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Welcome back, Trendsters! Today's newsletter is all about opportunities on the horizon as the Federal Reserve prepares to unleash a wave of liquidity. With the first rate cut in four years potentially happening this month, we're looking at a historic shift in the market that could present a once-in-a-lifetime moment for investors. Lower rates mean easier borrowing, and that could impact everything from housing to business loans. But what does it mean for you?
In today's Chart of the Day, we turn our attention to Freeport-McMoRan. After a rough spring, it looks like the copper miner is facing even more challenges, with a bear-flag breakdown and potential downside ahead. We’ll break down the technicals and what this could mean for traders.
Plus, don't miss out on the Market Moving News section, where we explore the latest on jobs data and how it’s moving the odds for the next Fed rate decision. And of course, keep your eyes peeled for some random trivia to keep things interesting!
Stay tuned—this newsletter is packed with everything you need to make smart moves in a market full of possibilities. |
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Automated Options Trades: Set, Forget, and…
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Rate Cut Expectations Rise as Labor Market Softens
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Hints of a slowing labor market sent ripples through the markets on Wednesday, raising expectations of a larger Federal Reserve rate cut. The July Job Openings and Labor Turnover Survey (JOLTS) revealed 7.673 million openings—well below the 8.1 million consensus and marking the lowest number since January 2021. This decline was particularly sharp in sectors like health care and government.
As a result, odds of a 50-basis-point rate cut at the Fed's upcoming September meeting surged to 50%, up from 38% earlier in the week. This labor market data added to concerns raised by the weak ISM Manufacturing PMI report and soft July jobs data, signaling that the Fed might need to take a more aggressive approach. While major indexes struggled for the second consecutive day, they finished off their lows, indicating some resilience. However, recession fears continue to hover over the markets. With the nonfarm payrolls report set for release on Friday, investors are closely watching for further signs of labor market weakness, which could help determine whether the Fed opts for a 25 or 50 basis-point cut. In terms of market performance, the S&P 500 slipped slightly, losing 0.16%, while the Dow eked out a small gain of 0.09%. The Nasdaq continued to struggle, falling 0.30%. On the fixed-income side, Treasury yields dipped, and crude oil prices fell below $70 per barrel. Strategy Insight: With recession risk rising, defensive sectors like utilities and staples could continue to outperform. For investors, maintaining a cautious stance while monitoring key data like Friday’s payroll report may be wise. |
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The JOLTS Report: A Shocking Twist or Just a Summer Slump?
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Why did the investor break up with the JOLTS report? Because it wasn't giving them the "hot summer fling" they were hoping for!
In all seriousness, Trendsters, the recent dip in job openings has certainly thrown a curveball into the market. It's left investors wondering if this is a sign of a looming recession or just a temporary slowdown.
The truth is, it's still too early to tell. But one thing's for sure: the Fed will be watching closely. And as always, we'll be here to keep you up-to-date on all the latest developments. So stay tuned, and remember, even in the face of uncertainty, a little humor can go a long way! |
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Freeport-McMoRan – Copper’s Losing Grip? |
Freeport-McMoRan (FCX) has been on a bumpy path since spring, and the outlook isn’t looking much brighter. After a promising series of higher highs and higher lows since early August, Tuesday’s action shattered that momentum. The copper miner slipped below the lower boundary of its rising channel, signaling what could be the start of a bear-flag breakdown. The critical zone to watch here is $43.30. This level has been a battleground in the past, serving as a key high in December and a breakout level in March. FCX gave it a valiant effort to hold onto this area, but yesterday it tore right through, leaving traders wondering what’s next.
Adding fuel to the fire, the stock has broken below its 200-day simple moving average, a key indicator of the long-term trend. When a stock starts trading below this line, it’s often seen as a warning that the long-term uptrend is fading.
And here’s the kicker: Between April and July, FCX formed what looks like a head-and-shoulders pattern, one of the most well-known reversal signals in technical analysis. Failing to break above its 2022 peak only adds to the case that FCX may be in for rougher terrain ahead.
For traders, the message is clear: Keep a close eye on these support levels because the path forward could be steep. |
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Sam Altman’s Secret Investment: Bigger Than OpenAI? |
Billionaire Sam Altman is backing a lesser-known company that could outshine OpenAI. With ties to the US Military and a boost from a Trump-era law, this could be one of the biggest tech stories yet! Discover the full story in our report!
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Easy Money or Economic Earthquake?
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The Federal Reserve stands at a crossroads, ready to usher in a new era of easy money, yet cautiously eyeing the potential tremors it could trigger. A rate cut looms on the horizon, signaling the end of an aggressive inflation-fighting campaign. But as the central bank prepares to turn on the monetary taps, questions linger: Can it achieve the elusive "soft landing," or will its actions inadvertently send the economy tumbling? The Fed's journey has been anything but smooth. From initially underestimating inflation to navigating a banking crisis, it has faced numerous challenges. Now, as it contemplates rate cuts, the stakes are high. Lower interest rates could stimulate borrowing and spending, providing a much-needed boost to the economy. However, they could also reignite inflation, forcing the Fed to slam on the brakes once again. Experts and Fed officials alike express cautious optimism, but the path forward is fraught with uncertainty. A cooling labor market, coupled with lingering inflation risks, could complicate the Fed's plans. The central bank must strike a delicate balance between supporting growth and maintaining price stability. Key Points: - A New Era Beckons: The Fed is poised to cut interest rates, marking a significant shift in monetary policy.
