WARNING: The Technicals are *FLASHING* This Warning.

So Yesterday obviously ended red which

suggests there's still a lot of fear

left in the markets that's absolutely

true we don't yet know what we're going

to get for our February March and April

data but what happened to financial

conditions something Jerome Powell let

the Federal Reserve pays a lot of

attention to and what happened to our

Breakeven inflation rates because what

I'd like to see is as the stock market

turned red and the 10-year treasury

approached four percent what did

Financial conditions do our financial

conditions properly and potentially

adjusting for the pain that we've

already seen in January data and is that

potentially enough to keep our stock

market from lagging even lower well

let's take a look this particular chart

here is a chart of the Goldman Sachs

Financial conditions index and the

financial conditions index is made up of

the value of the dollar the value of

stocks the value of housing the value of

a treasury bonds it's a little bit of

everything a lot of it is based on the

value of the treasury yields so let's go

ahead and see if we have any kind of

Trends here so first of all it's worth

noting that right now we are sitting at

Financial conditions that are as high as

what we last saw at the end of December

remember when everybody was basically

paper handing for tax loss harvesting

well that's roughly where we sit right

now at a scale of financial conditions

tightness we're sitting around that

December paper handing level however

we're not sitting at the levels of

financial tightness that we saw in

September and October and this is where

we really started seeing Financial or

inflationary surprises and we

potentially really started bottoming in

a lot of stocks a lot of stocks saw

their bottom in Q3 2020 uh um two now is

it possible that October did end up

marking the bottom aligning with the

tightest Financial conditions yeah it is

possible unless of course we get more

inflationary surprises in the Feb March

April reports which obviously come out

April uh it will come out March April

May anyway if we get worse reports we're

going to zoom up we'll probably see the

stock market test those bottoms and so

that's kind of interesting if you align

again the bottom of the stock market

with financial conditions you can see

why have we been read the last two or

three weeks here Financial conditions

have been substantially tightening uh

and at the same time we've had this

alignment the 10-year treasure yield has

tightened to the tune about 60 basis

points that could move mortgage rates in

the real estate market up probably

somewhere around 60 to 75 basis points

as well if we Google mortgage rates

right now we drop to our usual 740

credit score so we have a consistent

look folks we are back at where are we

we are right back to the seven percent

credit score almost sitting at 7.1 or

not for a credit score 430 your fixed

rate mortgage that's pretty dang high

and this is symbolized and brought to us

by the financial uh a Goldman Sachs

Financial conditions report so this is

something we're really going to have to

pay attention to but what we'd also like

to pay attention to is that well I'd

like to say that that Financial

condition's tightening could be a sign

that the Market's already trying to take

care of that January hot data for us so

the Market's already at work and as long

as we don't get worse data in February

which comes out next month in March

maybe the pain that we just went through

will end up being temporary now though

let's also look at the five-year break

evens how are we doing on Five-Year

break-evens because five year Break Even

suggests to us okay is inflation going

to get worse or are we topping out on

inflation so we'll just in this portion

here Focus specifically on what

Financial or what five-year break-evens

or the Market's predictor of inflation

have been telling us for the past year

and that's very important because we

know we are well above where we were

when the FED last pivoted in uh in 2018

at the end of 2018 where the five-year

break evens were sitting about 1.6

percent we were trending in that

direction in January but unfortunately

the January data really ruined

everything here is the chart of the

five-year break evens and if we go ahead

and draw a similar line over here so

let's go to our tool and grab a line

here what do we have what we have is a

five-year Break Even level that has

peaked out about last week maybe

somewhere around Monday Tuesday and

we're sitting at levels that are at the

same inflation expectations of what we

had roughly at the beginning of December

so really we're relatively stable there

if we wanted to draw a larger downtrend

we can although that downtrend is not as

perfect as what we've previously had

where it started to look like we were

almost breaking the downtrend that we

had had a nice downtrend here and

unfortunately that somewhat broke here

so the downtrend just isn't as quick as

what we had been hoping and that's

really to say that inflation's probably

going to take a lot longer to bring down

than we were expecting and that's why

we're seeing some of that red here the

good news is we've somewhat peaked again

on those inflation break evens and

that's fantastic so maybe this is a sign

that we're not going to get back to that

4.3 treasury yield we're not going to

get back to that level of uh of of

inflation uh that we saw previously and

maybe just maybe we could stabilize now

there is a thesis uh that uh hey we're

going to end up doubling double dipping

with the next reports but at least now

could it show hey things won't be as bad

as what we saw going into Q3 where we

had uh these these break evens sitting

closer to 2.7 percent or potentially the

break-evens that we saw in October well

maybe since we're peaking out slightly

lower than where we were in October

