Editor’s Note: My colleague Luke Lango, Senior Investment Analyst at InvestorPlace, has identified a rare economic event that historically triggers a stock market boom. It occurred three times in the past 30 years – in 1995, 1998, and 2019 – sparking market surges each time. According to oddsmakers, there’s a 100% chance this event will happen again in less than 10 days.
Luke is hosting an urgent briefing on Wednesday, September 11, at 8 p.m. ET to help people prepare for this rare economic dynamic. Despite September’s slow start, he believes this event will trigger numerous stock breakouts and has selected three trades poised for significant growth.
Read his message below to learn why he thinks these circumstances will succeed again. And reserve your spot for Luke’s briefing here.
The stock market has found itself in a bout of volatility recently – but that all could change in less than 10 days.
While the S&P 500 is up around 15% so far in 2024, pretty much all those gains came in the first half of the year. Over the past two months, stocks have gone essentially nowhere. Going into the Fourth of July weekend, the S&P 500 was trading at 5540. Today, it is trading at 5465.
Sixty days later. Zero upward progress.
Stocks are stuck.
But due to this rare economic event, stocks may get unstuck in less than 10 days.
This very specific, very powerful, and very rare economic dynamic has occurred just three times in the past 30 years. Every time it has, it strengthened the economy and sent stocks soaring higher – even if they were dropping beforehand.
One, we’ve got falling stocks.
Then last Thursday, the ADP Employment report came in very weak. Friday’s official jobs report was just as weak. The unemployment rate is rising. Job openings are crashing. There are now barely more job openings than unemployed persons.
Two, the U.S. labor market is weakening.
Next, the CPI inflation rate is expected to drop to 2.5% in next week’s report. And real-time estimates point to September inflation running at 2.3%, given the huge drop in oil prices so far this month.
Three, inflation continues to soften.
Point being: Due to this rare set of economic circumstances, the current tug-of-war between soft-landing bulls and recession bears is about to end. And the bulls are going to win.
And stocks will soar.
The recent lack of upward progress across the stock market can be attributed to one thing: recession fears. The economic data has weakened meaningfully over the past two months, with the unemployment rate rising about 10%, job openings falling about 10%, and real-time estimates for GDP growth dropping nearly 10%. The economy is clearly slowing.
But due to the rare economic dynamic about to emerge, that’s not going to matter anymore.
The Domino Effect That Will Reignite the Economy
High rates have frozen the real estate market. They’ve also frozen the automotive market, the home repair market, and the construction and manufacturing industries. High rates have made it hard to borrow money and made it expensive to pay off debt, leading to a major slowdown in consumer spending. They’ve delayed big-ticket purchases like travel. And they’ve compelled people to save money in high-interest savings accounts.
High rates have slowed the economy.
But according to the numbers I’ve crunched, this rare economic event is about to reinvigorate the economy.
Sure, it’s not going to immediately unfreeze the housing or automotive markets. Nor will it reenergize consumer spending or create significantly better borrowing conditions in less than 10 days. But as time goes on and this rare economic event keeps happening, it will. And that’s exactly what we think will happen in the next year.
Over the next year, we’re going to see the housing and automotive markets unfreeze. We’ll see the construction and manufacturing industries reemerge. It’s going to get much easier to borrow money and pay off debt. Consumer spending will be reenergized. Many more of us are going to open up our wallets and start making big-ticket purchases again.
This rare economic event is going to make a difference.
And that’s why, in less than 10 days, stocks are going to get unstuck.
The market knows this, and as such they’re just waiting for the first domino to fall. Once it does, I suspect you’ll see a mad dash with traders rushing to pile back into stocks, the economy is going to meaningfully strengthen, and stocks are going to soar.
That’s my take on the current situation.
Stocks to Buy on the Dip
All that said, which stocks should you be buying? AI stocks. AI stocks. And some more AI stocks.
Our research suggests the underlying investment momentum in the “AI Boom” is only strengthening, despite broader market volatility.
Last Wednesday night, for example, AI firms C3.ai Inc. (AI), Hewlett Packard Enterprise Co. (HPE), Verint Systems Inc. (VRNT), and Credo Technology Group Holding Ltd. (CRDO) all reported quarterly earnings. Those stocks are mostly dropping post-earnings. But the numbers and commentary in the earnings reports were very positive.
C3.ai, for instance, reported accelerating revenue growth on the back of huge AI pilot deal growth.
HPE’s AI systems orders and revenues rose by double-digits from the previous quarter, with management reporting that AI interest from big business and other large enterprises is high and adoption is accelerating.
Verint reported that its AI bookings rose more than 40% year-over-year, paced by surging demand for its AI chatbots in call centers.
Meanwhile, Credo said it is seeing rapidly expanding AI deployments with the rise of generative AI driving robust demand for cutting-edge, power-efficient, high-speed connectivity solutions.
The fundamentals underlying the AI Boom – and AI stocks – remain very strong. Indeed, they’re only getting stronger.
AI stocks are just going through a little valuation/sentiment reset right now. That’s fine. It’s normal. Let it happen. Smart investors should be ready to buy the dips at big technical support levels because of the strong underlying fundamentals.
So, get the Buy List ready. Make sure to have some great AI stocks on it, and pull the trigger on some new trades once technical support shows up for this market.
The Final Word
While stocks have been stuck in neutral for the past two months, as I’ve been saying, I think they’re about to wake up in a big way. If I’m right, a lot of money could be made in the markets between now and the end of the year.
And that’s why I’m putting together an urgent strategy session next week for folks, to help them prepare for this major economic event.
We plan to address all this and more in our urgent briefing on Wednesday, Sept. 11, at 8 p.m. Eastern, aimed at helping you prepare for this rare economic dynamic.
A little before we get started, I’ll send you an email with the subject line [The Great Tech Reversal of 2024]: Your Access Link. To join me, you’ll just click the link in that email.
To make sure you get that email, just reserve your spot for my briefing by clicking here.
Most importantly, at this briefing, we plan to unveil a game plan to help you potentially profit from this rare economic dynamic.
So don’t run away from the current market volatility because September is usually a bad month for stocks.
Rather, embrace it. Attend our special briefing this coming Wednesday, Sept. 11, at 8 p.m. ET. And learn how to potentially turn this volatility into profits.
Sincerely,
Luke Lango
Editor, Hypergrowth Investing
