Free Money In The Waves If You Ride Them Just Right - Market After The Close, Thursday 18 July
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It Pays To Stay On Your Toes
by Alex King
During this morning's trading session it was OFFICIAL that China was about to invade Taiwan, because the Japanese Government said so. Apparently. I didn't see this news myself but I did see a rapid dumping of tech stocks, beginning with TSMC, despite the rock-solid quarter they printed before the bell. (You can read our TSMC Q2 Earnings Review here). This and general selling pressure created a very nice opportunity to bank some short gains today, in all of the major indices. The market moved up into the close but not convincingly so in my view; Netflix reported after hours with a set of numbers that were good on any measure; the stock still closed a little in the red.
My own opinion is that for now, the dominant trend is down; I don't think we're in a bear market, I don't think its Fedmaggeddon, Volmaggeddon, Great Depression 2.0, or any such thing; I think we're in a seasonal correction which unchecked will likely run down into the election, find support, and then regardless of winner, move up again afterwards. Why? Because worry. Everyone worries about Events and elections are big Events. After the Event, most likely it's back to business, unless the Worries of either side prove correct and one party is in fact going to take over the country in socialist revolution or the other side takes over the country in a populist coup. If either of those things happen, well, it's probably time to load the truck with $SQQQ and go play golf. But in the more likely event that it's business as usual with less worry, because the result is behind us, well, I think markets can continue their climb then. For now though you have to ask, will institutional investors really be winding risk on? Why would they? They have fat gains to liquidate or hedge - or should have, if they have been doing it right since October 2022 - so they can just sit on their hands and do nothing until the situation becomes clear.
The wildcard I think is rate cuts, and not because if there is a cut, folks will be YOLOing altcoins and buying up the high-beta 2021 darling crowd. No, I think if cuts happen, and money-market yields fall, I would expect this late bull money to come into $AAPL, $MSFT, $NVDA, $TLT, that sort of thing. Which will push up indices. So if there's a Fed cut in July we may see the Q3 correction cancelled; a cut in September would likely give further impetus to a Q4 run up.
As always, it pays to react, not to anticipate; but in my view it helps to have a map with which to navigate and to know which way to turn as events unfold. The charts we post here in the daily Market On Open note are in my view a useful way of orienting oneself and understanding likely reversal, support and resistance levels in both the short and long term.
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So Let’s Get To Work
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