The Market is Flashing Sell Signals Again

Steady Wealth Podcast

The Market is Flashing Sell Signals Again

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Investors and traders are starting to see sell signals in the market once again. While the first quarter for equities was very bullish, many are now watching the Nasdaq 100, which did about 18% in the first quarter, to see if this momentum is sustainable. However, the seasonality of the stock market should be taken with a grain of salt, as historical trends don't always hold true in the current economic climate. Economic data, such as the Purchasing Manufacturers Index, indicates contraction, and this could spell trouble for the equity market.

The fact that the equity market is living on borrowed time is becoming clearer, with the S&P 500 up only about 7-8% for the year and an equally weighted S&P graphing at basically a flat line. The market is propped up by just a few stocks that people have flocked to, such as Apple, Microsoft, and Google, and if these stocks drop, many investors could be hurt, even if just psychologically.

Investors are also watching gold, which tends to do well when real interest rates go lower. However, if and when panic sets in and stocks are being thrown out, gold may react poorly, potentially dropping to as low as 1900. It could be a great time to buy more if you have a long-term view. For more daily nuggets of knowledge, check out Serge’s shorts on YouTube.

What You’ll Learn:

• Why Serge thinks risk assets are ready to resume lower.

• The difference between the Nasdaq 100 and the Nasdaq Compound.

• Why stocks and equities like lower interest rates.

• And much more!

Favorite Quote:

“When interest rates start to go lower, stocks and equities tend to like that.” -Serge Berger

When Will the Fed Cut Interest Rates?

Steady Wealth Podcast

When Will the Fed Cut Interest Rates?

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Serge has found that the number one thing on institutional investors’ radar is when the Federal Reserve will start to cut rates. This is almost unprecedented as usually the top concern is about stocks. Serge believes that the Federal Reserve will cut rates soon, as we will see a real recession soon. Equities, particularly tech stocks, have recently rallied strongly and tend to perform well in the long game. When interest rates are lowered from a higher rate and a recession is looming, legit tech stocks tend to get a bounce. However, when rates go from ultra-low to almost 5%, the shock is real and comes in waves. 

As the economy worsens, interest rates will lower. The market is going to front run the Fed, which does not control the Treasury market. The first rate cut is expected to happen sometime between this summer and the end of the year. The Fed often reacts more quickly to save the economy in terms of it getting worse than they would in a tightening cycle. Interest rates peaked in early March of this year, and it is expected that the first cut will happen 3-6 months from now. Until then, Serge believes Bonds are still the way to go when investing.

What You’ll Learn:

• How a real recession tends to play out.
• The difference between inflation and defaults.
• Why you should consider investing in Bonds.
• And much more!

Favorite Quote:

“Every recession ends in some sort of a credit crisis.” -Serge Berger

How Traders and Investors Determine Trends with Daniel Sinnig

Steady Wealth Podcast

How Traders and Investors Determine Trends with Daniel Sinnig

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Daniel Sinnig studied to be a software engineer, but always had his eye on trading and investing. He believes that finding trends is one of the most crucial aspects of being a successful trader and investor. Daniel realized that he needed better tools to help him make better investment decisions, so he used his software engineering background to create tools to help him with his trades. Eventually, he was introduced to Serge and together they developed Market Rover, a web-based tool that helps traders and investors identify trends in the global macro picture, and economic and business cycles.

According to Daniel, the biggest challenge for traders is figuring out what to trade. With so many options available, traders can become overwhelmed and make impulsive decisions. Over the past decade, Daniel has seen short-termism kick in, causing traders to lose sight of major trends. He advises traders not to fight the market but rather go with the trends.

Market Rover is a web-based tool that allows traders to access trend signals without downloading or installing anything. The tool was originally built for in-house use but was eventually developed to share with the rest of the world. Daniel believes that web-based tools are the future of trading and investing, as they remove obstacles and make it easier for traders to access information. He also emphasizes the difference between trend signals and trade signals, advising traders to focus on the bigger picture when making investment decisions.

