๐ Stock Market Update: Wednesday, August 21, 2024 Stocks resumed their upward trajectory following a minor retracement in the previous session, with the S&P 500 inching up by 0.33% to close just shy of its recent peak.
๐ Away From Stocks:ย The dovish tone from the Federal Reserve's July meeting minutes provided a tailwind for Treasury yields, pushing the two-year yield down to 3.92%, marking the second consecutive drop of seven basis points. In the commodities market, WTI crude ๐ข๏ธ continued to face pressure, dipping below $72 per barrelโa level not seen since January. Meanwhile, gold ๐ช remained steady, closing at $2,511 per ounce. Bitcoin ๐ฐ experienced a notable surge, rallying 4% to $61,300, while the VIX ๐, a gauge of market volatility, edged back above 16.
Micron Technology Inc. ($MU) is currently forming a tight flag pattern after a pullback of nearly 50%, which followed a bottoming pattern established about two weeks ago. This flag pattern suggests a potential continuation of the previous upward move if the stock breaks out above the flag's resistance. The formation of such a pattern typically indicates consolidation, where the stock takes a breather before potentially resuming its upward trajectory. This setup could be particularly compelling for traders watching for a breakout, as it often precedes a bullish move, especially if it aligns with broader market trends or positive company-specific news.
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Given that it's an election year, a quarter-point cut seems more likely than a 50-basis point reduction. Central banks often take a cautious approach during election periods to avoid influencing the political landscape too heavily.
There is growing speculation that Fed Chair Jerome Powell may shift from a "data-dependent" to a "forward-looking" stance, with an increasing number of FOMC members advocating for this approach. This potential shift by Powell at the upcoming Jackson Hole symposium could pave the way for lower interest rates. Such a reduction typically leads to price-to-earnings (P/E) expansion, offering a potential boost to equities, particularly small-cap stocks.
Bottom Line: When all four indexes are signaling buy alerts, it indicates that the markets are entering a bullish cycle.
Today's crypto price action, following the drastic BLS revisions and dovish FOMC minutes, suggests that crypto's upside beta to equities has returnedโa positive signal.
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