VIDEO: Why We’re Watching These Indicators and RSI Levels

In today’s Daily Rundown, Chris Versace shares the upcoming hurdles the TheStreet Pro Portfolio sees for the stock market and how we’re planning to tackle them. Part of that includes keeping a close on the market’s condition, which so far isn’t oversold.

Chris also explains the other indicators we’ll be watching to avoid the risk of a market head fake and some of our plans for Friday’s Weekly Roundup.

Transcript

CHRIS VERSACE: Hey folks, Chris Versace. Here it is the afternoon of Thursday, April 3, a painful day in the markets so far as folks come around to really baking several things into their market expectations, their market forecasts, what call you, whatever you want to call it.

These are things like, yes, President Trump's reciprocal tariffs that were arguably bigger than many had expected, the evolving landscape of responses to those reciprocal tariffs, but also some of the latest economic data.

And here I'm referring to things we discussed in our alerts with you this morning, but they bear repeating, the March Challenger job cuts report that spiked compared to February, the inflation and jobs data contained in the ISM services PMI, and what that says about the economy all before the potential impact of tariffs.

And we gamed out a bunch of things in our alerts for you today, talking in one about what we would need to see, the different scenarios that could lead to a sustained market rebound. If you haven't seen that alert, I really suggest you dig into it.

We also walked through the amalgamation of events over the last couple days in terms of economic data, including the data we got earlier today that I just mentioned, but also impacted tariffs.

And we gamed out what we think Fed Chair Powell is likely to say tomorrow. If you haven't seen the alert, I'll spoil it for you. We do not expect him to deliver dovish comments. In fact, they could be incrementally hawkish, just given the most recent inflation data points.

So all this is playing out arguably how we thought it would. Remember, this is why we boosted the portfolio's cash position last week. This is also why we continue to be owners of the inverse ETFs that we have in the portfolio.

Now, near term, as I communicated with you, we are likely to stick on the sidelines. We want to be mindful about the market mood. We don't, however, want to get head-faked. But there will be a time when we want to slowly put some cash to work, taking advantage of the market's drop.

Now, I know we still have some hurdles ahead of us, the March employment report, Powell's comments like I just mentioned, potential reciprocal to the reciprocal tariffs that President Trump laid out, and of course, earnings preannouncements and the start of the March quarter earnings season.

Just quickly, you know I was concerned about the June quarter guidance before President Trump laid out the tariffs. Obviously, I continue to be concerned about that.

But here's the thing. We have yet to see the market become oversold. I know it sounds crazy, but when you look at the RSI levels for the S&P 500, it's right near 33, not below 30. For the NASDAQ Composite, it is near 32, also not below 30. So we will continue to keep our eyes on that.

But we're also going to watch a few other indicators, the VIX for example, but also the market oscillators. Why? Well, we want to determine when the worst of these multiple hurdles that we're watching when the worst of their impact is priced into the market. Again, we don't want to get head-faked.

Now, I will share with you that on the topic of market oscillators, we will be talking about them as part of the weekly roundups chart of the week, and that'll be coming your way tomorrow late in the day. So please, Bob is going to take some time to really go into a detailed effort with this, so please be sure to digest that. It is one of the things that we will be watching.

So in addition to all that, when it comes to the portfolio, will we-- excuse me, we will be watching RSI levels for the holdings. Earlier this week, we shared a table of them, and odds are we are going to update that in tomorrow's weekly roundup.

We know that there are some positions that are deeply oversold. Universal Display is one. Its RSI level is right around 25, 26. It means that we're going to be patient with that position. We are going to be looking forward to some fresh data.

But with others that are deeply oversold, we will be eyeing levels to put capital to work. And as I shared yesterday in one of our alerts, we will be examining companies with inelastic business models, which are arguably far more defensive in nature. Some of them also have nice dividend streams.

And we'll be doing this just to prepare ourselves should we see further signs that the economy is going to go through something more than, let's say, a slowdown. So we want to be prepared for that. So we'll be doing that in the next couple days, which means probably some things coming into the bullpen. I won't spoil it, but that's one of the things that we'll be looking at.

Now, I do want to close today's video with saying just, yes, I know emotions are running high. But let's remember that emotional decisions, especially when it comes to the market, well, they tend to be bad decisions. And I know it's easy to let that emotion overtake us, but we have to do our best to remain calm, cool, and collected so we can make smart decisions for the long term.

That's what we are going to do. We'll do our best to do it, and we'll be communicating all our incremental thoughts with you. Obviously, as we get fresh data, whether it's on the economy, whether it's what Powell has to say, or we start to learn more on the, again, as I like to say, reciprocal, reciprocal tariff front-- I might have botched that, but I think you understand what I'm saying.

So we do have another big day coming tomorrow. We'll have a lot coming at you, so please be sure to check your emails, your alerts. We want to make sure you're getting our latest thoughts. And if we make any moves with the portfolio, we want to make sure that you are right there with us. Thanks for watching.