What You’ll Learn:

• What the biggest challenge for traders is.

• How the Watchlist feature works.

• The difference between trend and trade indicators.

• And much more!

Favorite Quote:

“We made this dashboard as intuitive and as simple as possible.” -Daniel Sinnig

Why Understanding Charts Matters with John Burnell

Steady Wealth Podcast

Why Understanding Charts Matters with John Burnell

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Understanding charts is essential for traders and investors as it helps them analyze data, identify trends, and make informed decisions. Research analysis, which is based on technical analysis, can be a powerful tool for those looking to trade in financial markets. John Burnell, an account manager and team member at Steady Trader, is a strong advocate of technical analysis and its usefulness in trading.

Burnell initially struggled to understand why markets were volatile and constantly changing. However, he found candlestick charts to be a valuable resource for technical analysis, as they provide a visual representation of market trends. He believes that technical analysis can be extremely helpful if used correctly and that oversimplification is what draws many traders to it.

Burnell has experimented with different indicators, such as moving averages and market memory, and has found that the odds are more in his favor when multiple indicators confirm a trend. He also advises traders to check the whole sector and look for correlations when they see something going on in their favorite stock.

What You’ll Learn:

• What ‘confluence’ means in regards to technical analysis.

• What some of the indicators used at Steady Trader are.

• Why global liquidity is so important to follow.

• And much more!

Favorite Quote:

“The business cycle, and more importantly, the credit cycle, will always supersede and trump the charts.” -Serge Berger

Why Covered Calls Make Sense Now

Steady Wealth Podcast

Why Covered Calls Make Sense Now

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Covered call strategies are an investment technique that can generate income on a portfolio of stocks, or even without a portfolio of stocks. This strategy has been previously overlooked, but it works in both bull and bear markets. It is essentially a neutral to bullish strategy where an investor sells an out-of-the-money call against every 100 shares of stock they own, while simultaneously collecting a premium. If the option expires, the trader can keep the stock and sell against it again. If the worst-case scenario happens and the stock is called away, the trader still keeps the premium earned.

One benefit of the covered call strategy is that it can snowball into a true compound effect and generate side income. The strategy is a low-risk way of using options and can also be used to hedge risk by giving compensation. Additionally, it is a monthly income strategy that can be used with a steady stock.

However, it is important to note that if the stock is volatile, the risk of options being underpriced is higher. Furthermore, it is not advisable to use the covered call strategy if the stock price is expected to make a big move in the near future. Overall, the covered call strategy provides an opportunity to generate income and mitigate risk.

Serge is currently putting together a 3-hour course on covered calls to take place in the near future, so stay tuned for details on that. If, in the meantime, you have further questions about covered calls, feel free to email support@thesteadytrader.com. If interested in having a covered call strategy done for you, head over to Blue Marlin Advisors.

What You’ll Learn:

• How to create a covered call.
• What can go wrong with a covered call.
• How a covered call can be a monthly income strategy.
• And much more!

Favorite Quote:

“A covered call is one of those forgotten strategies.” -Serge Berger

Why The Fed Wants Stocks Lower

Steady Wealth Podcast

Why The Fed Wants Stocks Lower

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According to our projections, the stock market may revisit the lows of 2020 or go even lower. The Federal Reserve is likely to hike interest rates as the situation gets more volatile, and credit and bond markets may react accordingly. However, due to the pandemic, it is taking longer to see any real panic in credit markets, as trillions of dollars flooded the economy, giving people a false sense of security. Inflation is also increasing sharply, and the job market is robust. The Fed wants the stock market to go lower to slow down consumer spending and prevent the economy from becoming too frothy. The current interest rates are high, and if they remain so, it will become difficult for people to afford debt. Therefore, driving the economy into a wall may be the solution.

