Dreary Action Likely Just a Pause Before Rate Cut Pushes Market Higher
Some top-calling bears might view this as the beginning of the end, but investors love to love the Federal Reserve.
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It was a dreary session on Monday with technology and Magnificent Seven names in the red, while the Russell 2000 squeaked out a minuscule gain.
Only about 42% of stocks advanced, but given the extended technical conditions, it wasn’t terrible. Some profit-taking and consolidation ahead of the Federal Reserve's interest rate decision on Wednesday would be quite healthy.
Despite the gloom, a fair number of speculative stocks rose by more than 10%. It was helpful that there is some support in the Bitcoin/cryptocurrency group, which has been one of the worst groups recently.
On my screens, the biggest winners were biotechnology and names like Nvidia (NVDA) , Harrow (HROW) and Uber (UBER) . The semiconductor sector also showed relative strength, with Micron (MU) and Broadcom (AVGO) attracting interest.
Sessions like this tend to bring out the top-calling bears who view this as the beginning of the end. The more likely scenario is that it is a pause that refreshes and sets the stage for another push higher. The Fed decision will be the catalyst for the next move, and investors love to love the Fed.
My game plan here is to manage positions closely and to be in position to make some aggressive buys after the Fed makes its move. I don’t know if that means chasing strength or buying dips, but I’ll have a list of trading candidates ready and will be prepared to take action.
Unfortunately, we will have to wait until Wednesday afternoon for the Fed, which means we’ll probably see some random and inconsistent action in the interim. It is a good opportunity to spend some time looking for some new ideas.
Have a great evening. I’ll see you tomorrow.
At the time of publication, DePorre was long UBER, NVDA and HROW.
