We got some interesting data Wednesday related to something we discussed on Monday’s episode of Crush the Open that I’d like to revisit…
Because it’s not great news for the market. But this environment has been great for a particular pairs trade I’ve had on, and I think this trade has a lot more room to run…
First, I’ve been watching the manufacturing data, and believe it to be a number that’s super tricky… If it comes in weak, markets might not like it. And if it comes in strong…
Look out below — the markets would likely hate it because that would mean manufacturing is slowing, which of course is not good.
On the other hand, that could also mean it’s time for the Federal Reserve to start cutting rates or at least slow down, which the market would like… But that’s not the case.
The U.S. Manufacturing PMI was projected to come in at 47.8, but instead we got 47.3, which is light. So you’d expect short-term interest rates to fall…
But instead, we first had a quick dip Wednesday morning in the U.S. 2-Year Treasury… before it took the elevator straight up.
Meanwhile, S&P 500 futures went straight down as this 2-year went up. So stocks, overall, don’t love the weak manufacturing number.
Now we’re in this weird environment where super strong data is bad… weak data is bad — it’s basically a lose-lose.
But things have been working out well for a pairs trade I have on right now in Link Trade Alerts, particularly today. When markets get rough like they have been most of the past year14 months or so, a hedged trading strategy often shines.
Check out my short video up top and let’s discuss this pairing of a long energy stock and short an electric vehicle company.
This was the first trade issued in my Energy Supercycle theory, and it’s working out beautifully, so be sure and check that out!
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*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
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