I talked about this chart in my newsletter last Wednesday before that pivotal CPI number... and that is exactly what has played out:
"If tomorrow's CPI inflation number comes in lower than expected and breaks this chart down, we could start to see a stronger broadening of stocks, with Mag7 taking a breather."
Sep rate cut is just about a lock and even December is favored.
The real-world part of the market is doing great - stocks like Home Depot, DH Hortons (home builder), even regional banks doing great. Coffee, energy, beauty products. We're hiding in some tech like Uber which I think is "safe" tech, but for now the A.I. party is over, especially with ASML delivering so-so guidance and reports of Trump getting tough on Taiwan.
Small caps? According to Bespoke Investment Group. “History was made today. The Russell 2000 closed 4.4 standard deviations above its 50-day moving average. No other major US index (Dow since 1900, S&P 500 since 1928, and Nasdaq since 1971) has ever closed at that much of an extreme,” the firm said in a post on X.
What to make of a move like that? Yes, some retracement is warranted, but massive high-volume moves like that are to be respected. A sea change could be upon us so keep an eye on forgotten stocks in the "real" economy. They've been forgotten for too long and with aggressive rate cuts on the horizon, as long as growth doesn't slow too much the Roaring 20s narrative may continue to play out.
Need help with option overlays?
Reach out. hans@gammacapitaladvisors.com
Comentarios