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August was a wild card, leaving even the most seasoned experts scratching their heads. The markets, it seems, have a knack for keeping us on our toes. But the real question is: Why did this happen? Today’s newsletter, titled “The Market Fooled Everyone in August, Even Experts – Here’s Why It Happened,” aims to unravel this mystery. We'll explore the factors that contributed to August's unexpected volatility and what it means for the road ahead.
But that's not all! We have a fascinating Chart of the Day featuring PayPal, dissecting its recent price action and offering insights into its potential trajectory. Plus, we'll keep you updated on the latest Market Moving News, ensuring you're always in the know.
And for those who appreciate a bit of trivia and lightheartedness, don't miss our Market Mischief and On This Day in History sections. We've got some intriguing tidbits that will surely pique your interest. Ready to dive in? Let’s get started! |
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Gas Too Expensive? This Tiny $2.50 Stock May Have the Answer |
Tired of feeling the pinch at the pump? A massive breakthrough from a little-known company could be the key to solving the gas crisis. And it’s not about electric cars!
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Manufacturing Woes Trigger a Risk-Off Refrain
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September, historically Wall Street's trickiest month, has wasted no time living up to its reputation. The first trading day saw a sharp sell-off, fueled by underwhelming manufacturing data from both the U.S. and China. Investors, seemingly spooked by the prospect of economic weakness, sought refuge in defensive sectors, leaving tech stocks to bear the brunt of the downturn.
The Nasdaq, heavily weighted towards tech, plunged over 3%, while the broader S&P 500 wasn't far behind with a 2.12% drop. The VIX, often dubbed the "fear index," shot up over 30%, signaling a marked increase in market anxiety. In contrast, Treasury prices rose, pushing yields lower as investors sought safety in bonds.
This abrupt shift in sentiment follows a surprisingly robust August, where stocks managed to stage a comeback. However, elevated valuations and uncertainty surrounding the Fed's upcoming decisions have injected a fresh dose of volatility into the market. The rotation out of tech and into defensive sectors further underscores the prevailing caution. Key Takeaways: - Manufacturing Malaise: Weak manufacturing data from both the U.S. and China has raised concerns about global economic health.
- Tech Tumble: Tech stocks, particularly in the semiconductor space, are experiencing a significant pullback.
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Defensive Dominance: Sectors like staples, real estate, and utilities are outperforming as investors seek safety.
- Volatility Spikes: The VIX surge highlights heightened market nervousness.
Strategies: -
Stay Agile: The market is currently in a delicate balance, so be prepared for further swings.
- Reassess Risk: Consider adjusting your portfolio's risk exposure in light of increased volatility.
- Focus on Fundamentals: Look for companies with strong balance sheets and resilient business models.
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Monitor the Fed: Pay close attention to upcoming economic data and Fed communications for clues about future policy moves.
Remember, Trendsters, even in turbulent times, opportunities can emerge. By staying informed and maintaining a disciplined approach, you can navigate the market's twists and turns with confidence. |
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Flip Options Fast: A Simple Way to Target Big Potential Paydays |
Discover how a little-known trading technique could let you flip undervalued options for big potential returns—often within hours. With 3-4 opportunities a week, you won’t want to miss out. Now, we cannot promise future returns or against losses, but the next trade could be coming as soon as tomorrow.
Learn how you could get started now! |
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The VIX's Dramatic Return: "I'm Back, Baby!"
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Remember the VIX, that quiet wallflower who's been chilling in the corner all summer? Well, September rolled around and suddenly, the VIX is back, louder and more dramatic than ever! It's like they took a page out of a reality TV star's playbook, shouting, "I'm back, baby!"
The VIX's sudden surge is a stark reminder that market tranquility is fleeting. Just when we thought things were calming down, volatility decided to crash the party. It's like that one unpredictable friend who always manages to spice things up, even when you least expect it.
So, while the VIX's return might be causing some anxiety, let's not forget that a little bit of spice can be a good thing. It keeps us on our toes, reminds us to stay adaptable, and adds a touch of excitement to the otherwise mundane world of finance. Just remember to hold on tight, because with the VIX back in the spotlight, the market is sure to be anything but boring! |
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Paypal (PYPL) is currently in a tight spot as it hovers just above the $70.06 support level. After a failed attempt to break through resistance at $73.93, the stock seems to be testing investors’ patience. Below $70, there's a significant drop in trading activity, which could lead to a swift slide down if the floor gives way. On the flip side, holding above this level might offer a glimmer of hope for a short-term bounce.
Volume tells the story here: most of the action is happening between $71.79 and $73.93, a battleground where buyers and sellers are fighting for control. If Paypal manages to climb past $73.93, the next target is $76.00, but that’s a big “if” given current market conditions. The Stochastic RSI is showing signs of being oversold, hinting at a potential rebound—but don’t get too excited just yet. Macro concerns like rising interest rates and weakness in the tech and fintech sectors could keep a lid on any rally.
For the bold, a break below $70.06 could be the signal to go short, aiming for $67.13, and potentially lower. For the cautious, it might be wiser to wait for a convincing breakout above $73.93 before going long. Either way, this battle at $70 is one to watch closely. |
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Nvidia Unchained: Tap Into NVDA’s Acceleration Cycles for Big Gains |
Graham Lindman’s new Nvidia trading strategy targets outsized acceleration cycles. Buy when the candle turns green, sell at the optimized point, and potentially double or triple your investment. Now more affordable thanks to Nvidia’s stock split!
