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Welcome back, Trendsters! After a well-deserved long weekend for Labor Day, it’s time to dive back into the markets. The economic landscape may be shifting, with whispers of a Bidenomics Miracle suggesting that the tide could be turning just in time for the 2024 election.
Is this newfound optimism the real deal, or are we just seeing a temporary lift? Today, we’ll explore whether the economy is truly on the mend or if caution is still the best strategy.
Our Chart of the Day focuses on Super Micro Computer Inc. (SMCI), which is at a critical juncture following a significant sell-off. The stock is balancing on key support levels that could either lead to a steep decline or pave the way for a remarkable comeback. You won’t want to miss our analysis on what might be next for SMCI.
We’re also bringing you the latest Market Moving News, dissecting crucial earnings reports and sector shifts. And for a bit of post-holiday fun, there’s some trivia to keep things interesting. Let’s get back to business, Trendsters, and see what the markets have in store after the break! |
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August's Dramatic Exit Sets the Stage
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The markets concluded August on a high note, showcasing a remarkable recovery from earlier jitters. Despite a rocky start, fueled by recession fears and a volatile job market, the S&P 500® index ultimately secured its fourth consecutive month of gains. This rebound was largely attributed to improving economic indicators and a growing expectation of a September rate cut from the Federal Reserve. The Dow Jones Industrial Average®, in particular, hit a series of new all-time highs, bolstered by strength in sectors beyond tech and mega-caps. Friday's PCE report further solidified the optimistic outlook, with core PCE coming in below expectations, signaling a continued easing of inflation. Closing Bell Highlights: - The SPX rose 1.01% to 5,648.40
- The $DJI gained 0.55% to 41,563.08
- The $COMP added 1.13% to 17,713.62
- The 10-year Treasury note yield climbed to 3.91%
- The VIX fell to 14.96
Looking Ahead: While the market's recent performance is encouraging, there are signs of consolidation and potential headwinds. Investors are cautiously assessing whether the positive momentum from earnings and anticipated Fed rate cuts is already factored into current prices. Additionally, September's historical reputation as a challenging month for stocks adds another layer of uncertainty. Strategies to Consider: - Stay Selective: Focus on sectors showing strength, such as real estate, materials, and industrials.
- Monitor Volatility: Keep a close watch on the VIX and be prepared for potential market swings.
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Balance Risk and Reward: Consider rebalancing your portfolio to ensure it aligns with your risk tolerance and investment goals
While the market's future remains uncertain, the recent rally provides a glimmer of hope. |
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Inflation's Diet: Still Hungry, But Losing Its Appetite
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Remember when inflation was the uninvited guest at every economic dinner party, gobbling up your purchasing power? Well, it seems like it's finally starting to watch its waistline. The latest PCE report showed that inflation cooled down a bit in July. It's like inflation went on a diet, and while it's still got a bit of a sweet tooth, it's definitely not ordering seconds anymore.
This is good news for investors and consumers alike, as it could signal a less aggressive Fed and a potential easing of interest rate hikes. Of course, we're not out of the woods yet, and inflation could always come back for a midnight snack. But for now, let's savor this moment of relief and hope that inflation sticks to its new, healthier eating habits.
Just remember: a balanced diet is key, even for the economy! |
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Buckle up, SMCI investors, this could be a wild ride! The latest sell-off has pushed Super Micro Computer Inc. to the very edge of its multi-year parabolic support. This isn't just another dip; it's a make-or-break moment for the stock's long-term growth trajectory.
The 1W MA100 (green trend-line), a steadfast support since the COVID crash of 2020, is now under siege. If it crumbles, the parabolic party is over, and we could be looking at a freefall towards the $250 level.
On the flip side, if the bulls manage to defend the 1W MA100 (and it'll take a miracle of positive news to pull that off), then SMCI could be poised for yet another stratospheric rise, potentially targeting the $2000 psychological milestone.
Bottom line: The stakes are high, the odds are stacked, and the future of SMCI hangs in the balance. Keep your eyes glued to this chart, folks, because it's about to get interesting! |
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Bidenomics: A Glimmer of Hope?
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After years of gloom, it appears that Americans are finally shaking off the malaise that has gripped the nation since the onset of the pandemic. This shift in sentiment could provide a much-needed boost for Kamala Harris as she gears up for the final stretch of the 2024 presidential race.
Confidence measures have been lackluster for years, with the University of Michigan’s sentiment survey hovering near recessionary levels despite a strong recovery from COVID and record job growth under Joe Biden. However, the latest survey data shows a significant uptick in consumer attitudes, particularly in the long-term economic outlook, which jumped over 10% from July to August.
