The Stock Market
None of the markets I have been speaking about have gone anywhere since I called the short-term top in the market in July. Below are the charts of the NASDAQ Comp, S&P 500, and Russell 2000.
Notice how they are all at the top of their respective trading ranges. This is important to note because I believe this month you are going to see the pullback I have been expecting. Volatility most likely will increase because of the following reasons. We are currently in a very tricky period with the dock worker strike, the war in the Middle East, and a presidential election. Investors don’t know how to react, so they do very little.
Although the market doesn’t seem concerned with the war at this time, it can turn on at any moment. If that does happen, it will provide a good buying opportunity.
A Hard Landing
A hard landing is not in the cards right now, according to the data. If this occurs, it will start showing up in the data next year, mostly likely between March and July 2025. This narrative could become amplified in the coming weeks as the stock market is trading off the jobs reports. This will most likely be the last true reading of the job numbers before the Federal Reserve meeting next month.
Here is why. Currently, there are approximately 45,000 dock workers on strike and 33,000 Boeing employees on strike. This will start showing up in the data after this week. This will skew data moving forward. This is a short-term number and has little to do with the true picture of the overall economy, while many know that there are more that don’t. Those that do not often become sellers become a self-perpetuating phenomenon. The narrative could become that job growth is too slow and the economy is heading for a hard landing. Remember, those numbers that include the strikers are not reflective of how the economy is truly performing. Those numbers could cause the unemployment rate to rise; if that occurs, this will perpetuate the narrative of a hard landing.
The Presidential Election
Finally, there is the presidential election. Notice all the charts at the top of their respective trading ranges. Remember when I said the recent rise was in light volume? There wasn’t aggressive buying? That remains the same. The rally stayed steady only because there was a lack of selling and the short players lay dormant. The buyers, in my opinion, will stay dormant.
The short players could come and revisit us this month for the reasons I gave above. I believe the markets will break new high ground, but not until post-election.
I am buying the dip. I bought the dip in earnest of a stock I liked yesterday.
The good news is there is a mountain of cash sitting on the sidelines. I expect this cash to be put back to work post-election. If my memory serves me correctly, I believe the stock market has been up 100% of the time 6 months after the Federal Reserve started lowering interest rates. I believe small and midcap stocks are the best place to be going into 2025.