I Get This Question All the Time
Editor's note: Use a guiding light to make it through the storm clouds...
Many investors fled the markets over the past few years as sky-high inflation and geopolitical conflict weighed on the markets. Now, with a banking crisis unfolding, this market uncertainty could drag on for much longer...
That's why Pete Carmasino – chief market strategist for our corporate affiliate Chaikin Analytics – believes it's crucial for investors to have the best tools at their disposal in order to survive this bear market.
In today's Masters Series, originally from the March 24 issue of the Chaikin PowerFeed daily e-letter, Pete details how the recent banking crisis has weighed on stocks... explains why more pain is on the way in the banking sector... and reveals how the Power Gauge system can help you navigate this ongoing turmoil...
I Get This Question All the Time
How do you know if the Power Gauge works?
People ask me that question all the time. And every time, my answer is simple...
Just look at the chart.
You see, many investors are skeptical. They don't think anything can help them anticipate the market's next move – at least not consistently.
The mainstream media reinforces this mantra...
To them, the market is a flowing river. And like a rafter, you're just along for the ride.
But at the same time, we all know Wall Street analysts use many different tools to interpret data and make predictions. They're certainly not just riding down the river on a raft.
For everyday investors, this situation winds up creating something called "cognitive dissonance" – or the mental toll of facing conflicting information. And it's not your fault.
Today, I want to clear the air with a compelling chart from the financials sector...
You'll see that this chart is about as clear as it gets. And with the Power Gauge at our side, we can continue making smart decisions even in today's market environment...
Now, I know we've already run a couple essays about the current banking crisis. And my colleague Marc Chaikin touched on the SPDR S&P Regional Banking Fund (KRE) recently as well.
But today, I want to zero in on this exchange-traded fund ("ETF"). That's because the regional banking sector builds a very compelling case for the Power Gauge...
KRE holds shares of about 140 regional banks. And today, it has zero "bullish" stocks.
Importantly, before the banking crisis hit, the Power Gauge flashed a few key signals on this ETF. So again, if you're wondering if the Power Gauge works, just look at the chart...
Specifically, I want to focus on the section that shows KRE's relative strength...
Nearly five months ago, on November 17, KRE experienced a negative relative strength change. That means the ETF started underperforming relative to the S&P 500 Index. And it's evident with the red coloring on the chart.
Soon after that, the Power Gauge flashed a "bearish" signal on KRE. Again, you can see what I mean with the red coloring in the lowest panel on the above chart.
Now, look at the Chaikin Money Flow indicator...
This indicator shifted from green to red leading up to that signal. That means the "smart money" from institutional investors stopped flowing into KRE before things went south.
In other words, by just looking at the chart, folks could've avoided the pain in this space.
And importantly... you'll notice that the chart is pointing toward more pain for KRE today.
The Power Gauge rates KRE as "bearish" today. The ETF's relative strength is deep in the red. And the Chaikin Money Flow indicator shows that the smart money is running away.
Thanks to the Power Gauge, we could see that regional banks were in trouble long before the recent crisis. And as a result, we could've avoided the pain that many others endured.
The Power Gauge combines fundamental and technical indicators on a stock-by-stock basis. It helps everyday investors interpret the categories and factors that matter most to them.
What you get out of it depends on how you use that information.
But if you're still wondering if the Power Gauge works, always remember...
Just look at the chart.
Good investing,
Pete Carmasino
Editor's note: Chaikin Analytics founder Marc Chaikin predicted the February sell-off... and the recent banking crisis – months before it happened. And he just stepped forward to share an urgent warning about what's coming next for the stock market in 2023...
Marc recently hosted an online presentation to discuss the one step investors must take in order to protect their wealth moving forward. Click here to watch the full replay...