• Current read is 43 on the fear greed index vs 36 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 flat at 5.98% Today, vs 5.98% last week.

• 10 year treasury bond yield increased to 4.09% Today, vs 4.04% last week

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

• Bond yields increased a little bit this week on the back of higher than expected inflation data and could imply rates higher for longer.

• 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 23rd

Overall Market Thoughts

This past week we saw more volatility in the high beta, high volatility names as Mr. Market is still confused on how to price things.

Several big tech names like Nvidia, Meta, and Robinhood had swings of 5%, or more at some point during the week. The true value of these businesses is not changing by that much day to 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.

These tiny dips 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 are stretched. A pullback is normal and healthy.

On the labor side, initial jobless claims came in below expectations. There were fewer people that filed for unemployment than expected. This means we are not seeing a major spike in layoffs and the labor market remains stable. Good!

GDP data came in quite a bit softer than expectations. There are several  factors that contributed such as the government shutdown, a widening trade deficit, and some slowdown in the economy.

On inflation, PCE data was somewhat mixed. December personal income rose 0.3%, consumer spending rose 0.4%, core PCE inflation (preferred inflation gauge of the Fed) came in around 3.0% YoY.

This means the consumer is still healthy, but inflation is still higher than the Fed’s 2% target. Growth is stable and inflation continues to cool, but it’s not yet fully under control. With time I expect inflation to fall & rates will flow that down. Inflation is not a persistent worry for me.

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 sticking to the plan that has worked for the last 10 years ish.

Monday February 23

We get factory orders. This matters because it is a leading indicator of manufacturing demand, business confidence, and future earnings. It helps answer one key question: Are companies gearing up for growth…or pulling back. We shall see! I think it will be decent.

As for earnings, we get Dominos Pizza & Hims.
Not super needle movers here IMO.
(deep dives will be in discord)

Tuesday February 24

We get the S&P Case Shiller Home Price Index which will show us how U.S. home prices are changing over time by tracking repeat sales of the same properties. It gives a clean read on housing market strength, affordability, and demand. Mortgage rates fell a tad recently, so we will see if this drums up some demand.

We also get the Consumer Confidence report. This will guide us on how optimistic or pessimistic consumers are feeling about the economy, their jobs, and their personal finances. Rising confidence usually signals stronger future spending, while falling confidence can warn of slower growth ahead.

As for earnings, we get Home Depot, Tempus AI, HP, Workday, & Axon.
The important one will be HD to get a gauge of consumer spending.
The rest matter less but I will still cover.
(deep dives will be in discord)

Wednesday February 25

No major U.S. Economic Reports.

As for earnings, we get Circle, Lowes, TJX, Nvidia, Salesforce, Snowflake, IonQ
(deep dives will be in discord)
The big dog is NVDA! This matters so much for Ai demand & if the profit margins can continue to hold up. I think they will report good, but it’s all about the guide.
(deep dives will be in discord)

Thursday February 26

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. One of the major threats right now to this bull market is the labor market, it’s important to watch this closely.

As for earnings, we get Celsius, D-Wave, Vistra, RocketLabs, Dell, Duolingo, & CoreWeave
CoreWeave is the big dog and will give us clues into AI demand and how their efforts are going to monetize their massive Capex of GPUs from Nvidia.
(deep dives will be in discord)

Friday February 27

We get the Producer Price Index which measures inflation at the wholesale level. It gives an early signal of inflation pressures moving through the supply chain before they reach consumers. This is a good gauge profit margin pressure and the risk that higher costs will eventually show up in consumer inflation.

We also get Construction Spending report that shows how much money is being spent on residential, commercial, and public construction projects. It provides insight into the strength of housing, business investment, and government infrastructure activity. Rising construction spending usually signals economic growth, while declines can point to slowing in real estate and the broader economy.

Lastly we get the Chicago Business Barometer (PMI) that measures business conditions in the Midwest manufacturing sector, including production, new orders, employment, and prices. It’s an early snapshot of manufacturing momentum, with readings above 50 signaling expansion and below 50 indicating contraction.

Final Thoughts

We are wrapping up 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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