Author: Ivanhoff

MarketSurge powers the charts in this video.

The Fed cut interest rates by 50bps, signaling that this time they are trying to be ahead of the curve – act before the economy slows down and unemployment rises. Time will tell if this is the right move. The net result is a new all-time high for the S&P 500. Small caps also gained and finished the week hovering near their 52-week highs. The Nasdaq 100 is still 4% off its all-time high. If it clears 485, it is likely to test 500. 

In the meantime, Utilities continue to rise unrelentlessly as if the market expects lower rates for longer, which would make the stock of any dividend-paying or capital-intensive companies more attractive. 

Semiconductors were among the weaker performers last week but there are potential winners even in that bucket – AVGO could be in play if it goes above 173, NVDA above 120, AMD above 160, etc.

Traditionally, gold and silver outperform during a rate-cut cycle. After a quick rug pull on Wednesday, they finished the week strong and are looking higher from here – GLD, SLV, GDX, SIL, etc.

The biotech ETF, XBI made another higher low and continues to consolidate for a potential breakout near its 52-week highs.

Overall, the price action is bullish. What would make me bearish? Seeing more high-volume selloffs in the indexes and major sectors. Seeing more sectors ETFs trading below their declining 20-day moving average.

I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.

Try my subscription service which includes a private X feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

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Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

What a difference a week can make. The first week of September brought a brutal selloff across the board. In the second week, we saw a massive recovery. This reminds me of how January started. The big pullback in semis in the first week was followed by multiple weeks of a strong rally. The odds are low that we will see a repeat of that but we have to remain open-minded to the possibility.

The next FOMC meeting is this Wednesday. There will be a rate cut. The only question is 25 or 50bps. It seems the market expects a 50bps cut and might get disappointed if it doesn’t get it. There’s no reason to be short until we see stocks and the indexes closing below the previous day’s lows.

Last week, we saw a wave that lifted all boats. Not only interest-sensitive stocks like homebuilders and biotech rallied but also tech and many other sectors. It has been a high-correlation market. Correlations are typically high during corrections and the first stage of a recovery. SPY is within 1% of its all-time highs so it is not rational to talk about a correction here. 

The biotech ETF, XBI made another higher low and it continues to work on the right side of a big base. It is setting up for a potential breakout near 103. We are already seeing multiple individual biotech stocks break out and run. Individual stocks tend to lead the ETFs and the indexes.

I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.

Try my subscription service which includes a private X feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

Tech is under pressure again. QQQ made a lower high a few weeks ago and renewed its descent. SMH weekly chart might be working on a giant head-and-shoulders bearish pattern. Semis leaders are getting obliterated and they can’t even stage a brief bounce. The ones that bounce are getting faded.

The market expects a rate cut in September. It’s a given. The only question is 25 or 50bps and the outlook for further cuts that the Fed will provide. In the recent past, the anticipation of a rate cut was a tailwind for small caps, regional banks, biotech, and homebuilders. Not this time around. Only real-estate-related stocks showed some strength on Friday but nothing to write home about. The rips are getting faded there as well.

In the meantime, bonds of different durations are rallying. Long-term treasuries (TLT) are setting up for a potential breakout near their 52-week highs. Before 2022, they were the go-to safety play when the market would pull back or there was a recession threat. This narrative went upside-down during the rate hike cycle in 2022 and 2023. Things are back to normal as the market is expecting numerous rate cuts ahead and the economy has slowed down.

Corrective markets require a different state of mind to trade them profitably. Choppy price action is typical for a downtrend – upside gaps in the indexes are sold; downside gaps in the indexes are bought. Earnings upside gaps in individual stocks fade on day one or don’t lead to follow-through for more than a day or two. Downside earnings gaps continue lower.  You don’t have to be overly active in such an environment but if you have to – approach it tactically and be nimble as any gains can reverse quickly.

I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.

Try my subscription service which includes a private X feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.