• Current read is 36 on the fear greed index vs 43 last week.

• I put this closer to 55. The market at basically at ATHs with elevated valuations.

• Market Fearful = Potential Opportunity/Deals. (consider buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (consider buy puts/sell shares/take on less risk)

• I like to be bullish when there is extreme fear

• I like to be bearish when extreme greed.

• Opportunity is out there, just gotta find it!

• 30 year fixed mortgage rate fell to 5.98% Today, vs 6.09% last week.

• 10 year treasury bond yield fell to 4.04% Today, vs 4.22% last week

• 2 year treasury bond yield fell to 3.40% Today, vs 3.48% last week.

• Bond yields fell a little bit this week on the back of softer than expected inflation data.

• As I always say, interest rates are gravity!

• As interest rates/bond yields DECREASE, stocks become MORE attractive because bond yields go DOWN which makes the risk free bond look LESS attractive.

Let’s Break It Down:

Upcoming Week Market Outlook | Week of Monday, February 16th

Overall Market Thoughts

The market is volatile right now. High beta, high volatility names are swinging aggressively because Mr. Market is confused on how to price things.

Take Robinhood as an example. The stock is fluctuating almost 8% daily. That is over 16% in a 24 hour period. The true value of the business is not changing by 16% in one day. That is volatility. And volatility creates opportunity.

Right now I feel like the S&P 500 and Nasdaq are roughly 10% overvalued. But while price is trading sideways or slightly down, earnings per share continues to grow in the background. That means the market is naturally getting cheaper day by day.

This tiny dip in the SP/Nasdaq is day to day volatility and is justified. We just came off back to back 20% years. Earnings growth did not justify that level of expansion. So valuations stretched. A pullback is normal and healthy.

On the labor side, we got a decent jobs report last week. But I continue to believe AI and post COVID normalization will pressure the labor market over time. AI is only becoming more powerful and useful & this is the dumbest it will ever be. In my opinion, that will continue to weaken parts of the labor market.

On inflation, CPI came in slightly under expectations last week. That is why interest rates fell. If inflation is not a threat, the Fed can cut rates to support the labor market and broader economy.

Overall I expect continued volatility. But nothing changes about the strategy. We buy great companies at good prices with a moat, pricing power, and durable competitive advantage. We only use stock options to magnify ultra high conviction setups.

Keep your ratios in check and you never lose sleep. We are investors. Not speculators who only make money if everything goes straight up. We can operate in bull markets and bear markets & continue to beat the market in the long run by solid margin.

Monday February 16

Markets are closed for Presidents Day.

Enjoy the long weekend!

Tuesday February 17

Not a major data day.

The biggest thing to watch will be how the market reacts after the long weekend. Sometimes volatility can pick up.

Palo Alto reports earnings after market close. That will give us a read on cybersecurity demand and enterprise spending trends.

Wednesday February 18

We get durable goods orders. This matters because it signals how companies see future demand. If durable goods orders are strong, it suggests businesses are confident and expanding. If weak, it signals caution.

We also get housing starts. Rates have come down slightly. This will tell us whether that is stirring demand in housing or not.

Federal Reserve minutes are released. This gives deeper context into how Fed members are thinking about rate cuts and the economy. The tone will matter.

Earnings include Analog Devices, Carvana, Coca Cola, and DoorDash. I do not expect any of these to drastically move the entire market, but they will give color on consumer behavior and semiconductor demand.

Thursday February 19

Initial and continued jobless claims come out. This is important.

Initial claims show how many people are newly filing for unemployment. Continued claims show how long people are staying unemployed. That gives us a real time gauge of labor market strength or weakness.

We also get trade deficit data. Remember the GDP formula includes exports minus imports. If the trade deficit narrows, that helps GDP. More exports and fewer imports is positive for growth.

Earnings to watch include Walmart, Lemonade, John Deere, Opendoor, and Copart.

The key one for me is Walmart. I do think the stock is fundamentally expensive, but it is a great gauge of the state of the consumer. We will learn a lot about spending behavior and economic resilience from their report.

Friday February 20

We get Q4 GDP. Based on recent trends and trade data, I am expecting decent numbers. But we will see.

We also get personal spending. Consumer sentiment has been weak, but spending has remained strong. It is like leaving a bad review at a restaurant but still going back to eat. That disconnect is real. This data will confirm whether spending is holding up.

Personal income also comes out. If wages are rising, that can support continued spending and economic momentum.

PCE inflation data is released. This is the Fed’s preferred inflation gauge. We want to see it trending toward 2%. If it continues to cool, that supports the rate cut narrative.

We also get services PMI and manufacturing PMI. That tells us whether those sectors are expanding or contracting.

Consumer sentiment is released as well, which helps us measure how people feel versus how they are actually behaving.

Final Thoughts

We are deep into Q4 earnings season, and I will be breaking everything down in real time inside Discord, continuing to look for opportunities while keeping risk and ratios in check.

Given current valuation levels, I expect volatility to remain elevated, but investors with a longer term time horizon should still do very well.

This is exactly why I focus on long dated option contracts, buying calls and selling portfolio secured puts, not cash secured puts. Keep ratios & emotions in check!

I will see you all next week!

As always, I am rooting for you and want nothing but wealth & health for you & your family!

-Brandon

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