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Red Across the Market This Week: Is Recovery Coming or Will the Bloodshed Continue?

In volatile markets, as we saw this week, adapting is key to staying in the game. It’s not about being the fastest, but about moving intelligently.

MOTIVATION
Quote of the week

"Those who survive are not the strongest, but the most adaptable to change."

-Charles Darwin-

Week of 02/09/2024
What You Need to Know This Week

Fed Expectations: Investors are keeping an eye on the Fed, with the possibility of a rate cut driven by slowing inflation and strong employment data.

NVIDIA Drops Despite Impressive Performance: NVIDIA shares fell 6.4% after disappointing with its spending forecast, even though its revenue grew by 122%.

Struggles in the Housing Market: Existing home sales fell 4.1%, reflecting buyers' difficulties due to high mortgage rates.

Tesla Increases Sales in China: Despite global challenges, Tesla showed a 5% growth in its sales in the Chinese market.

Nasdaq Under Pressure: The tech sector retreated 2.3%, due to concerns about large AI companies.

08/09/2024
Reflection on What Happened and What Might Happen

The market corrected sharply this week. In an attempt to recover from the previous week, we saw that it was not enough and it has retreated again.

There is still no sign of a negation of the bullish trend, but we do see that it closed in a support area from which it could rebound (see chart, white line). If it loses this area, we would be approaching the support zone marked by the last low during the red week we had due to the Bank of Japan's rate hike (red rectangle on the chart). If it reaches that zone, it would be an interesting region to see a reaction; there could be a notable bounce. A breach of that support area would indicate a potential larger decline and correction.

We need to be attentive to how the market reacts in that zone.

QQQ 1D

Historical Perspective

Previous Technology Corrections: NVIDIA's decline is reminiscent of what happened with Apple in 2015, when inflated expectations led to significant corrections despite strong financial results.

Rate Cuts of 1995: The Fed's rate cuts amid a similar slowdown in 1995 fueled a 20% market rally in the following 12 months.

08/09/2024
Market Lessons

The market continues to teach us that excessive expectations are dangerous. Despite strong results, both NVIDIA and Tesla faced corrections that many did not see coming. Maintaining a rational strategy will always be more effective than chasing the hype.

Common Mistakes

One common mistake that can be seen in weeks like these is overestimating NVIDIA's future growth, as its reduced spending for the upcoming year surprised many investors. The market quickly punishes those who do not have proper risk management in place.

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Earnings Calendar 09/09/2024
Economic Calendar

Monday, September 9, 2024

Time

Event

Forecast

Previous

12:00

NY Fed 1-Year Consumer Inflation Expectations (Aug)

3.0%

3.0%

13:30

Atlanta Fed GDPNow (Q3)

2.5%

2.1%

16:00

Consumer Credit (Jul)

12.30B

5.23B

Tuesday, September 10, 2024

Time

Event

Forecast

Previous

08:00

OPEC Monthly Report

11:00

Fed Vice Chair for Supervision Barr Speaks

13:00

EIA Short-Term Energy Outlook

13:15

FOMC Member Bowman Speaks

14:00

3-Year Note Auction

3.440%

3.810%

17:30

API Weekly Crude Oil Stock

-2.790M

-7.400M

Wednesday, September 11, 2024

Time

Event

Forecast

Previous

09:30

Core CPI (MoM) (Aug)

0.2%

0.2%

09:30

Core CPI (YoY) (Aug)

3.2%

3.2%

09:30

CPI (YoY) (Aug)

2.5%

2.9%

09:30

CPI (MoM) (Aug)

0.2%

0.2%

11:30

Crude Oil Inventories

0.900M

-6.873M

11:30

Cushing Crude Oil Inventories

-1.704M

-1.142M

14:00

10-Year Note Auction

3.648%

3.960%

Thursday, September 12, 2024

Time

Event

Forecast

Previous

09:30

Continuing Jobless Claims

1,850K

1,845K

09:30

Core PPI (MoM) (Aug)

0.2%

-0.2%

09:30

Initial Jobless Claims

230K

228K

09:30

PPI (MoM) (Aug)

0.1%

0.0%

11:00

Federal Budget Balance (Aug)

-285.7B

-244.0B

13:00

WASDE Report

14:00

30-Year Bond Auction

4.015%

4.314%

17:30

Fed's Balance Sheet

7,115B

7,113B

Friday, September 13, 2024

Time

Event

Forecast

Previous

11:00

Michigan 1-Year Inflation Expectations (Sep)

2.8%

2.8%

11:00

Michigan 5-Year Inflation Expectations (Sep)

3.0%

3.0%

11:00

Michigan Consumer Expectations (Sep)

71.0

72.1

Earnings Calendar 09/09/2024
Earnings Report

Monday, September 9, 2024

Company

EPS / Forecast

Revenue / Forecast

Market Cap

Oracle (ORCL)

1.39 / 1.33

13.3B / 13.23B

470.91B

Thursday, September 12, 2024

Company

EPS / Forecast

Revenue / Forecast

Market Cap

Adobe (ADBE)

4.65 / 4.53

5.41B / 5.37B

228.10B

Kroger (KR)

0.93 / 0.91

33.91B / 34.08B

40.89B

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