Rate Cuts, So Hot Right Now!

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 📝 Report 36: Rate Cuts, So Hot Right Now!

There was no podcast last week because I was getting over a bit of a cold that I caught on the flight back from Japan and trying to adjust to the jet-lag which is never fun. However, I have some notes this week for readers of this site that I am going to share publicly and then there will be a podcast this week.

We’re basically at a forgone conclusion that there is a rate cut here in two weeks and I talked about this being the case all the way back in June in issue 23 titled “Which Way Uncle Jerome”. 

The question most want to ask in this situation is “What will the market do on cuts” and I said it in this weeks PDF report: that question is the wrong question to be asking.

The question was, what ideas would be in-play into this rate cut cycle and we answered a lot of those almost three months ago in the PDF report and then re-iterated many each week thereafter.

Names like $SOFI ( ▲ 0.87% ) which is up over +80% since then.

Or a small-cap pick we liked in Astronics $ATRO ( ▼ 0.97% ) which had inflecting FCF, a turn-around and tailwinds from small-cap exposure into this rate cut.

And there were many more in the PDF Report that were not purely interest rate sensitive plays but just great technical/price-action setups as well that have performed.

Names like $AFRM ( ▼ 2.58% ) which we flagged back at $60-$65 a share before the earnings report and new all-time high.

A few readers cashed in well over +$10,000 on that one swing alone.

So, when I get the questions about what the broad-market will do/could do ahead of this I usually don’t have much to say but this time it’s different and I talked about that this week for subscribers.

 📝 SP500: Measured Move Worries

There are obviously a lot of ways to determine overbought or oversold situations but price-action tends to be the “purest” way of that and right now we have a measured move on the $SPY ( ▼ 0.29% ) - and not just any measured move, a monthly time frame one.

This completes at $680-$690 - again for those new here, price is an area, not an exact target.

But then you have an RSI read on the monthly of 71 which is not great, worse that it’s a monthly reading.

Now, some can take this data and say “is this a market crash?” - that’s sensationalist and I know many of you like the doom and gloom but that’s not my take-away from it and I am not sharing that here but you can read it in this weeks report. 

The simple view is that we are getting close to the shiny-object stocks slowing down and some, who turned out to be right, that bought the April lows in Mag 7 are in for a rude-awakening.

We’re already seeing divergence in many of these Mag-7 names.

And I expect that divergence to continue not only into this rate cut but into the final part of the year. In fact, I talked about this with BOJ rate hikes (which actually may be on the table again - seriously) back in Q1.

What you saw was a nasty correction, really hidden by tariffs but the rest of what I said below played a major part and that should be the case again.

Does that matter to us? No.

I am happy to trade those momentum names long or short while we pick up 40% returns on $SWK ( ▲ 4.92% ) and $GXO ( ▲ 2.43% ) then look for doubles on $ATRO ( ▼ 0.97% ) and $VFC ( ▲ 0.2% ) .

The rate cut will be a catalyst it’s just a matter, like anything, how you monetize it and I can tell you now there will be opportunities just not in these names or the gold miners like everyone thinks.

That’s it for this weeks update.

Enjoy issue 36 of The PDF Report and if you are not a member get a copy below!