Discover Nvidia Unchained today! See how Graham is trading Nvidia now. Follow the link to get started!
The profits and performance shown are not typical, we make no future earnings claims, and you may lose money. The trades expressed are from historical data in order to demonstrate the potential of the system. From January of 2000 through May of 2024 from the study we have seen a 82.5% win rate on stock with an average winner of 10% and an average return of winners and losers at 5.77% on an average 28 day hold time in a model portfolio. The historical options over the last 5 years have shown a remarkable 169.1% average return per trade of winners and losers over that same 28 day average hold time.
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August’s Market Shock: Even the Experts Were Fooled
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August 2024 will be remembered for its dramatic volatility—and how even the most seasoned experts were blindsided. Global stocks tumbled in the first few days, sending the CBOE Volatility Index (VIX) to levels unseen since the pandemic. While the chaos was largely attributed to over-leveraged yen carry trades and inexperienced traders, the market’s rapid recovery left many scratching their heads.
By the end of the month, the S&P 500 had fully bounced back, and traders returned to their favored positions. The cherry on top? Jerome Powell’s dovish speech at the Jackson Hole symposium, signaling that the Fed was not in a hurry to cool labor markets further, which added fuel to the recovery.
But what truly stood out in August wasn’t just market movements—it was the wild swings in economists’ predictions. One major firm raised its recession probability to 25%, only to scale it back weeks later. Others, like a well-known Wall Street bank, declared the U.S. was already in a recession. These shifting forecasts have only added to the uncertainty.
With Wall Street analysts heavily reliant on high-frequency data, expect this narrative volatility to continue. Until the Fed re-establishes more stable strategic anchors or a major shock reshapes the economic outlook, we’re in for more of this analytical turbulence. |
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Tech Stocks Tumble While Defensive Sectors Hold Steady
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Tech stocks took a beating today, with Nvidia (NVDA) dropping over 9% following last week’s earnings, where guidance—though positive—failed to meet investor expectations. This downturn continued for other big names, including Apple (AAPL) and Microsoft (MSFT), suggesting that the rotation out of tech might still have legs. The sell-off also hit the semiconductor sector hard, with Intel (INTC), Micron (MU), and AMD all losing nearly 8%. Investors are increasingly nervous about the economic outlook, taking their concerns out on high-growth sectors.
On the brighter side, Southwest Airlines (LUV) gained 2.28% after receiving an upgrade from Evercore ISI, citing improved capacity discipline and new revenue strategies. In contrast, U.S. Steel (X) dropped nearly 6% following opposition from Vice President Kamala Harris regarding its $14.1 billion sale to Japan’s Nippon Steel. Meanwhile, Boeing (BA) took a hit, falling over 7% after a downgrade from Wells Fargo, which flagged concerns about the company’s future cash flow.
With the Federal Reserve signaling a shift in focus toward the labor market, investors are eagerly awaiting Friday’s nonfarm payrolls report. A soft report could push the Fed closer to a 50-basis-point rate cut at the next meeting, with some analysts already expecting further cuts by year-end.
In the meantime, today’s ISM Manufacturing report fell short of expectations, indicating continued weakness in the U.S. manufacturing sector. Keep an eye on factory orders tomorrow—they may provide some needed clarity. |
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MARKET MUSINGS & TIME CAPSULE |
Random Musings When in doubt, blame the algorithms – If August taught us anything, it’s that when markets go haywire, pointing the finger at trading algorithms is always a safe bet. After all, they’re the only ones that don’t argue back. Is $70 the new $100? – With Paypal (PYPL) hovering just above $70, it feels like stocks have a new benchmark for “psychological support levels.” If it breaks, expect a flurry of opinions on whether it was an “inevitable technical move” or just bad luck. Fed Speak Translation Guide – “We are not seeking further cooling in labor markets” loosely translates to “We’re just as confused as you are but don’t want to admit it.”
Recession probability roulette – Economists are adjusting recession odds like they’re spinning a roulette wheel. Is it 25% or 15% today? Who’s keeping track at this point? VIX hits 20 again – When the VIX rises above 20, Wall Street’s version of “something’s wrong” starts to get louder, but somehow, nobody’s ever surprised. On this day in history, September 4
September 4, 1998 – Google is founded by Larry Page and Sergey Brin. Little did they know they’d be revolutionizing everything from how we search for information to how we check our portfolios.
September 4, 1929 – The Dow Jones Industrial Average peaks just before the infamous crash of 1929. A reminder that even the best rallies can turn sour faster than a poorly timed trade.
September 4, 1957 – Ford Motor Company debuts the Edsel, one of the biggest failures in automotive history. Proof that even the most established companies can make colossal misjudgments.
September 4, 1972 – Mark Spitz wins his seventh gold medal at the Munich Olympics. It's a lesson in hitting your stride at just the right time—something market timers dream of.
September 4, 2006 – Amazon announces the development of Amazon Web Services (AWS), which would go on to power half the internet—and fund Jeff Bezos’s space ambitions. |
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To close things out, here’s a thought from investor Shelby Cullom Davis: “You make most of your money in a bear market, you just don’t realize it at the time.”
Considering the twists and turns August threw our way, this quote reminds us that volatility can create opportunity—even when it doesn’t feel that way. The market’s unpredictability may have blindsided many, but staying patient and strategic often leads to the biggest rewards. While the tech sell-off and concerns over the Fed have dominated headlines, there are always hidden gems waiting for those who can see beyond the noise. So, as we move further into September, keep this in mind: sometimes the best gains come from staying calm when others are uncertain. |
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