Good morning,
Last week, I highlighted the importance of two upcoming events for investors: Jackson Hole and Nvidia earnings.
Nvidia’s earnings are this Wednesday and while I still believe this is the market’s most important stock, how much importance that event carries has declined in the wake of Powell’s speech last Friday.
As always, I’m not going to tell you what Powell said or how I felt about it. I’m only interested in the market’s interpretation. And that view was:
OVERWHELMINGLY BULLISH
Anyone who tells you otherwise is lying, misinformed, or some combination of the two.
Friday saw greater than 11:1 advancers to decliners on the NYSE and more than 90% up-volume for the first time since November 14.
That was 12 trading days after the October low (Friday was 14 from the August 5 low) and the S&P 500 would go on to rise an additional 17% from that day until the end of Q1 and it went the entire time without so much as a 3% pullback.
Of course, I’m not going to call my shot with Nvidia and predict how this week will go. The chart still looks strong overall and is predictably at an inflection point ahead of earnings.
But regardless of what that stock does, we want to bet on stocks being higher from here through year-end. And Friday’s action and the history of breadth thrusts tells us we don’t want to wait for a pullback that may never come.
The major takeaway here is that if you didn’t increase equity exposure along with our ETF models on August 6, it still isn’t too late to do so.
However, what I’m interested in buying or adding to is now different.
Small-caps were the biggest beneficiary of Friday’s action and while the absolute chart has been strong, the relative chart vs. large is finally catching higher.
Buy small caps.
This week’s report will review:
Major index technicals
History of 8-day win streaks
What happens after the first Fed rate cut
Why the dollar deserves our attention
Key takeaways from the S&B 20 baskets
and more!
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