The three stages of a bear market are a bubble pop, which happened in 2022, followed by a stage where people think the worst is over and get a false sense of hope, and the third stage where things start to break, usually in the credit markets. Interest rates on credit cards are around 20%, making it crucial for the Fed to control the economy. The side benefit of higher interest rates is that investors can move to risk-free investments like the 6-12 month T-bill, which yields about 5%. As a result, people are advised to sell their stocks and buy bonds. If the stock market craters, those who have invested in bonds will make a 5% risk-free return. It is expected to take about 30 months for the stock market to return to its highs so it’s wise to plan accordingly.

What You’ll Learn:

• Why the Fed has to see the stock market lower.
• Why the Fed has to have the economy slow down and go into recession.
• What a T-Bill is and how they work.
• The average time it takes for stocks to rebound.

Favorite Quote:

“The Fed will not ease their policy until stuff starts to break.” -Serge Berger

Beware of Stock Market Seasonality in Bear Markets

Steady Wealth Podcast

Beware of Stock Market Seasonality in Bear Markets

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The stock market is a complex entity, and there are many things that can happen which are difficult to predict or fathom. One such thing is stock market seasonality, which tends to be more difficult to predict during bear markets. Bear markets are defined by their volatility, and making money during a bear market is difficult. Past bear markets, such as the year 2000 and the 2007-2009 financial crisis, were marked by extreme volatility and were difficult to trade.

Seasonality is a pattern that can be observed in the stock market. For the S&P 500, it is typically hard to predict how equities will perform between February and March, with January-March being choppy with big rallies, sell-offs, or markets that go nowhere. The second half of March and April are typically good months, while May and June are consolidation months, and July and August are generally non-eventful. September and October are historically difficult and choppy, and November and December have big risk moves at year-end.

During a bear market, stock market seasonality is more prone to emotions, with more news flow that can surprise people. However, one of the more reliable patterns is the Q4 rally, which typically rallies into the first half of December. In 2022, this pattern was observed when the market bottomed in October and rallied into mid-December, up 17%. It is important to use multiple analysis points at any given point in the cycle, rather than relying on single-factor analysis.

Bear markets are tough to trade because different players come in non-traditionally, and the retail community, given more of a voice with social media, can impact the market in unexpected ways. However, despite ongoing bear market conditions, the bull spirit of the retail community persists, with very few people being truly concerned.

What You’ll Learn:

• Why bear markets tend to last, and how they play out in the second half.
• Why it’s so hard to make money in a bear market.
• Why the Q4 rally tends to be more reliable and how to capitalize on it.
• Why you shouldn’t use single-factor analysis.

Favorite Quote:

“The bear market is not over, but the bull spirit of the retail community is certainly not done yet either.” -Serge Berger

Why Stocks Could Rally Into The Spring

Steady Wealth Podcast

Why Stocks Could Rally Into The Spring

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We may see stocks continue to rally over the next few weeks to months. To understand why, we must first understand where we fit in the bigger picture. If you don’t understand things like the economic cycle, it can be very difficult to make money, often chasing false rallies, or selling in false sell-offs. As we’re all painfully aware, interest rates have gone from about .5% to about 5% in the last 18 months. While they have gone up this high before, they never have this quickly. It’s inevitable that we’ll have credit issues, we just don’t know how severe or when. It always takes awhile to work its way through the system.

If you didn’t catch last week’s episode where we discussed the recession playbook, consider going back and taking a listen. We’re essentially right on track with inflation cooling off and starting to come down. This usually means the equity market will rally sharply. We already saw a surprise rally in Q4, and a hot January jobs report kept the rally alive. With 10x more money in the market than during the 2008 financial crisis, we’ve already seen the Nasdaq rebound 20% for the year. With the Nasdaq going up 50-60% before, there’s still plenty of room for improvement. Just have patience, things will take some time to play out.

What You’ll Learn:

• Why you have to understand the bigger, global, macro picture.
• What the Q4 Surprise Rally usually looks like.
• How political timelines can influence the stock market.
• And much more!

