Did the Market Tip the Boat Too Bearish? First, don’t miss today’s Daily Chart Setup trade idea down lower in this newsletter.
As we have been through many times, when everyone in the market is on the same side of the boat, the boat tends to tip the other way and dump everyone out. We reached a very bearish level with extreme fear, and lots of puts being bought. Come join me as we dive in and see what’s moving!
Plus, as always, we have stocks popping and dropping so come find out what is moving this morning as I look for stocks and do some live premarket analysis on SPX, SPY, NDX, QQQ, Russell, IWM and other stocks that are potential plays for the day. — — — The Market Signal Flashing Its Loudest Warning Since 2008 A storm is brewing in the markets — and most investors are blissfully unaware.
There’s a crucial market indicator I track religiously: the spread between the two-year treasury yield (DGS2) and the Fed funds rate. If you’re still fixated on inflation or employment figures, you’re watching the wrong signals.
It’s this spread — the gap between these two critical interest rates — that's quietly telling a story nobody wants to hear.
Right now, the Fed’s funds rate is hovering around 4.5%, closely aligned with the DGS2. That alignment might sound benign, but historically, when these two rates dance too closely together, trouble isn’t far behind.
Back in January 2023, I warned about the Fed going too far with rate hikes. The Fed should have paused earlier — it didn't. Instead, it kept rates higher for longer, creating unseen economic stress that's now rippling across the economy.
Here's why that matters: The real consequences of rate hikes typically take about two years to hit the economy.
We’re now at that two-year mark.
The market is already showing signs of stress, but the bigger concern is what comes next. We haven’t experienced a major correction in years, despite the recent volatility.
Sure, we've seen some quick sell-offs — but nothing like the kind of deep, prolonged downturns that truly reset market valuations. A 35% plunge? Historically, markets undergo severe corrections periodically. In 2007, we saw a brutal 57% collapse during the financial crisis. Before that, the early 2000s tech bubble burst saw similar damage.
Even the COVID crash in 2020, though sharp, didn't lead to the kind of lasting pain typically associated with prolonged bear markets.
But now, the spread between the two-year Treasury and Fed funds rate is flashing a warning louder than anything since 2008. This isn't a minor glitch. This signal is a proven early indicator of major market panics — a red flag that we ignore at our peril.
If history repeats, a 35% market pullback isn’t out of the question. To put that in perspective, on the Nasdaq 100 (QQQ), a 35% drop means around 2,000 points erased from current levels.
That’s enough to seriously damage portfolios, especially for those caught unprepared. How to prepare now While the market chatter remains obsessed with inflation data and earnings forecasts, the smart money is quietly positioning itself defensively. Right now, that means paying close attention to sectors like Consumer Staples (XLP) and Health Care (XLV), which historically hold up better during downturns.
It also means taking profits on speculative positions before the panic sets in.
Bottom line…
This isn’t a drill. The two-year spread is quietly screaming CAUTION. Ignore it at your financial peril.
Now be sure to join me live at 9:15 a.m. ET for “Morning Monster,” my market-open livestream on YouTube!. I’m also live at 5 p.m. ET on Tuesdays for “30 Minutes of Awesome” — bring your ticker and I’ll analyze it in real time!
And be sure to hit that Subscribe button on my YouTube page! _____________________________________________________ Flip Wall Street’s Game in Your Favor
And I’m holding a special briefing at 2 p.m. ET today, March 20, to show you exactly how you can turn the tables on Wall Street and start targeting its moves for your gain.
_____________________________________________________ Today’s Daily Chart Setup: AAR (AIR)
 This idea came directly from my Daily Chart Setup that automatically signals potential plays. - AIR is a new potential entry. Target: 74.31 Stop below: 60.18
- AIR has a historical win rate of 90.0%
- AIR has a profit factor of 3.672
- AIR trades last 46 trading days on average over 30 trades since 1972.
See the secret behind these signals here!
This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. Always remember that past performance is not indicative of future results. How the Daily Chart Setup Works Here’s a more detailed description of how the pattern triggers:
1. The price breaks upward through the orange Market Roadmap line.
2. Then the price goes up and down while staying above the line. Eventually, it comes down to touch the line again — this could take days, weeks or even months.
3. Once it touches the line and starts moving back up, that signals an entry.
I use Fibonacci levels for for profit targets and stop losses, and these two tools combined have helped me achieve a 77% win rate over the past six-plus years!
You can grab my Market Roadmap Indicator here for just $5 — less than a cup of coffee at most places! Jeffry Turnmire
Jeffry Turnmire Trading
I host my “Morning Monster” livestream at 9:15 a.m. ET each weekday on YouTube, and then “30 Minutes of Awesome” at 5 p.m. ET each Tuesday!
Please check out my channel and hit that Subscribe button!
I’m just a regular dude in Knoxville, Tennessee: a husband, father, civil engineer, urban farmer, maker and trader.
I've been at this trading thing with real money for 20-plus years, and started paper trading over 35 years ago. I have a knack for making some epic predictions that just may very well come true. Why share them? Because I like helping other people — it's the Eagle Scout in me. *This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. |
No comments:
Post a Comment