January 22, 2024

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Trendsters, strap yourselves in!

Trump's potential return has the markets sweating like a bull in a China shop. Will it be a triumphant moon landing for stocks, or a faceplant into reality? Tune in as we dissect the potential aftermath, as we question what happens to the markets if Trump wins again.

But while the political circus keeps Wall Street clowns on their toes, we've got eye-popping charts and sizzling news to set your trading engines on fire.  In "Chart of the Day," we're taking AMD on a cosmic voyage – can it rocket to $900 or is it headed for a cometary crash? ☄️ And in "Market Moving News," we'll peel back the headlines and reveal the hidden gems you need to know.

Now, grab your coffee, sharpen your trading claws, and prepare to explore the market jungle with Traders on Trend. The jungle drums are beating, Trendsters – are you ready to answer the call? ✊

See you inside! ✨

Today's Market Mood: EXTREMELY BULLISH!

The Bear-Bull Meter

Forget champagne toasts – break out the ticker tape! Wall Street erupted to record highs last Friday, fueled by a potent cocktail of mega-tech resurgence, robust earnings, and a surprise surge in consumer confidence. Investors, perhaps buoyed by the prospect of a soft Fed landing, piled back into tech like hungry hippos at a Silicon Valley salad bar.

Semiconductors led the charge, with Nvidia, last year's S&P 500 MVP, hitting a record high, crowned "AI king" by Wells Fargo. Travelers, meanwhile, jetted skyward after stellar earnings, leaving competitors trailing in its contrails. The mood on Main Street? Sunny with a chance of optimism, judging by the University of Michigan's consumer confidence reading, the highest since 2021.

Not to be a party pooper, but this sudden tech lovefest needs a reality check. We need to be reminded that tech took a nasty tumble earlier this year. Could this be a head fake, or the start of a tech renaissance?

Here's the playbook:

Tech Titans: Buy or Bail?

Nvidia's ascent signals renewed faith in AI supremacy. Follow the leader? Maybe, but keep an eye on the broader chip sector – AMD's 6% jump hints at a potential rally.

Don't forget the "flight to quality." Treasury yields may dip, pushing investors towards tech over rate-sensitive sectors like utilities.

Fed Focus: Friend or Foe?

Consumer confidence is soaring, potentially dampening calls for Fed rate cuts. This could be music to tech's ears, but remember, a hawkish Fed can still cause turbulence.

Beyond the Buzz:

Regional banks are banking on optimism, with the KBW Regional Banking Index surging. Keep an eye on this trend for potential ripple effects. Food and beverage, along with utilities, might be taking a breather after their recent run.

Remember, Trendsters, markets are like temperamental toddlers – unpredictable and prone to tantrums. Stay glued to the charts, listen to the whispers of the Fed, and adjust your strategies accordingly.

Forget AI assistants, the real market movers might be wearing fur and spitting in your coffee. A recent study claims llamas can predict stock market crashes with uncanny accuracy. Turns out, these fluffy economists get spooked by rising interest rates, just like Wall Street suits.

So, next time you see a llama, don't offer a selfie stick – ask about its portfolio! And who knows, maybe you'll unlock the secret to llama-powered market dominance. Just don't blame us if your investment strategy involves wearing a poncho and chewing cud.

$AMD Moon Mission? Charting a Course to $900

Imagine a sleek rocket emblazoned with "AMD" blasting off from a launchpad, leaving a fiery trail against a starry sky.

Stay on your spacesuits, because AMD's chart is on fire! The chipmaker's trajectory suggests a potential moonshot towards that stratospheric $900 mark, fueled by several factors:

• Tailwinds Galore: Market trends like AI, cloud computing, and gaming are blowing in AMD's favor, propelling its growth.
• Valuation Gap: Compared to rivals like Nvidia, AMD appears relatively undervalued, creating room for upward movement.
• Technical Breakout: The chart's recent surge suggests a break through resistance, potentially signaling sustained momentum.

