What does a First Fed Rate cut really mean?ANALYSIS ON FED STANCE
Powell has consistently indicated that interest rate decisions would hinge on economic data, a stance reaffirmed by the unchanged rates in the latest policy announcement. Despite the Fed's clarification that rate cuts are unlikely until there is more certainty that inflation is consistently heading towards the 2% target, some still question if this is truly a dovish stance.
Persistent high inflation has led to adjustments in the market's expectations, now reflecting only a 45% likelihood of a single rate cut by September—down from earlier predictions of three cuts this year. I maintain that even this adjusted forecast is overly optimistic. (drawn and extrapolated on the chart above)
Powell emphasized that the Fed requires more than a month or two of data to influence policy changes, pointing out that the data from the most recent quarter has been particularly concerning. This sentiment is reflected in the market's behavior, with rising yields and ongoing corrections in equities.
Market volatility remains high, especially around Federal Open Market Committee (FOMC) announcements, evidenced by significant selling in both the Nasdaq ( NASDAQ:IXIC ) and NYSE on high trading volumes. In light of these conditions and Powell's recent remarks and the elevated volatility, I've chosen to scale back my market exposure back to nearly 100% cash for about 3 weeks now.
WHAT DOES CUTTING RATE REALLY MEAN FOR STOCK MARKET
I have calculated all the times when there has been a First Fed Rate Cut and extrapolated the 6-month % change and the 12-month % change following this First Fed Rate Cut.
Assuming that this can happen in September (currently about 45% chance that rates will be cut in September based on the CME FedWatch Tool), then I have plotted the results using a black line. This is the average of the 24 times since 1921 that the Fed has made a FIRST rate cut.
It is clear that the average scenario is very bullish with an average 12month change around +14-15% on the SP:SPX . However, what is more interesting is that if we look at the times where there is a rate cut without having a recession the scenario becomes very strong.
The real concerns of the FED is that we might get reaccelerating in inflation. We are currently in a goldilocks situations, since even though inflation is a little high, the economy is growing and we are not overheating (much better position than EU economies, which are not growing so fast and would have to cut faster). Rates currently are about on average where they would be on a long term 5-year history. This reaccelerating fear is based on events happened before in 1970s and 1980s. You can see in the picture below and what the FED looks to avoid. If you are interested to play with the data, I have made the tool available in my script section.
INDICATOR
RAW DATA
Feel free to use the raw data of the First Fed Rate cut for further analysis below. Source: Bloomberg Finance L.P.
05/05/1921 -12.01 9.87
05/01/1924 11.96 33.8
04/23/1926 11.29 12.82
08/05/1927 10.16 14.29
11/04/1929 13.87 -7.96
02/26/1932 -37.46 -29.83
04/07/1933 76.34 81.66
02/05/1954 16.7 39.39
11/15/1957 4.04 28.53
06/10/1960 -6.72 6.00
04/07/1967 8.65 3.64
08/30/1968 2.35 -6.84
11/13/1970 21.26 7.00
11/19/1971 18.61 24.04
12/09/1974 41.76 41.68
05/30/1980 16.75 17.29
11/02/1981 -7.43 16.02
11/21/1984 7.92 21.7
06/06/1989 10.31 17.17
07/06/1995 10.93 22.28
09/29/1998 21.11 26.4
01/03/2001 -4.26 -7.78
09/18/2007 -11.93 -22.78
07/31/2019 7.43 -2.05
Mean 9.9 14.43
Median 10.23 15.16
First
CrowdStrike going up!A bit unusual for me to try and make a idea about a specific stock, but here goes!
Crowdstrike has always been a darling for me and I have been in-and-out of the stock a couple of times, but this time im in it for the long run!
Clear upwards trend, with a nice couple of close support/resistance levels.
The current one we are at now from 168-169. Should go higher, based on their incredible earnings.
TP 1 - just above the 180-level, should be reached start-mid November and should hold that support.
TP 2 and 3 will be commented later!
Follow and keep track of the stock!
Good luck!
FIRST REPUBLIC BANK - LONG SETUP We have a beutifull zone of acumulation with a long range.
