March 21, 2023

Markets:

Stock futures rose Tuesday as traders tried to add to a rally from the previous session that was sparked by hope that the banking turmoil would be contained.

Regional banks surged in early trading, led by First Republic. The beaten-down bank jumped 21.9%, a day after losing 47%. The SPDR Regional Banking ETF (KRE) gained 3%. Regionals got a boost after Treasury Secretary Janet Yellen said Tuesday morning that the government is ready to provide further guarantees of deposits if the banking crisis worsens.

Wall Street is coming off a strong rally, with the Dow surging more than 380 points Monday, while the S&P 500 gained 0.9%. The action came a day after a forced takeover of Credit Suisse by UBS, which was engineered by the Swiss government. Investors also welcomed news that JPMorgan Chase could be advising embattled First Republic Bank on strategic alternatives.

Investors now expect a slower pace of tightening from the Federal Reserve in light of the banking crisis. Traders now are pricing in a 83% chance of a quarter-point rate hike when the Fed wraps its two-day policy meeting on Wednesday, according to CME Group’s FedWatch tool. The probability of a pause is at 16.6%.

Billionaire investor and Pershing Square CEO Bill Ackman said the U.S. Federal Reserve should pause its interest rate hikes, as the Federal Open Market Committee meeting kicks off Tuesday.

Noting that markets have seen “major shocks” with the closures of U.S. banks, Ackman said the banking crisis “remain unresolved” and that higher rates will not help with the situation.

Portfolio:

We enter todays session holding positions in TSLL, BAC, and APPS. All exploding higher in premarket.  S&P technically continues to once again build.  If this ever gets over 4100 and holds it at close, it'll be next level for this market.  Not saying this happens, but this hated move higher continues right now and we will never fight the trend and continue to trade both sides of this.  Be ready today, we could add into this move but the Fed tomorrow is the wild card.  Right now, patience over the next two sessions until we release the Fed's decision and then our path will be set to trade with both hands!  Our hope, the current trend line continues to build and after the Fed tomorrow added fuel is provided.  Could make for a wild period ahead with opportunity.  Stay alert today and ready.  Let's have a great session.