Dear Members,
The FED cut rates by 25 basis points as widely expected. Wednesday’s Astro combinations were so positive, that I thought there was a small chance that even 50 basis points could be cut. The FED rate cut proved to be very positive for the market even though a sharp selloff was witnessed in the market after the announcement. However, the market started recovering after quickly bottoming out and closed at par by the end of the trading session. During the electronic trading session, which take place after market close, it started gaining value. This clearly indicates that the FED cut is showing positive signs for the US markets. Over the last three years the tech sector has performed very well despite a higher rate environment, while the rest of the sectors were eying a FED rate cut.
After the rate cut Homebuilder, Housing, and regional bank ETFs NAIL & DPST traded well, but then they gave away all the gains, while tech stocks did exactly the opposite. We recommend investors hold long positions in US tech stocks as well as Chinese tech stocks, as the AI boom will move into the next phase, and overall, the next three years look fantastic. As per our letter this week is positive for the markets, so on Thursday and Friday we see the markets gaining value.
IMPORTANT NOTE: We do not see Tech stocks moving higher nonstop over the next four years, there will be some corrections here and there, but surely the Nasdaq is ready to go towards 45000-75000.
The Dollar held our Astro support level of 96.01 which is a very positive sign for the USD. Sell most of the currencies on any rise.
Thirty Year bond will continue to trade in a mixed trend so trade in and out, and any sharp weakness should be taken as a selling opportunity, and we will update you when its time to buy.
A 25-basis point cut is surely negative news for the metals. We recommend staying away from metals, and any rise in metals should be taken as a selling opportunity. I am not recommending taking any major short positions in silver and gold. On the lower side today, I am recommending buying precious metals. Thursday and Friday are positive days so metals should trade positively, any weakness should be taken as a buying opportunity.
Crypto and Quantum computing stocks will do very well, so stay long in Crypto, Crypto ETFs, and Crypto stocks. Also take some long positions in SOUN and AAOI.
Thanks & God Bless,
Mahendra Sharma