But before you strap in and blast off, remember:

• High-Risk Ride: AMD's volatility can be stomach-churning. This is a moonshot, not a gentle cruise.
• Research is Key: Do your due diligence, understand the risks, and invest responsibly.
• Diversify Your Portfolio: Don't put all your eggs in the AMD basket. Spread the risk across various sectors and assets.

Just remember, even seasoned astronauts pack parachutes.

Sponsored

Just five companies, all heavily involved with AI, have boosted the major averages into bull market territory.

One of those stocks, Nvidia, was up 189% in the first half alone.

Nvidia is a legendary home run, but our Weiss Ratings AI specialist, Jon Markman, has homed in on one high-rated AI stock in particular.

It’s our pick for The #1 AI Stock of 2024 and Beyond.

Today, we have a big question to tackle: What happens to the markets if Trump wins again?

Trump’s re-election could have major consequences for the markets. Here’s how they will likely adjust.

Trump’s 2016 victory was a shocker for the markets, but this time, they are more prepared. Trump is on a faster track to the nomination, and polls show a tight race with Biden. Wall Street is already weighing the impact of Trump’s possible comeback.

“This time the markets will factor in both possibilities and price them accordingly - we don’t expect the same volatility as we saw in 2016 after the election,” said Daniel Tobon, head of G10 FX strategy at Citigroup Global Markets.

Of course, nothing is certain, and Trump’s chances could be derailed by his legal troubles or a surprise at the polls. That’s why the markets are more focused on the economy, geopolitics and the Fed’s rate moves.

But there is some consensus on how Trump’s policies could affect the markets, based on his previous actions and his current proposals - such as imposing 10% tariffs on imports and making his 2017 tax cuts permanent. The result could be higher bond yields, a stronger dollar, and a drag on other currencies.

Here’s how the markets reacted to Trump’s 2016 win and how they could react if he wins again this year:

Bond Rally’s Fate

The US bond market is in a different situation than in 2016, when the Fed had just started raising rates and was expected to continue. Those expectations, along with Trump’s tax cuts, triggered a bond sell-off, pushing up 10-year Treasury yields by the most in over seven years. Bond funds saw the biggest outflows since 2013’s “taper tantrum.”

The question now is how much Trump’s policies could change the rate cut expectations that are now built into the markets.

“It’s about tax and growth implications, deficit implications, regulatory implications, because that’s quite crucial for markets,” said Gennadiy Goldberg, head of US rates strategy at TD Securities.

But the fiscal impact of the election could be more subdued this time, partly because a key issue will be whether to extend Trump’s 2017 tax cuts, not necessarily adding new ones. Besides, Biden has been pursuing a stimulative fiscal policy, leaving the government with large deficits at a time of near full employment.

For now, grab some popcorn, and enjoy(?) the drama as it unfolds!

Riding the Stock Market Carrousel:

• DraftKings (DKNG): Bounced 0.2% after Stifel called "hold" a thing of the past, upgrading them to "buy." Looks like ESPN Bet's headwind is fading faster than a fumbled punt.
• Hertz (HTZ): Hit the brakes, tumbling 4.1% after Jefferies slapped a "hold" on them and slashed their price target. Electric vehicle repair woes and higher costs aren't exactly a smooth ride.
• iRobot (IRBT): Face-planted 27% after the EU's antitrust watchdog said "hasta la vista, baby" to Amazon's acquisition plans. Amazon, unfazed, revved up 1.2%.
• J.B. Hunt Transport Services (JBHT): Shifted gears higher, climbing 0.9% on stronger-than-expected revenue and a 6% intermodal shipping volume surge. Seems their deliveries are exceeding expectations faster than a package on rocket fuel.
• Spirit Airlines (SAVE): Soared 17% after exceeding passenger enthusiasm forecasts, sending revenue skyrocketing. Looks like their bookings are taking off faster than a party plane at spring break.
• Wayfair (W): Trimming the fat, rallying 10% after announcing a 13% global workforce reduction. Wall Street loves efficiency plays, even if it involves saying goodbye to colleagues.

