Financial News vs. Noise
Obviously a rough day yesterday. Futures are currently green, but WAY off the highs. After a day like yesterday you often prefer the next day to be a red to green move. You get more confidence of a bottom than you do with a green open. What you often see is that people who didn’t sell yesterday take any opportunity to sell the next day. Looking at a chart of SPY there is no real obvious nearby support. The best levels would be the 200 day and the April lows, both pretty far away.
I think if all we are talking about are some issues in Japan, war in the Middle East, and Fed behind the curve, then we are probably close to done here. Not saying we zip back up, lots of damage has been done. The wild card is whether there is anything going on beneath the surface.
The QQQs are a bit more interesting. They pulled an undercut and rally at the 200 day. That becomes any easy level to use as a stop for a long.
It’s also a bit more interesting as it seems like some of the froth has been taken out of AI, which means we are getting close to being able to froth it up again. Personally, AI is the only spot I have longer term options and the only spot I add to dips on. I did add some yesterday.
I think Jefferies has a pretty good take here…..
Some normalcy has started to return to the markets. To reiterate our view expressed yesterday, we do not think the Fed will cut inter meeting or will deliver a 50bp cut in September. We do not think that the US economy (or Europe) is headed for a hard landing. The aggressive market reaction over the last few sessions was due to combination of heavy positioning, unwind of carry trades, summer illiquidity and geopolitical concerns which amplified the shift in market perception of the US economy.
Some other positives in a sea of red….
NVDA closed over $100
Semi’s also had an undercut and rally at the 200 day.
This could be a big deal in helping restore confidence in AI. Palantir Stock Jumps on Strong Earnings. CEO Sees ‘Unprecedented Opportunity.’-Barron's
“The growth of our business has been re-accelerating steadily, and we see an unprecedented opportunity ahead to capture and build on that momentum,” CEO Alex Karp wrote in a shareholder letter. “Our growth across the commercial and government markets has been driven by an unrelenting wave of demand from customers for artificial intelligence systems that go beyond the merely performative and academic.”
My head of ETF Capital Markets told me to buy calls ahead of earnings, unfortunately I didn’t.
Then there is Nickileaks talking about a larger than 25bp cut. Market Selloff Upends Fed Rate-Cut Calculus A further slowdown in the labor market could lead to a larger half-point rate cut next month-WSJ
If you are worried about the market there is something wrong with your strategy. From the high, SPY is down 9.4% (still up 9.54% ytd). My personal account from the high is down 1.4% because my main goal is to avoid large losses that are very difficult to come back from. What to Do With Your Money if You’re Worried About the Market-WSJ. Moves like this are a wake up call, if you are making dumb money moves or can’t sleep then something is wrong.
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