- Balancing Act: The central bank must carefully manage the risks of easy money while supporting the economy.
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Soft Landing in Sight? The Fed aims to achieve a soft landing, but challenges remain.
- Market Impact: The Fed's decisions will have far-reaching implications for investors. Stay alert and adapt your strategies accordingly.
As the Fed prepares to take its next step, the market watches with bated breath. The outcome of this monetary policy pivot could shape the economic landscape for years to come. Will it be a smooth transition or a bumpy ride? Only time will tell. |
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Stocks React to Earnings and Analyst Ratings |
A few notable stocks saw significant price movements driven by analyst reports and earnings results.
Dick’s Sporting Goods (DKS) fell 4.89%, despite exceeding expectations for both revenue and EPS. Investors seem concerned about the company’s guidance, which, while positive for EPS and same-store sales, fell short on revenue outlooks.
Dollar Tree (DLTR) had a tough day, plunging 22.16% after missing estimates. The company cited “immense pressures from a challenging macro environment,” and shares have been battered, down over 40% this year. Tesla (TSLA), however, was a bright spot, gaining more than 4% following CEO Elon Musk’s post about the company's robot business, which sparked optimism among investors.
Hormel (HRL) didn’t fare as well, dropping 6.43% after missing expectations and lowering its outlook. Falling demand for their whole bird turkeys continued to eat into the company’s performance, with retail volume down 9% and net sales sliding 7% in the third quarter. Looking ahead, Broadcom (AVGO) is set to report earnings Thursday, with a spotlight on its AI revenue, which doubled in the last quarter. HP Enterprise (HPE) is also on the radar, as investors look for continued growth in its AI systems business.
Meanwhile, the S&P 500 found support at its 50-day moving average of 5,505, avoiding a deeper decline. However, the Fed's Beige Book showed mixed economic signals, with modest wage growth and declining consumer spending, leaving investors on edge about future market direction. |
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| MARKET MUSINGS & TIME CAPSULE |
Random Musings Rate cuts are like stepping into a time machine—suddenly, everything feels cheaper, but what’s the true cost down the road? Keep an eye on inflation, because it always finds a way back.
Job openings shrinking and rate cuts rising—it’s like playing a game of economic whack-a-mole. Every time one problem shrinks, another one pops up.
Freeport-McMoRan breaking through support reminds us that even big players can stumble when momentum shifts. It’s not the fall that matters, but how it recovers from here.
Investor optimism often follows rate cuts like kids to a candy store, but too much indulgence and the market might just end up with a stomachache. Moderation is key.
Tesla’s robot dreams sent shares soaring. Robots may run Tesla’s factories soon, but it’s still human emotions driving the stock—fear, hope, and speculation all in one charge. On this day in history, September 5 September 5, 1997: Mother Teresa passed away, a reminder that while markets chase wealth, some legacies are built through service and sacrifice—proof that value isn't always measured in dollars.
September 5, 1774: The First Continental Congress met in Philadelphia. Much like today’s Fed meetings, the outcome had the potential to shape the future—just in a different kind of revolution.
September 5, 1977: Voyager 1 launched, embarking on a journey no investor could dream of—traveling beyond the solar system. Long-term investments, anyone?
September 5, 1882: The first Labor Day parade was held in New York City, a reminder that job data has been making headlines for a long time. Today, it's JOLTS; back then, it was just workers wanting fair wages.
September 5, 1960: Cassius Clay (later Muhammad Ali) won Olympic gold in boxing. In the market, as in the ring, timing is everything—sometimes you have to strike while the iron’s hot. |
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As we close out today’s newsletter, let’s consider a quote from investor Seth Klarman: “The stock market is the story of cycles and of the human behavior that is responsible for overreactions in both directions.” With the Fed’s potential rate cut on the horizon, we’re seeing exactly that—anticipation and reaction swirling together as markets try to make sense of what’s coming next.
Today’s topics—from Freeport-McMoRan’s struggles to Tesla’s rise on robot dreams—highlight the constant dance between reality and expectations. The Fed may start trimming rates soon, but remember that investor sentiment often drives the biggest swings. Prepare for opportunities but stay cautious of the overreactions that follow big headlines. So, whether you’re watching the Fed’s next move or following market signals like a seasoned trader, it’s worth keeping a balanced perspective. As they say, sometimes the best strategy is to stay grounded, even when everyone else is chasing the next big wave. Until next time, keep a steady eye on the markets—there's always more around the corner.
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Disclaimer:
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