Earnings Season Gearing Up:

Hold on to something, earnings season is about to hit warp speed with 350+ companies reporting this week. United Airlines (UAL) takes flight on Monday, a key indicator after Delta's bumpy landing. Dow heavyweight Johnson & Johnson (JNJ), Netflix (NFLX), and Procter & Gamble (PG) join the runway on Tuesday. Tesla (TSLA) charges in on Wednesday. Buckle up, it's gonna be a wild ride.

Consumer Confidence Takes Flight:

The Grinch couldn't steal consumer spirits this year. The University of Michigan Index of Consumer Sentiment soared to 78.8 in January, defying expectations and sending analysts scrambling for their spreadsheets. Looks like declining inflation and rising income optimism are acting like rocket fuel for wallets.

Interest Rates Take Off:

Last week's positive economic data, including retail sales, housing starts, and low jobless claims, threw a wrench in the "Fed rate cuts soon" party. Treasury yields surged, hitting a five-week high near 4.20%. The "good news is bad news" debate is back in full swing, with some fearing strong data could delay rate cuts and crush the bullish market.

Fed Pivot Fades? Traders Rethink the Odds:

Investors are slamming the brakes on their aggressive rate-cut expectations. The odds of a March rate cut dipped from 77% to 47% in a week, sending a clear message: the Fed might keep their foot on the gas for longer than anticipated.

It's been a week of unexpected twists and turns on Wall Street. Keep your eyes on earnings season, the Fed's next move, and that ever-shifting consumer sentiment. 

Things to Ponder

Market Mood: This week on Wall Street, earnings reports and economic data waltzed a complex quadrille. Corporate beats fueled optimism, but inflation's shadow remained, keeping investors on their toes.

Earnings Spotlight: J.B. Hunt Transport emerged as a champion, revving up on surging intermodal volume. Does this signal resilient consumer spending, or just a pit stop on the economic road trip?

Wayfair Reshapes: The online furniture giant shed weight with layoffs, while Amazon saw an unexpected rebound despite its acquisition plans hitting the brakes. Is this a case of one company's pruning benefiting another, or something more intricate at play?

Spirit Takes Flight: Holiday bookings propelled the budget airline to new heights, suggesting passengers haven't been grounded by rising costs. Can this momentum maintain altitude in the face of economic turbulence?

Fed Foxtrot: The central bank's cautious drumbeat echoed through the markets, pushing yields higher and dampening hopes for an immediate rate cut. Investors face a conundrum: embrace strong fundamentals or heed the Fed's measured steps?

On this day in history, January 22th:

1875: Alexander Graham Bell's phone rings into history, a reminder of how communication revolutions shape financial landscapes.

1905: Bloody Sunday in St. Petersburg serves as a stark lesson in the potential economic and social unrest's impact on global markets.

1943: The turning point in Stalingrad whispers the importance of resilience and strategy in navigating volatile seas, both economic and historical.

1973: Roe v. Wade's impact continues to ripple through investor sentiment and corporate governance practices.

2002: The euro's debut dances onto the scene, influencing trade, valuations, and market volatility ever since.

Confetti cannons not included, but consumer sentiment skyrocketed this week, buoyed by inflation's retreat and income optimism's encore. Earnings season kicks off this week, with United Airlines taking center stage – hopefully their numbers won't require an emergency landing.

Meanwhile, the Fed's rate-hike drama seems far from over, with strong economic data keeping the central bank's boots tapping a firm rhythm. And don't forget Wayfair's strategic shedding - sometimes financial fitness means taking off some layers. As for iRobot's robotic rejection? Well, at least they can take solace in knowing the EU's antitrust watchdog isn't afraid to dust off the broom closet.

In short, the market may not be a walk in the park, but this week, investors found themselves navigating its maze with surprising ease. Fingers crossed it's not just a case of mistaking fool's gold for the real deal.

Some market wisdom to begin the week: "The stock market is a device for transferring money from the impatient to the patient." – Warren Buffett.

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