Dear Reader,
Last Wednesday, the Fed finally announced its first interest rate cut since the Covid pandemic – it was also the largest rate cut in 16 years.
The reaction was predictably bullish, with the S&P notching yet another all-time high.
All three major benchmarks – the Dow (+1.6%), S&P (+1.4%), and Nasdaq (+1.5%) – ended the week in positive territory.
Now, given what I’ve been telling you over the last few weeks – that seasonal bearishness is coming to an end while at the same time markets are entering the very bullish presidential election cycle – you might think it’s smooth sailing ahead.
Not so fast…
This week, the Fed is going to get a reality check thanks to the release of two important pieces of economic data.
First up, on Thursday, second-quarter GDP numbers are due. And on Friday, we’ll get a look at the latest data from the Personal Consumption Expenditures (PCE) index, the Fed’s preferred method to gauge inflation.
This data is going to test the theory behind the Fed’s big surprise last week.
Here’s the thing, though… even if markets are disappointed by the results, I don’t think either report is enough to stop these markets.
In fact, I don’t see anything to stop us from hitting our 580 target.
As you’ll see in today’s Five Points video, I think that could happen even before election day.
As usual, we’ll check in on stocks, bonds, commodities, currencies, and crypto.
And I’ll give you a look at seasonality – and tell you why I’m shifting my focus to exchange-traded funds this week.
Click below to check it out…
Good trading,
Tom Gentile
America’s Pattern Trader