Stocks continue to be slippery with the S&P 500 down 6 out of the last 8 trading days.

I'm in the camp that this is a constructive pullback after a fantastic run to kick off 2023. JC has been pounding the table all month about how sloppy, digestive trading action in the month of February is perfectly normal market behaviour.

With February drawing to a close soon, I wouldn't be suprised to see this downdraft exhaust itself soon. As such, I'm going to make a tactical bet that a leading name in the banking/finance sector is going to hold these levels and potentially lead the way back to 2023 highs.

From the Desk of Willie Delwiche.

Annual data shows that the Federal government’s cost to service its debt (as a % of GDP) reached its highest level in two decades last year. 

Why It Matters: Debt servicing costs were at a generational low just a few years ago. Now persistent inflation is pushing bond yields higher and the latest CBO projections show federal debt levels continuing to soar (new highs that aren’t cause for celebration). Interest payments on the debt are moving from afterthought to fiscal burden. Without a rediscovery of fiscal discipline getting a handle on inflation is going to be a challenge and that is likely to keep yields higher for longer. A quick return to the market and fiscal conditions of the past decade does not appear to be in the cards.    

We've adjusted a position in the Paid-to-Play portfolio today:

The largest insider transaction on today's Hot List is a Form 4 filing by Samuel Cowley, general counsel and secretary of Insight Enterprises $NSIT.

Cowley reported a purchase of $853,065 in NSIT.

From the Desk of Kimmy Sokoloff

The market is jittery this morning as we await more economic data, more importantly inflation data.

In January, Fridays were very strong. In February, Fridays have overall traded higher but very lackluster.

We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

This week we're looking at Capital Goods stocks.

Wall Street analysts keep raising their estimates.

This, of course, is happening as the prices of these stocks keep on going up.

This is classic behavior for bull markets.

You can see the revisions trend rising as the price of the S&P500 keeps heading higher:

From the Desk of Ian Culley 

Rates continue to rise along with concerns of an impending recession.

The narrative is quickly shifting back to tighter monetary policy following last week’s higher-than-anticipated CPI and strong economic data. I don’t pay too much attention to this gossip. But I do keep a pulse on the latest discourse surrounding markets.

With these newfound recessionary fears circulating, I want to share a chart I like to avoid… The 2s10s treasury spread.

I can’t remember the last time I wrote about the yield curve. It’s been so inverted (deepest inversion since the early 80s) for so long that I honestly don’t know what to think.

Nevertheless, the overlay chart of the Staples sector $XLP relative to the S&P 500 $SPY with the 2s10s spread conveys an important piece of information:

It sounds so simple.

To win at trading means to take profits.

If there are no profits taken, there is no winning. And if there is no winning, then what am I even doing here?

Subscribers to the various options education services we provide at All Star Charts know that I’m usually very clear about where I’ll take profits in the various trades I put on. Most trades have a profit target and I set the GTC limit orders out in the market and let them get hit. I’m hands-off. Unemotional.

So it would seem that I’m pretty automatic about this practice of profit-taking in all realms of the market in which I engage.

You might be surprised that this hasn’t been true in my personal index options trading.

From the Desk of Kimmy Sokoloff

This morning the market popped.

Then it faded most of the day until about 1:00 p.m. ET, when the rally started, right off of support.

$SPY dipped below 396.76, and then it bounced from there.

This is the video recording of the February 23rd, 2023, Weekly Town Hall w/ Willie Delwiche.

2/23/23 2:00 PM ET