Happy Sunday. QQQs finished up 1% despite it being another choppy week.
We won’t spend too much time on the macro this week, as our base case continues to remain “choppy (and upwards trending)” leading into and out of the first rate cut, that eventually resolves in a strong move up (that’s predicated on macro staying roughly stable). Since the beginning of August as we have had 6 different moves up and down of 3-5%, yet the QQQs haven’t really moved from where they were at the beginning of August. We expect more similar up and down action over the next month+.
Our game plan continues to be to add on dips, not chase factors, play off extremes and not get FOMO each way. On Monday, we took advantage of a good spot on the chart to increase our net, and wrote:
We thought today was a good risk/reward spot to increase our net a bit more than normal — it’s very possible this could have been the low for the year and if so we are positioned accordingly now. If we’re wrong, then easy to trim our net back down if we break below the Aug 20th low. We’ll continue to adjust accordingly.
That has played out well so far. A reader was surprised I said that could have been the low for the year. In response, I wrote:
To elucidate: It's not that I have high conviction of it, is that the risk/reward spot on the chart was so good (sitting at support & 50d) that it was worth taking a shot at increasing net. And it does jive with my ~1+ month view of choppy but upwards trending - our game plan has been to add on dips. And you have Citi conf tomorrow and companies should generally sound good. Seemed like a good spot to take a slightly bigger than usual shot. Can pull back if we close below Aug 20th low, and not lose much more than 1%
Readers know I love using the chart to find good r/r spots where we can take bigger than average sized bets — especially when it dovetails with our fundamental view — as it allows us to limit downside if we’re wrong. This was one of those cases…
This week all eyes will be on PCE and CPI as investors are now pricing in 3 rate cuts in the final three Fed meetings of the year after the weaker than expected jobs report.
In Tech, one of the biggest and best conferences of the year - the GS Communacopia & Tech conf in SF. Schedule can be found here
We also get the AAPL iPhone release on Tuesday and ANET investor day along with ORCL CHWY and ADBE EPS…Another packed week…
Let’s get to the good stuff…