we’re going to “flip the chart” today on the SPDR S&P 500 ETF Trust (SPY), an index ETF that tracks the S&P 500.
With stocks heading lower, we’re playing to the downside, so I like buying the SPY April 28, 2023 $397/$396 Put Spread for $0.45 or less. Capture a quick profit at 30% and exit the trade if the spread is down 50%.
Again, keep an eye out for this week’s article and another profit opportunity next [time]. See you then!
— Shah Gilani
Source: Total Wealth