There May be No Rate Cut in 2024

Tom Gentile

Posted in

By: Tom Gentile
April 24th, 2024

3 mins read

Originally published via our newsletter previously. Subscribe for early access!

Inflation Needs to COOL OFF!

It seems like forever ago there was talk of the Fed issuing their first rate cut in years this past March.  Then we were looking at the first one happening in June.  NOW, per the CME Group’s Fed Watch gauge, there is only a 44% chance it happens in July.

The Fed has a target goal of where they want to see inflation, which is 2%.  

Currently it is tracking at or near 3%.

Unless that number comes down, the Fed is going to sit on their hands longer than many want.  The markets have been in a bullish trend since last October. 

A reason for that run had to do in some parts with the expectations inflation was going to get under control and the Fed was going to start issuing rate cuts: up to at least 3 for 2024.

According to Bank of America ecocnomists (sourced from an article from a rate cut may not happen at all in 2024.

I’m reading they feel there may be at least one rate cut in December if we get one at all.

This market may struggle to find any meaningful upside momentun until we get economic data that shows inflation is cooling off.

Market in Focus: SPY – SPDR S&P 500 ETF Trust

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All annotations on the above image indicate more downward price action may come our way.  

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Tools & Observations

We are going to keep our analysis simple and take a look at the seasonal picture on our curated list of 300+ stock in the Money Calendar library.

The reason for that is the chart on SPY and the fact it has rolled over and is showing some accompanying bearish signs there may be more downward price action to come.

One more indication for the potential of prices moving lower is the read on the Money Calendar. Starting today to the end of the month the % of bearish patterns outpace the bullish patterns.

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The date shown below is tomorrow, April 18. I sorted by Highest Power Meter to Lowest so one can see the securities that have the larger price moves in the recent few years to their 10-yr. average price move. This shows us which have recent momentum in their respective direction.

The red, horizontal lines is what we want to see as those indicate bearish price patterns/moves 9 or 10 of the last 10 years over the date range analyzed.

We favor those with a duration of 20-30 days and on those we look for bearish option strategies like a Long Put or Put Debit Spread to name a couple.

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Tom Gentile
C1P: Chief 1-Percenter

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