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Trendsters, the much-anticipated Harris-Trump debate didn’t disappoint, with tariffs, tax cuts, and fracking taking center stage. While Harris criticized Trump’s tariffs as a “sales tax,” Trump defended them with his usual flair. Both candidates promised tax cuts, though the details left plenty of room for interpretation. The debate stirred up plenty of market questions, and today’s newsletter is here to break it all down.
Meanwhile, in our Chart of the Day, Cisco Systems is back in focus after a strong rally last month. After a pullback to key levels, buyers are eyeing new opportunities. Will CSCO find support and surge higher? We’ll dive into the technicals to give you the full picture.
And that’s not all! Stay tuned for Market Moving News and perhaps a fun bit of trivia to keep you on your toes. Today’s update is packed with insights to help you keep track of the latest market movers and the strategies that can position you well in this volatile environment. |
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On the Edge of Anticipation
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The S&P 500 momentarily touched a new record high, fueled by optimism around the Fed's expected rate cut and Microsoft's hefty stock buyback announcement. However, the market's initial enthusiasm fizzled, leading to a near-flat close. It seems investors are holding their breath, hesitant to make bold moves before the Fed's decision.
August retail sales data exceeded expectations, signaling continued consumer strength. While this positive news didn't cause a major market swing, it adds another layer of complexity to the Fed's decision-making process.
The current market uncertainty, coupled with the looming Fed announcement, has kept volatility elevated. The VIX, a measure of market volatility, ticked higher, reflecting the cautious sentiment. Potential Market Movements: -
Increased volatility: Expect choppy trading in the coming days as the market reacts to the Fed's decision and Powell's comments.
- Sector rotation: Depending on the Fed's actions, we could see a shift in favor of sectors that benefit from lower rates, such as technology and consumer discretionary.
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Bond market reaction: Keep a close eye on Treasury yields, as they will reflect the market's expectations for future Fed policy.
Strategies to Consider: Stay agile: Be prepared to adjust your positions quickly in response to market movements. Manage risk: Consider using stop-loss orders to protect your downside. Focus on quality: In times of uncertainty, prioritize companies with strong fundamentals and healthy balance sheets.
Don't try to time the market: It's impossible to predict exactly how the market will react to the Fed's decision. Focus on your long-term investment goals and stay disciplined. |
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Microsoft's Buyback Bonanza |
Why did Microsoft announce a $60 billion stock buyback? It wanted to show the Fed who the real big spender is!
With the Fed about to make its interest rate decision, Microsoft decided to flex its financial muscles with a massive buyback plan. It's like the company is saying, "Hey Fed, we can stimulate the economy too!" Of course, the buyback is likely more about boosting shareholder value than one-upping the central bank. But hey, a little friendly competition never hurt anyone, right?
This move also highlights the contrasting approaches to economic stimulus. The Fed uses interest rates to influence borrowing and spending, while companies like Microsoft can directly inject cash into the market through buybacks. It's a fascinating dynamic to observe, and it adds another layer of intrigue to the current market environment. |
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JPMorgan Chase - Ready to Break the Mold? |
JPMorgan Chase's chart is painting a picture of bullish potential, hinting at a possible surge of at least 14%. It's like the stock is channeling its inner athlete, training hard within the confines of its long-term upward channel, and now it's eyeing that gold medal – the $229.00 price target.
The 50-day moving average is acting as a bit of a hurdle, but with the RSI showing a neutral stance, there's plenty of room for JPM to power through. It's a classic case of "watch this space" – a potential breakout above the MA50 could signal the start of an exhilarating rally.
Remember, though, even the most promising charts need a reality check. Keep an eye on those broader market trends and economic indicators – they're the coaches that can help you fine-tune your trading game plan. Key takeaways: -
Bullish Bias: Long-term and short-term uptrends suggest a positive outlook
- Potential Breakout: A move above the 50-day MA could trigger further gains
- Target in Sight: $229.00 is the potential reward, but be mindful of resistance levels
- Stay Alert: Combine technical analysis with market awareness for optimal decision-making
In short, JPMorgan Chase is showing signs of strength, but like any good athlete, it needs to perform under pressure. Keep your eyes peeled for that breakout – it could be the start of a winning streak! |
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The Fed's Gambit: Playing the Volatility, Not the Prediction Game
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The Fed's rate decision is upon us, and the market is a cocktail of anticipation and apprehension. We've seen the S&P 500 flirt with new highs, only to pull back - a clear sign that investors are on edge. The question isn't if the Fed will cut rates, but by how much. And therein lies the uncertainty that's keeping everyone on their toes. The market has been riding high on the hope of a rate cut, but with many stocks already in overbought territory, the risk of a "sell the news" event is real. The bigger the cut, the more the market might worry about the underlying economic health. It's a classic case of "be careful what you wish for."
