It's hard to know who to trust these days... As my colleague Marc Gerstein detailed yesterday, a huge contradiction exists in the economy.

Editor's note: The markets and our Chaikin Analytics offices will close Monday, January 16, for Martin Luther King Jr. Day. As a result, we won't publish our Chaikin PowerFeed e-letter that day. Look for your next issue on Tuesday, January 17. The 'Smart Money' Is Betting on a Recession By Karina Kovalcik, senior quantitative analyst, Chaikin Analytics It's hard to know who to trust these days... As my colleague Marc Gerstein detailed yesterday, a huge contradiction exists in the economy. On one hand, a new Bloomberg survey points to the "most widely anticipated recession in history." But on the other hand, most analysts' earnings estimates are far too rosy for a recession. That doesn't mean the so-called "smart money" is sitting idle, though. In fact, the data today tells us this group of investors is betting on – and preparing for – a recession. Here's how we know... Recommended Links: Here's What You Missed Yesterday The man who nailed the '20 and '22 crashes explains why a rare event is coming to stocks this year, and how it could open the biggest money-making opportunity in 20 years. You could have doubled your money 34 times with his picks, so be sure to grab his FREE recommendation for 2023 while it's still online today. Click here to watch now. ** THIS WILL DEFINE MY LEGACY ** In this season of giving, Dr. David Eifrig is re-opening his original briefing on his No. 1 biggest discovery in 15 years (and more than four decades in the markets). He's already shown readers big double-digit gains since last July... even while the broader markets suffered. But see why 2023 could be the best year yet for this strategy, right here. There are two types of traders in the world – the "dumb money" and the "smart money." And it's exactly what it sounds like... We don't want to be on the side of the dumb money. These small-time traders want to get rich quickly. But their timing is usually terrible. They're typically two to three steps behind the smart money. And in turn, they get burned more often than not. The other group is called the smart money for a reason... It's made up of large institutional investors – such as pension funds, mutual funds, and hedge funds. And unlike the dumb money, these Wall Street pros are right more often than they're wrong. Just as important, they trade in large sums. And large sums leave footprints. In the early 1980s, Chaikin Analytics founder Marc Chaikin developed a way to track these footprints. It's called the Chaikin Money Flow indicator. This indicator measures the accumulation (buying pressure) versus the distribution (selling pressure) of a stock over time. And it focuses on the closing price. That's important... You see, institutions need to trade just after the open or just before the close because that's where the markets are most liquid. And since the Chaikin Money Flow indicator tracks the closing-price data for a stock, it's a great measure of smart-money activity. In our Power Gauge system, the Chaikin Money Flow indicator is a green-red oscillator. It ranges from +100 to -100. Positive numbers show net buying pressure, while negative numbers show net selling pressure. And when we look at the Chaikin Money Flow indicator today, it's obvious... the smart money is betting on a recession. When the smart money expects a recession, it gets "defensive." It starts putting money into sectors that do well in tough times – like utilities, consumer staples, and health care. That's exactly what's happening today... To see what I mean, let's look at the Utilities Select Sector SPDR Fund (XLU). The panel below the main price chart shows the Chaikin Money Flow indicator. Take a look... Notice that the Chaikin Money Flow indicator was positive back in August. But then, the smart money dried up. That makes sense, though. Fears of an imminent recession subsided at the time. And not long after that, the utilities sector began to underperform the benchmark S&P 500 Index. But now, the smart money is turning back to this defensive sector. As you can see, the Chaikin Money Flow indicator has been in the green zone since mid-November. And in recent weeks, the utilities sector started outperforming the S&P 500 once again. The picture is even clearer in another defensive sector – consumer staples... The Chaikin Money Flow indicator for the Consumer Staples Select Sector SPDR Fund (XLP) turned green in mid-November, too. And the sector has outperformed the S&P 500 since this time last year. Take a look.. In the end, our takeaway is clear... The smart money is preparing for a recession today. We should do the same. Good investing, Karina Kovalcik Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 +0.66% 12 16 2 S&P 500 +0.38% 143 294 62 Nasdaq +0.54% 32 54 14 Small Caps +1.68% 590 956 345 Bonds +1.97% Energy +1.91% 6 17 0 — According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish.. Major indexes are mixed. *  *  *  * Top Movers Gainers AAL +9.71% UAL +7.52% CTSH +5.85% RCL +5.47% NCLH +5.28% Losers CRL -5.95% TECH -5.14% ILMN -5.05% DPZ -3.50% HPE -3.49% *  *  *  * Earnings Report Reporting Today Rating Before Open After Close BK, BLK, JPM BAC, C, UNH DAL FRC No earnings reporting today. Earnings Surprises No significant Earnings Surprises in the Russell 3000. *  *  *  * Sector Tracker Sector movement over the last 5 days Real Estate +8.07% Information Technology +7.38% Discretionary +7.25% Materials +7.18% Communication +5.22% Energy +4.53% Industrials +4.44% Financial +3.58% Utilities +2.89% Staples +0.79% Health Care +0.31% *  *  *  * Industry Focus Telecom Services 8 25 8 Over the past 6 months, the Telecom subsector (XTL) has outperformed the S&P 500 by +7.03%. Its Power Bar ratio which measures future potential is Neutral, with an equal number of Bullish and Bearish stocks. It is currently ranked #15 of 21 subsectors and has moved down 1 slot over the past week. Indicative Stocks GSAT Globalstar, Inc. ATEX Anterix Inc. CNSL Consolidated Communi *  *  *  * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here. You're receiving this e-mail at STEVENMAGALLANES520.NIMS@BLOGGER.COM. For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice. © 2023 Chaikin Analytics, LLC. All rights reserved. Any reproduction, copying, or redistribution, in whole or in part, is prohibited without written permission from Chaikin Analytics, LLC. 201 King Of Prussia Rd., Suite 650, Radnor, PA 19087. www.chaikinanalytics.com. Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors. Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation. This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.