Eric Fry goes live tonight at 8 PM EST … is Bitcoin at $100K back? … Louis Navellier’s small-cap wins … is China a “buy” with Beijing slinging stimulus around?
We begin today with a reminder that tonight at 8 PM EST, our macro expert Eric Fry is going live with his Great 2024 Sell Off event.
There are three main focuses:
- What to make of our roaring bull market that’s hit a series of all-time highs this year
- Where the market goes next and why
- A suite of investment tools that provides investors powerful quantitative assistance, helping them better time their entries and exits and achieve greater returns
Having these tools can make an enormous difference in your trade management, and that has a huge impact on your portfolio value. Here’s Eric:
Most people get into investments with a destination in mind… but no plan for how to arrive at their destination with their profits intact.
You see, the decision to enter an investment or trade is just Step 1 of the process. I daresay that’s the easy part.
The steps that follow, however, are even more important. Trade management can make the difference between generating large gains…or large losses.
As we’ve been highlighting in the Digest over the last handful of days, we’re in a challenging market with many crosswinds. Stocks could climb 20% over the next year or they could just as easily fall 20%.
So, while we want to have exposure to the potential continuation of this bull market, it’s equally important to be prepared to sidestep a bear. The tools Eric will highlight this evening are engineered to help investors preserve their gains and reduce their downside risks.
Back to Eric:
We are on the precipice of a series of huge, market-changing events: recession rumors, one of the most contentious presidential elections in U.S. history, the staggering cost of living, and more. It’s all a perfect storm for a tumultuous stock market.
However, this isn’t all doom and gloom. There is a way to emerge in a stronger financial position than you are today…
That’s why tonight at 8 p.m. Eastern time, I’m going live with some of the best tech minds in the business.
In a special event we’re calling The Great 2024 Sell-Off, we will reveal what I believe to be one of the most critical trade-management tools out there. You can click here now to instantly reserve your seat for that event.
Switching gears, Bitcoin is back above $63,000…is the bull market back?
Crypto investors were supposed to enjoy a monster bull market run in the wake of the Fourth Halving back in the spring.
Not only did that fail to materialize, but instead, a bear market arrived as bitcoin fell 24% between April 1 and September 7.
However, since then, bitcoin has jumped 18% is now trading above $63,000.
Is the post-halving surge back on the table? And if so, what kind of prospective gains are we looking at?
In his weekend update of Crypto Investor Network, our expert Luke Lango wrote “[The Fed’s rate cuts] may have just saved the crypto markets – and ignited a rally to $100,000 in Bitcoin (BTC/USD).”
Now, I’ll quickly add that before you cannonball back in, Luke remains cautious. He’s waiting for one more green light to indicate that this is a breakout that investors want to buy. From his update:
The technicals suggest we need a few more good days out of Bitcoin before the “buy signals” flash everywhere.
BTC has bounced nicely off its 50-week moving average, but has yet to commandingly retake its 25-week moving average around $63,000 – something which we view as necessary to confirm this isn’t a “false rebound” like we saw in May 2014 and April 2018.
BTC has also retaken its 20-, 50-, and 100-day moving averages (MA) in this rebound. But has yet to retake its 200-day MA or its March 2024 downtrend resistance line.
Now, remember, Luke wrote this over the weekend. Since then, bitcoin has, in fact, retaken $63,000. Meanwhile, it’s knocking on the door of its 200-day MA, which Luke just highlighted.
While this is encouraging and indicative of growing strength, Luke isn’t buying until he sees one final box checked:
We would like to see Bitcoin make a move above $64,000 – and stay above $64,000 – to confirm that technical legitimacy of this rebound rally.
If that happens, we will view that as a “buy signal” from the market. That would likely be good time to start buying more cryptos.
As I write Tuesday, bitcoin is barely 1% beneath $64,000. If you’ve been looking to buy into the crypto market, keep your eye on this trigger.
Shifting to rate cuts, now that we’ve begun a new easing cycle, what corner of the market is Louis Navellier betting on?
If you’re new to the Digest, Louis is a legendary quant investor. He bases his market decisions on cold, impartial numbers instead of hunches or guesses. And the numbers he’s been evaluating tell him that there’s one part of the market to make sure you’re in today – small caps.
Here’s Louis:
Small-cap companies can be some of the most innovative and profitable on the market. But the fact is that smaller companies have bigger debt loads than their large-cap peers and rely on external financing to fund their operations. With a rate cut, they can reduce their borrowing costs and put more capital towards their operations.
So, while smaller-cap stocks have traded erratically and underperformed large-cap stocks this year, a big rebound may be in the offing.
Historical market data support Louis’ takeaway. Below, we look at small-, mid-, and large-cap stock performance in the first 3, 6, and 12 months following the first rate cut (data beginning in 1954).
Small caps are on the left. You’ll see that they outperform across all three time-horizons. And note that one-year return of nearly 27%.
While we’re talking small-cap gains, a quick congrats to Louis’ Breakthrough Stocks subscribers. Between September 6 and last Friday, 13 of the small-cap stocks on their Buy List stocks posted double-digit gains between 10% and 37%.
And since mid-August, one of Louis’ latest recommendations, Idaho Strategic Resources (IDR), has jumped 55% while the S&P has added just 3%.
This is what can happen when you combine a quant-based market approach, the highflying world of small-caps, and interest rate cuts from the Fed.
Bottom line: There’s an enormous tailwind now blowing at the back of small-cap stocks. History suggests you want exposure to this corner of the market.
Finally, China just went big with stimulus
If you haven’t been watching, the Chinese economy and investment markets have been struggling over the last couple years.
Economic growth has slowed due to weak consumer spending, a slump in the property market, and lingering impacts of the pandemic disruptions. Major real estate developers, like Evergrande, have defaulted on debts, sparking concerns over a financial crisis. Then there are geopolitical tensions, particularly with the U.S., that have slowed foreign investment into China. It’s turned into a mess.
Meanwhile, the government’s strict regulatory crackdowns on sectors like tech, education, and entertainment have kneecapped investor confidence. Between spring-2023 and a couple days ago, the Shanghai Index bled off 20%.
So, what happened “a couple days ago?”
Well, Beijing came in big with a rescue package.
From Bloomberg:
China’s central bank unveiled a broad package of monetary stimulus measures to revive the world’s second-largest economy, underscoring mounting alarm within Xi Jinping’s government over slowing growth and depressed investor confidence.
People’s Bank of China governor Pan Gongsheng cut a key short-term interest rate and announced plans to reduce the amount of money banks must hold in reserve to the lowest level since at least 2018…
The central bank has also pledged to provide roughly $113 billion of liquidity support for the Chinese stock market.
Now, on one hand, this firehose of support makes the Chinese market suddenly more interesting.
Below, we look at the ETF MCHI, which is the iShares China ETF. The vertical spike over the last couple days is the reaction to this news of government support.
On the other hand, remember that this firehose is needed because, well, things are on fire.
If you want to gamble here, make sure you’re ready to protect your capital if the bull case doesn’t materialize.
And that brings us back to Eric’s event tonight, which will highlight a series of tools that are engineered to meet this exact need. Here’s the sign-up link again.
We’ll keep you updated on all these stories here in the Digest.
Have a good evening,
Jeff Remsburg
