It’s been nearly two years since Jackson Hole Jay saw his shadow and we all endured 6 more weeks of harsh market weather. If you need a reminder, August 26, 2022 was the day Fed Chief “Jay” Powell climbed out of his Jackson “Hole” Economic Symposium to announce “more pain ahead!” This is how the stock market weather turned out after Jay saw his shadow in August 2022:
Wall Street was seeing the “light at the end of the tunnel”, while Jackson Hole Jay saw an avalanche from a brutal winter approaching. The bulls sought hibernation for 6 more weeks, while short sellers were skiing the slopes of Colorado. Eventually, all was fine and the secular bull market emerged a bit later than I expected.
Now let’s fast forward to August 2024 and today’s speech. Jackson Hole Jay poked his head out and saw nothing but cloudy skies – no shadow, so potentially a mild market winter ahead. He went back into his Symposium and Wall Street was left feeling like the worst of the market winter was behind it. We know that August/September is not typically kind to market bulls. It’s one of the reasons I’ve been waving that caution flag for the past 5 weeks or so – even longer if we talk only about semiconductors ($DJUSSC). But it’s also difficult to ignore the risks that we could see a melt up – especially in certain areas of the market now that the Fed has FINALLY changed gears. Jackson Hole Jay all but guaranteed the first rate cut in September in what is likely to be a series of rate cuts. Everyone who follows me knows I’m a stock market statistician/historian. I ALWAYS approach August/September with caution, because of historical precedence. But there have been plenty of exceptions where Wall Street ignores those seasonal risks and bids prices higher.
2024 may be one of those years.
Over the coming days, after watching more rotational clues, I will provide our EarningsBeats.com members a game plan to attack the many opportunities ahead. I see certain asset classes and sectors that are likely to outperform, possibly in a very significant way. I see many stocks that are likely to double, triple, possibly more.
Despite the Fed’s much more dovish tone that will benefit U.S. equities, we’ll have HUGE opportunities on pullbacks. And it’s really hard for me to envision a straight-up move in August/September. There’s a chance of that, but much more likely will be the occasional pullbacks that we can use to build positions in key stocks and ETFs that will sweeten our portfolios as equity prices rise in 2024 and 2025.
I will be announcing the 10 equal-weighted stocks that we’ll “draft” into our 3 portfolios – Model, Aggressive, and Income” on Monday, August 26th, at 5:30pm ET. It’ll be designed, hopefully, to take advantage of what’s likely to happen during the balance of Q3 and into Q4. I’ll also be discussing this Fed change in policy and how I believe it’l impact the stock market. You can attend this with a FREE 30-day trial of our service. Be sure to click that link, kick the EB.com tires, and join me on late Monday afternoon. I’d love to see you!
Happy trading!
Tom