Favorite Quote:

“We, as human beings, have gotten increasingly impatient. Things will take some time to play out.” -Serge Berger

The Recession Playbook for Investors and Traders

Steady Wealth Podcast

The Recession Playbook for Investors and Traders

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Over at Blue Marlin Advisors, when the economy goes into a recession, there’s a specific playbook they employ. A recession is not necessarily all that critical, it’s how the market responds to it. Recessions are actually a normal, and important, part of the economic cycle. If we look back over the years, we can clearly see this repeating cycle of some sort of growth phase, a peak, and a slow down or retraction. For people that know how to work with the retractions, economic slow downs can actually be good.

Currently the slowing down of the economy is being accelerated. We had a very favorable market for many years, which peaked with the pandemic rescue funds. Late 2021, early 2022, the FED started to realize what was going on, and began to raise rates aggressively. At some point, you then get higher equity prices. As inflation tends to slow down, people get hopeful and rally, usually buying up what was popular at the peak. The more macro-oriented, however, will be keeping a close eye on the credit markets. We just saw rates go from basically 0 to over 5%. While the FED has hiked rates that high before, they’ve never done it this quickly. It takes time for things like this to move through the system, but we’ll definitely start to see credit problems coming in soon.

There’s a lag between bond market pricing and what the FED does. That’s why the federal funds rate may not move, but bond markets will start to improve. It’s a hope rally, and it’s what we’re seeing right now. When we get to the point where the equity market is getting ready to capitulate, equity managers tend to start to panic. We’re not really seeing a lot of panic yet, but when we do, it’ll be a great time to buy risk asset stocks. If you know how the economic cycle goes, you can usually stay one step ahead. If you’d like to find out your risk level for current economic times, head over to Blue Marlin Advisors for a free consultation.

What You’ll Learn:

• What an economic cycle looks like.
• Why all parts of an economic cycle are so important.
• How economic slowdowns can be good for some.
• Where we’re at in the economic cycle right now.

Favorite Quote:

“Every part of the economic cycle has a distinct asset class mix that’s perfect for your portfolio.” -Serge Berger

The Pros and Cons of ETFs in Your Portfolio

Steady Wealth Podcast

The Pros and Cons of ETFs in Your Portfolio

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Over the last 20+ years, ETFs have increasingly become a staple in many people’s portfolios. From an investing and trading perspective, there are a lot of reasons for this. From tradability and tax-efficiency, to diversification and transparency, ETFs can be a great option. Other times, they aren’t the best option. Let’s look at the pros and cons.

For tradability, unlike mutual funds, ETFs can theoretically be traded in and out throughout the day. In fact, there are many people who do day-trade ETFs. The flexibility and liquidity are main reasons why people gravitate towards ETFs. When it comes to tax efficiency, ETFs go through less capital gains than most other options out there. If you want to diversify, ETFs are a great choice as they cover most major asset classes. If transparency is important to you, consider that most ETFs disclose holdings on a daily basis.

Now, a lot of the pros of ETFs can also be cons in some scenarios. For instance, if you hold ETFs too long, there are management fees involved. While they are usually less than those of mutual funds, they’re still there. For liquidity, there are some ETFs that don’t have the volume to be able to liquidate easily, so be aware of this. There’s also a potential for less diversification, as many individual stocks within ETFs have a lot of overlap. While the pros seem to outweigh the cons, you should always be aware of the potential for cons.

If you’re an individual investor that wants to trade, check out The Steady Trader, where there are lots of individual trade alerts and research to tap into. If you have a portfolio and need an investment advisor, visit us at Blue Marlin Advisors and get connected.

What You’ll Learn:

Why ETF’s don’t appeal to some people.

Why ETF’s should be a part of your portfolio.

How ETF’s can help you gain exposure to different markets.

Why you should always check the liquidity of an ETF.

Favorite Quote:

“ETF’s are great products if they’re being treated properly.” -Serge Berger