Yesterday we saw that any good news will pump this bank.
So now , we have a beautiful price to enter with a buy at 13.00 with take profit at 19.00 and stop loss at 11.
Remember, when nobody talks about it, that will be the time to buy.
First Solar 1D Possible Breakout of a Bull Flag FormationThe stock is showing a strong green day which could be the start of a breakout from the current bull flag formation.
First Solar's (FSLR) fundamentals support this thesis. The company has a large backlog which will take multiple years to work through.
It can be cheaper to build and run a solar plant than it is to buy gas for existing natural gas power plants.
First Solar is involved with large utility-scale solar installations with their efficient PV solar panels.
The company has strong expected double-digit revenue and earnings growth for the foreseeable future.
Solana bulls holding ground at $90 spells bullish breakout Solana (SOL) price action has been delivered to the mercy of bears for the moment, but those same bears could be facing a surprise to come as early as next week. Although bears are squeezing bulls against the $90-handle and investors have already stepped in multiple times these past few weeks to save SOL price action from falling, the Relative Strength Index (RSI) is flatlining to slowly grind back higher, pointing to a bullish breakout. Expect as soon as next week to see the price shoot back up first to $120, breaking the high from last week and next target $146 to the upside, holding 55% gains.
EURUSD BUYhere is what i see on this pair...
1. price just broke out of my downward trendline on the H1 i'm waiting to see if it closes above it
2. and then again a mini upward trendline formed from the previous low up until now with about 3 touches or so
3. so only if price retests the broken trendline and tests the upward trendline only will i place buy trades on this pair
thanks for your time hope you have a blue week!!!!
Done for nowThe TOTAL2 Market chart is for one of the most beneficial for all the altcoins as Standard TA applies, There is a saying that goes "when the sun rises its for everyone" The principle here has to do with cash flow and looking for the market as an overall, the transition is less volatile due to the high volume, just imagine a big ship that needs to do a sharp turn, Bear market has unnoficially started once that candle closed below the 21, and officially once its below the 50. We can also see that the RSI is exhausted, with several bearish divergences, and that the stochastic is no longer crossing above the 50 line if set for 21. My conclusion is that the trend has inverted in June from the dip, and now is inverting again. Market is in my opinion to return in late October to mid November for a short bullish run and resume its downward trend until the next BTC halving. Take this analysis with a pinch of salt since im not an official trader and am not providing financial advice.
SPX500 Bearish movementAs we all know SPX500, has been floating at ATH for the past month or so. I am see a strong bearish correction coming in the next couple days/weeks..IMO eventually the bubble has to pop.. This is my first published idea, all feedback is welcome and appreciated.
Thanks, Richyounginn
$FCC perfect bounce on the edge of the Arc.First Cobalt just proved the validity of the arc with a nice bounce out of a bullish pennant. We could be looking at a quick 3 bagger here.
The Silver StandardI love silver.
Bullish pennant formation with a breakout but be careful cause it could be a fakeout since there's not much volume yet. Seems the market is repricing it but no matter.
This stock going up over the next 1-2 years is a matter of near certainty.
Fundamentals support it.
(note: I do own the stock and call options on the stock.)
Not financial advice.
Snap within a SnapLast time i tried to predict this stock i was devastated but right now i feel more confident on my prediction.
1. Possible inverse H&S taking place as we speak
2. In case it is activated i am waiting to see whether that will be the top and whether we will see the formation of a massive H&S as shown on the graph with a target close to the Covid gap
3. So first long and then short
*This is only my opinion and all the graphs here are shown for educational purposes only. I advise none to act based on my foolish predictions :), always think for yourself, take care and keep researching.
First Majestic is a Silver Stallion!Possibly one of the last good buying opportunities for First Majestic. Today we sit on key levels of support and resistance at $18 a share. Silver has been undervalued for too long.
Fundamentals:
*Exceptionally high short interest.
*Positive Earnings in the last Quarter.
*Shortage of physical silver.
*WILL BE A VALUABLE IN A BEAR MARKET.
Invest at your own risk.