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BIPOLAR Market: One week pessimistic, the next week optimistic.
The market sentiment is shifting week by week with each set of data—one week pessimistic, the next bullish, and so on. The index has recovered all it lost and closed the gap created on Black Monday. Inflation has dropped to its lowest level since 2021. This high volatility is leading investors to demand more fixed-income assets like bonds.
Strong Drop and Strong Recovery in the Markets
We had a week that began with a Black Monday after the Bank of Japan decided to raise interest rates for the first time in 30 years, from 0% to 0.25%. This triggered significant panic in the markets.This situation highlights the carry trade we discussed in a YouTube video. Essentially, investors were obtaining loans at extremely low rates (0%) and investing in T-bills and other riskier assets that offered higher yields. However, when there is a change after 30 years, and rates rise—even if only to 0.25%—it suggests a shift in trend. As a result, investors begin to reallocate their debt in response to the rate hike and start selling. This selling pressure forces other financial operators to rebalance their portfolios, leading to further selling and creating a snowball effect.Following the largest single-day drop in the SP500 since 2022, the index made a strong recovery, marking the biggest rise since 2022 as well. It’s important to note that, unlike Japan, the U.S. is looking to lower interest rates.
Biden steps down, markets respond; Kamala competes; earnings reports disappoint, and markets correct.
It was a week of correction, with disappointing earnings reports from tech stocks and mega-cap companies dragging the market down. For now, the correction appears healthy, and we need to wait to see how things continue next week.
The market reacts positively, declaring Trump the victor.
This week of July 15 was eventful, with the market responding positively in the early days, assuming a Trump victory following his failed assassination attempt. However, Thursday and Friday saw a strong correction in the SP500. We also witnessed an impressive rise in the Russell 2000, in contrast to the correction in the SP500. This rotation towards smaller-cap assets implies that a rate cut is very likely, and these companies stand to benefit the most.
Bitcoin Unstoppable and Germany Sells
Week of July 8 with Important Data. We saw significant increases overall, with bullish pressure, followed by a strong correction on Thursday that recovered on Friday. The declining inflation data provides a positive outlook for potential rate cuts.
A week with TESLA soaring, giving us an 18% return in just 2 days, and SPY reaching a new high.
We had a week with the S&P 500 recovering in the last 3 days, with TSLA delivering excellent results by breaking out of its descending channel pattern, while other assets behaved more similarly to the SPY.
Last Week of June, Q2, and H1 2024.
Returning from a business trip, I didn’t send an email for 2 weeks because I prefer to send it when I'm focused and clearly seeing the results. If I don’t have clear information, I don’t trade, and that’s not possible while traveling. Now back from my trip to Europe and China, we’re resuming. This last week has seen mixed results, and we have the PCE report on Friday, which could provide some signals about the direction of things.
Mixed data, uncertainty in the new highs of the S&P 500.
The month of June begins next week, and the indices corrected quite a bit this week after reaching highs the previous week. They are currently in a local support zone, which, if we see a general bullish sentiment, could continue upward. However, as we mentioned, there are mixed feelings. Next week should bring more clarity.
NVDA Took It All: Excessive Optimism? Rate Cuts, Historic Highs in Commodities, and the Future of Crypto in the U.S.
The week of 05/27/2024 begins, and the market anticipates rate cuts, but inflation persists with commodities at all-time highs. China is reinforcing its gold reserves, and cryptocurrency is moving strongly as the FED and U.S. policy navigate an uncertain future. Is the shortest bull market in history about to come to an end.
Encouraging Data: Bullish Week
The week of 05/20/2024 begins, and we saw good performance last week thanks to encouraging—or rather, non-pessimistic—inflation data, which provided a significant upward boost. However, we need to stay alert because, while the CPI (Consumer Price Index) was "good," the PPI (Producer Price Index) wasn't as favorable, and that will eventually transfer to consumers.