This isn’t just an isolated case. Gallup and The Conference Board both report similar improvements in economic confidence. While these gains are modest, they suggest that the tide may be turning. The earlier stock market chaos of August has subsided, and inflation, which peaked at 9% in June 2022, has now fallen back to a more manageable 2.9%. Even expectations for future inflation are at their lowest in nearly four years. As interest rates appear poised for cuts, consumer spending could increase, further improving sentiment. The timing couldn’t be better for Harris, who replaced Biden as the Democratic nominee in July. Recent polls indicate that Americans rate Harris more favorably on economic matters than Biden, a sign that her candidacy might be offering a fresh sense of optimism. The national mood is improving, inflation is easing, and interest rate cuts are on the horizon—all of which could set the stage for a strong finish to 2024. While challenges remain, particularly for lower-income families, the overall economic picture is brightening, offering a rare moment of optimism in an otherwise challenging period. |
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Tech Titans Take the Lead
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The tech sector saw some significant moves this week, driven by a mix of earnings, analyst ratings, and strategic shifts. Dell (DELL) soared after exceeding Wall Street's expectations, fueled by strong demand for its AI-oriented servers. Marvell Technology (MRVL) also surged on the back of impressive earnings and positive guidance, citing "strong demand from AI." Intel (INTC) got a boost from reports of potential restructuring and a possible shift in expansion plans.
Breadth and Performance: A Mixed Bag
The S&P 500 continues to show strength, with 77% of its stocks trading above their 50-day moving averages. However, the Nasdaq and Russell 2000 are lagging behind, highlighting a divergence in performance between large-cap and small-cap stocks. Sector-wise, utilities, real estate, and financials led the gains in August. Technical Outlook: S&P 500 in a Holding Pattern The S&P 500 remains range-bound, stuck between 5,550 and 5,650 over the past two weeks. This consolidation phase suggests a cautious outlook until the index breaks out and sets new all-time highs. Economic Data: PCE, Spending, and Jobs in Focus The PCE price index for July met expectations, rising 2.5% annually. While this is still above the Fed's 2% target, it's a sign that inflation is moderating. Personal spending and income also came in line with forecasts, suggesting that consumers remain resilient.
Crude Oil Prices Plunge Crude oil prices took a hit after reports that OPEC is likely to proceed with a planned output hike in October. This move could put downward pressure on inflation, but it also raises concerns about potential supply disruptions.
Jobs Data Takes Center Stage The focus next week will be on the August nonfarm payrolls report. Analysts expect job growth of 163,000, which would be a significant improvement from July's disappointing 114,000. A strong jobs report could reinforce the Fed's hawkish stance, while a weak report could raise the possibility of a larger rate cut at the next meeting. The Bottom Line The market remains in a delicate balance, with investors weighing positive economic data against lingering concerns about inflation and the Fed's policy path. The upcoming jobs report will be a key factor in shaping the market's outlook in the weeks ahead.
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MARKET MUSINGS & TIME CAPSULE |
Random Musings
Inflation is like that friend who promises to leave but keeps sticking around. Even as the overall rate cools down, certain costs, like groceries and rent, are still hanging around, reminding us that some challenges just don't depart quickly.
Rate cuts may be on the horizon, but they’re not a silver bullet. They can provide temporary relief, but they also signal that underlying issues still need to be addressed. As markets anticipate these cuts, the real test will be how the economy handles them.
Consumer sentiment is climbing, and this shift could be the boost Kamala Harris needs in the 2024 race. As optimism spreads, it’s worth noting how much this can influence market behavior and political fortunes alike.
Tech stocks are soaring on AI momentum, but let’s not forget that every rise comes with its own risks. Dell, Marvell, and Intel are riding high, but staying grounded is crucial as market dynamics can change swiftly.
August ended on a high note, but September is known for its surprises. With the market’s recent gains, it might be wise to keep an eye out for potential shifts as we move deeper into the month. On this day in history, September 3 September 3, 1783: The Treaty of Paris was signed, officially ending the American Revolutionary War. A reminder that even the most intense conflicts eventually find resolution, just as markets find equilibrium after turmoil. September 3, 1929: The Dow Jones Industrial Average reached a peak before the infamous crash that led to the Great Depression. This serves as a cautionary tale about market exuberance and the importance of staying vigilant.
September 3, 1939: Britain and France declared war on Germany, marking the start of World War II in Europe. Global events can have profound impacts on markets, just as geopolitical tensions do today.
September 3, 1967: Sweden switched from driving on the left-hand side of the road to the right, a move known as “Dagen H.” This drastic change shows that sometimes, significant shifts are necessary to keep things on track, much like policy shifts in the economy.
September 3, 2008: Google launched its Chrome browser, forever changing the internet landscape. Just like today’s AI advancements, innovations can quickly become integral parts of our daily lives and economies. |
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As we close the books on this market roundup, let's leave you with a dose of wry humor from the renowned economist, John Kenneth Galbraith: "The only function of economic forecasting is to make astrology look respectable." In a world where predictions and projections often fall flat, it's a lighthearted reminder to approach market forecasts with a healthy dose of skepticism. While analysis and data can guide our decisions, the future remains inherently unpredictable. After all, in the grand theater of the market, even the most seasoned experts can find themselves playing the role of the fool. |
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