maybe the worst is behind us in terms of

looking at the chart temporarily thanks

to the January data again we look at the

January data and we kind of compare it

to where the NASDAQ has been we zoom out

on the NASDAQ we look at a Fibonacci

retracement you saw where we were on the

break evens look at where that puts us

when we look at the NASDAQ for example

this is the chart of the QQQ we have now

perfectly retraced uh on the NASDAQ to

our Fibonacci level one up from zero

here right now this is very very

interesting because it's almost like we

perfectly got rejected at our second

level on the Fibonacci and now here we

are at falling right back to our support

which is the second level now in terms

of a percentage for retracement it's

worth knowing that we got rejected at

the 38.2 percent retracement what that

means is when we take when we say that

the high of December of 2020 or November

in this case of 2021 is the peak and the

bottom is potentially November or excuse

me October of 2022 then we retraced 38

we've got rejected and we fell to the

next level which is at about 23.6

percent

right now at least from a technical

point of view it seems like Financial

conditions have tightened enough to

where we should be okay in terms of

tightness given this hot January data we

got

we have break even yields inflecting

down which suggests maybe we could have

a slow bounce off of this 28 Fibonacci

level in my opinion a reasonable

trajectory on a technical basis going

forward here could be a slow

continuation of the trend that we've

that we've had slow though very slow so

for example if we if we look for a trend

here I think probably one of the best

places to draw that might be here let's

see what this looks like let's kill that

let's draw a new line over here let's

see if we can get a trend over here

if we suggest hey when could we

potentially get to the 50 retracement

line on a little bit more of a patient

Trend it might take us until about June

and in my opinion this trend line is a

reasonable trend line to pay attention

to and it really shows us a ceiling for

those higher Highs coming off of the

bottom and that suggests maybe still

bouncing around not yet breaking that

38.2 percent line until look at where

that break lines up from a chartist

point of view that break to a leg higher

breaks right here March 21st now why is

that so interesting from a technical

point of view

fomc meeting folks the fed's fomc

meeting is on March 22nd this means from

a technical point of view for the next

three to four weeks maybe we'll trade

sideways leading into that fomc meeting

where we'll get CPI and jobs data but

the market will mostly care about how is

the Fed reacting and responding to that

and if the FED continues on sort of this

dovish path even though we lost Leo

Brainard from The Fad she's gone over to

be the director of the National Economic

Council she took Larry kudlow's job well

his previous job somebody else is there

now you know Mr v-shaped recovery anyway

that's the NEC so Leo Brainerd left she

was the one of the biggest doves at the

fed and now she's gone you've got a

pretty hawkish fed actually right now

but you're even seeing some of the Hawks

like Master say look once we get to five

percent uh we're good like I mean maybe

we have some more small hikes to do but

the leading data we're seeing from

businesses and companies we're talking

to which by the way reiterates what I'm

seeing in earnings calls and reports at

companies is that the tightening is

happening what you're seeing it

especially with some lag especially with

the quantitative tightening still ahead

of us but anyway potentially from a

technical point of view we could bounce

off of the 23.6 NASDAQ Fibonacci level

here which is basically where we closed

that level to tell you exactly is 289 64

we closed about two points above that at

about 291. so but we did touch that

intraday we almost perfectly touched the

Fibonacci Fibonacci intraday in fact if

we look at the lows I was about 40 cents

off pretty close anyway is it possible

that then we have this sort of volatile

uh volatility maybe a slow Trend up with

volatility going into March 22nd and

then a breakout around March 22nd which

is what the at least for me my technical

point of view is pointing out yeah and

then the next resistance level is really

going to be that 50 Fibonacci in which

case this trend if it holds could

potentially say it's going to be June

before we actually break that 50

Fibonacci level right so it's

interesting we'll see but from a

technical point of view I think the

retracement that we just had over the

last three weeks is not a confirmation

that we're back to a longer term bear

Trend mostly because if you look at the

longer term bear Trend we've already

broken that right we're we're look at

that we're literally sitting on the

200-day moving average as support

and we're not anywhere near that longer

term bear Trend which would suggest

longer term uh or second leg lower right

so from a technical point of view which

by the way I talk about technical

analysis a lot as well in the stocks and

psychology of money course linked down

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learn about everything that I know in my

perspectives over there but from a

technical point of view I'm not very

bearish right now if anything this is a

moment right here I'm actually tempted

on Monday to potentially pull the

trigger on some option trades uh we are

we we're talking about those a lot in

the live stream yesterday so if you're

in the course member stream you'll see

exactly which particular stocks are

really Prime for this option trade based

on volatility analysis and now based on

a technical analysis on the NASDAQ we

could look at some components of the

NASDAQ and maybe pull off uh some some

uh some good uh yield farming so to

speak on Monday