Hey, Ross here:
Welcome to a brand-new trading week.
Before we dive deeper into what’s going on in the stock markets, let’s look at a chart that illuminates just what an anomaly the era of low interest rates truly was.
Chart of the Day
The days of 3% mortgages are over. And we may never see them again.
Those waiting for interest rates to fall back to 2021 levels could be in for a rude awakening.
We have been spoiled by low interest rates for more than a decade. Money has been cheap, allowing Americans to borrow for a fraction of what our parents paid for the same debt.
This has fueled prosperity. Bigger houses, nicer cars, and a host of other luxury goods became “affordable” thanks to low monthly payments.
But as today’s chart shows – this is not the norm.
The average 30-year mortgage rate peaked at 18.6% in 1981. For today’s median home price of $439,000 with 20% down, that would mean a monthly mortgage payment of $6,224. And that’s before taxes and insurance.
The stock market is still in the process of adjusting to the new reality that the era of low interest rates could be over for good.
And as last week’s price action showed, such an adjustment always comes with some pain.
What to do in such a situation?
Well, there’s no reason to make it even more difficult for yourself – so why not just take the path of least resistance?
Insight of the Day
The path of least resistance – at least in the near term – is the short side.
Over the next few days, you’ll see me sharing some short trade ideas right here on this newsletter.
That’s because the near-term path of least resistance for the stock market is to the short side.
Market participation is plummeting – with over 60% of stocks in long-term downtrends and over 75% in short-term downtrends.
Add a hawkish Fed, the UAW strike, and a surging dollar and Treasury yields on top of that…
And it’s pretty clear that those willing to short stocks stand the best chance of picking up short-term gains right now.
That’s not to say there aren’t areas of strength (there always are).
But if you’re willing to short stocks, there are some great opportunities out there.
And if you want to get a hold of these short trade opportunities before the rest…
Embrace the surge,
Editor, Stock Surge Daily