Weekly Update: Revising the Meaning of “Don’t Fight the Fed”
Many of you have likely heard the old Wall Street adage, “Don’t fight the Fed.”
Usually, this phrase is uttered by bullish investors warning their bearish counterparts not to short a rising market being fueled by easy monetary policy.
But at this point, with the Federal Reserve seemingly set to defeat rising inflation by any means necessary, it’s taking on a different meaning.
New Meaning
For me, fighting the Fed right now would mean trying to buy stocks in the face of tightening monetary policy.
Instead of taking on that risk, I am starting to look for more ways to go with the market flow.
After all, the Nasdaq made a new year-to-date low this week, indicating that this bear market is not over yet.
Therefore, on today’s Watchlist, I’m including just one bullish idea and two bearish ideas.
Both technically and from a fundamental perspective, I think we’ll have more success trading with the Fed rather than against it.
With that in mind, let’s get right to our newest ideas…
Jackson Financial Inc.
Jackson Financial Inc. (JXN) is a $3.7 billion financial planning firm showing huge growth in both sales and earnings.
Here’s how the chart is setting up…
Here’s how the stock is setting up with my Stealth System…
- Surge score: 97/100
- % Above 52-wk low: 98%
- Sales growth: +170%
- Return on Equity: 32%
- Triple momentum: yes
Growth stocks have been hammered over the last six months, but JXN has held up better than most.
It is also a recent initial public offering (IPO), so this would be the first base breakout for the stock.
The stock has compressed nicely with pullbacks shallowing from 25% to just 8%.
I am looking to buy the stock on a break above $44.10 with a stop beneath the swing low at $42.05.
MaxLinear, Inc. (Short Idea)
MaxLinear, Inc. (MXL) is a $3.9 billion semiconductor company focused on communications chips.
Here’s how the chart is setting up…
Here’s how the stock is setting up with my Stealth System…
- Surge score: 77/100
- % Above 52-wk low: 59%
- Sales growth: +26%
- Return on Equity: 49%
- Triple momentum: yes (short)
This stock was a big winner in 2020 and 2021, climbing over 800% in less than two years.
But the bullish run appears to be over.
Shares have rolled over hard, making a decisive break of the 200-day moving average and plummeting to new lows.
The stock popped up on earnings last week, but I would use this as an opportunity to sell the stock short.
Try to sell near the $50 level and use the 200-day moving average as your stop loss.
RH (Short Idea)
RH (RH), also known as Restoration Hardware, is an $8.5 billion luxury home furnishings retailer.
Here’s how the chart is setting up…
Here’s how the stock is setting up with my Stealth System…
- Surge score: 18/100
- % Above 52-wk low: 8%
- Sales growth: +11%
- Return on Equity: 95%
- Triple momentum: yes (short)
Restoration Hardware is getting destroyed.
It’s down more than 50% over the last six months, with no sign of coming back to life.
So far, RH has found support at the $320 level.
But it has been tested four times so far, and I don’t expect it to survive a fifth test.
If the stock makes new lows, this would be a good short opportunity.
I would use the 50-day moving average as my initial stop and then bring it down as the trade moves lower.
Join the Insiders
Now, if you’ve ever wondered how I developed a proven track record of trading along the insiders like corporate CEOs, CFOs, executives and board members…
Do yourself a favor and check out my latest Insider Effect presentation!
Corporate insiders are always buying or selling shares in the companies they operate. These folks have a footing of knowledge that Main Street investors simply do not.
I covered my strategy for trading alongside corporate insiders and generating potentially massive gains as a result.
Live Coaching Session
Monday, at 3:00 p.m. EDT, we’ll be hosting our regular weekly coaching session for Stealth Trades.
We’ll send you a login reminder that morning, just so you don’t forget.
We’ll cover all of our new stocks on the Watchlist as well as the rest of the stocks inside Stealth Trades.
You need to attend this session to get the most from your subscription!
In the meantime, you can watch the replay of our latest Stealth Trades session right here.
Best wishes for your trading,
Ross Givens
Editor, Stealth Trades
P.S. Click here to learn more about my Insider Effect strategy and see what you could be missing out on.