My Strategy: Cash is King, Volatility is Queen In this climate of uncertainty, I'm playing it safe. I've raised my cash levels and am ready to pounce on the volatility that's sure to follow the Fed's announcement. Trying to predict the market's reaction is a fool's errand. Instead, I'm focusing on the opportunities that volatility will create. The key is to resist the FOMO (fear of missing out). Yes, the market could rally on the news, but it could just as easily pull back. The Fed's decision will likely trigger a significant shift in market sentiment, and I'm prepared to adjust my portfolio accordingly.
Remember, the best traders don't try to outsmart the market. They adapt to it. So, let's stay focused, keep our powder dry, and be ready to seize the opportunities that this volatile period presents. |
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Small Caps Shine as Big Tech Stumbles Ahead of Fed Decision
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Small-cap stocks stole the spotlight today, with the Russell 2000 gaining around 0.8%. Hopes of lower interest rates boosting smaller companies that rely more on borrowing fueled the rally. Meanwhile, the energy sector also surged on the back of rising crude oil prices, driven by a weaker dollar and U.S. plans to refill reserves.
The softer dollar also offered support to multinational U.S. companies with significant overseas operations, contributing to a strong performance in the consumer discretionary and industrials sectors. However, big tech took a breather for the second consecutive day, with weakness seen in giants like Nvidia, Apple, and Broadcom. The reasons behind this decline remain unclear. Notable Movers: - Intel (INTC): Continued its upward trajectory following positive announcements about a co-investment with Amazon Web Services and the establishment of Intel Foundry as an independent subsidiary.
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Microsoft (MSFT): Received a boost from a $60 billion buyback plan and a dividend raise.
- Hewlett Packard Enterprise (HPE): Jumped on an upgrade from Bank of America, citing cost-cutting opportunities and synergies from an upcoming acquisition.
What to Watch Later: - Dot-plot for 2024 and 2025: Will the Fed's projections be hawkish or dovish?
- Terminal rate: How low will the Fed go?
- Summary of economic projections: Does a potential 50-basis-point cut indicate a weaker economic outlook?
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Powell's press conference: Expect some market-moving commentar
All eyes are on the Fed's 2 p.m. ET announcement. Keep a close watch on:
Additionally, focus on August housing starts and building permits, along with August existing home sales and leading indicators later in the week.
Remember, we're in a crucial market moment. Stay informed, and let's see how the Fed's decision shapes the next chapter of this market story. |
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MARKET MUSINGS & TIME CAPSULE |
Random Musings
The Fed meeting: It’s like watching a cooking show where everyone knows what the dish will be, but no one’s quite sure how spicy it’ll turn out. If you think JP Morgan climbing 14% is exciting, remember—volatility always makes a bigger entrance when you're not expecting it. The stock market is a master of mixed signals. Just when you think you’ve got it figured out, it decides to throw a curve you didn’t see coming.
Inflation, rate cuts, and economic projections—what a trio. At least one of them is bound to create some drama for traders. Microsoft announces a $60 billion buyback, and the market says, "Sure, that’s nice, but what about the Fed?" Priorities, right? On this day in history, September 18
September 18, 2008 – Lehman Brothers files for bankruptcy, triggering a global financial crisis and leaving everyone wondering how things got so far off track.
September 18, 1793 – The U.S. Capitol’s cornerstone was laid by George Washington, proving that long-term investments sometimes take a while to build but can stand the test of time.
September 18, 1981 – Sandra Day O'Connor became the first woman confirmed to the U.S. Supreme Court, breaking barriers in leadership, just as tech companies do with innovation (on good days).
September 18, 1973 – West Germany and East Germany joined the United Nations, a reminder that sometimes even the biggest divides can close with the right diplomatic effort.
September 18, 1998 – The Internet Corporation for Assigned Names and Numbers (ICANN) was formed, giving structure to the internet and proving that even chaotic systems need order (kind of like rate cuts). |
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The Calm Before the Trade
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As we wrap up today’s newsletter, remember, the market’s reaction to the Fed's decision is anyone's guess. But one thing is for sure—volatility creates opportunity. Whether you’re positioned to ride the wave or sitting on the sidelines waiting for your moment, it’s all about keeping a steady hand in the face of uncertainty.
In the words of Jean-Paul Getty, "In times of rapid change, experience could be your worst enemy." It’s a good reminder that flexibility beats stubbornness in this game. So, whether the market goes up, down, or sideways tomorrow, staying nimble is the name of the game. Markets have a way of surprising us all, no matter how much we think we know.
As always, keep your eyes on the charts, your strategies sharp, and your cash ready to deploy when opportunity strikes. Until then, we’ll be watching the Fed and preparing for the next round. |
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