Fed Rate Cut Outlook

FOMC meeting is coming this week and 25 bp rate cut is widely expected by the market. After the CPI and PPI report this week meeting expectations showing inflation is slowing and jobless claim holding, the stock maket started to melt up again. I would be very cautious here. The market seems relaxed anticipating the start of the next bull run once Fed starts the rate cut. However if the economy outlook is strong, would Fed really need to do a “series” of rate cut?

Currently the S&P and NASDAQ are both reaching near all time highs and its upper resistance trend line. If the markets are unable to break above the trend line and make new all time highs and stay above for a few days, then watch out below. A much bigger correction downward may take place. I would add to my current position on QID, SDS, and buy back SOXS, VXX and SCO for me to be well positioned to make profits on the correction.

For my long term holds on gold and gold miners, I would expect the prices to move up initially but also starts its corrections downwards with the bigger markets. I believe gold may bottom around 2,300 to 2,400 before its next bull run while the broader markets continues its further corrections downward. Once gold corrected, I would go in heavy top up my GLD, GDX, NEM, AEM, WEM, GDXJ, SLV and SILJ.

This is just my opinion on the outlook on Fed rate cuts. Ofcourss I may be wrong, so always do your own research and invest wisely. Think logically and be cautious during this critical time not to be manipulated by the institutions. Hope everyone continues to do well moving ahead.

Cheers.

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Dr DT

Retailers must include gold in their portfolio during rate cut cycle and economic slowdown. Consider NEM, GDX, GLD, GDXJ

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