Now We Can Move On……Until July

Dow: +38.46…
Nasdaq: +33.44… S&P: +8.71…

Stocks crept toward record highs as the Federal Reserve left interest rates unchanged but hinted it could slash rates in the months ahead.  The Fed’s statement showed eight of 17 officials projecting the Fed would need to cut the benchmark rate this year. Meanwhile, a majority of officials forecast that the benchmark rate would be below its current level by the end of 2020.

My bet is that they will cut 50 not 25 basis points at the July 31 meeting. Just a guess, but if that thinking sets in, the market could get some serious fuel to go higher.  What a shell game.

The 10-year note closed today with a yield of 2.02%.  It will be interesting to see if they defend that 2% area.  If they do, and start selling bonds, then TBT could be a trade.  I just don’t know how much juice would be in that trade though.

These Fed jackasses are truly clueless on so many levels. They are sooooooo worried about inflation. They feel they need inflation to be at 2%.  Powell said, ” we are looking to make the 2% goal more credible.” He also said that “2% inflation goal has become  a global norm.”

Here’s a newsflash though.  The G-20 has not hit 2% inflation in a quarter since 2007-2008 and most of Europe is NIRP-ing (negative interest rate policy) their asses off with negative rates.  Hasn’t helped, but the global bubble grows more immense by the day.

My kevlar bodysuit and aluminum propellor hat is ready whenever they are.  Should be a hoot when it all gets unhinged. In the meantime, you just can’t fight the Fed.

Also adding to investors’ optimism for stocks this week, President Trump and Chinese President Xi Jinping agreed to meet at the Group of 20 summit in Japan, sparking hopes for a trade truce. Wake me when that happens.

So what hasn’t played higher yet? Well if you believe that the semiconductor space (SMH) isn’t in turmoil, (all the numbers say the second half will be fairly abysmal), then you may have a trade there.  The “rising tide lifts all boats” motto may apply here.

You can play it with SMH,  or if you are really bullish you can buy SOXL which is the 3X leveraged etf.

SMH pulled back from 120 to 97 from late April to late May. It has since bounced from 98 to 106 but could go a lot higher if the FOMO crowd decides to target this group again.

I don’t hate the chart at all.

I added ZYNE & QURE today to the P&L.

Biotech is starting to get back in shape, both IBB and XBI look like they may be starting bull flag patterns.  There should be a bunch of good setups in this space going forward if this pattern holds.


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