Maxwell's Market Mindset: Is Powell Superman? Blocking Out the Noise, Our Plan for This Week

8/25/2024

This week’s spotlight was on Jay Powell’s much-anticipated speech at the FOMC Jackson Hole conference. Powell confirmed rate cuts are coming, but also cracked a joke that had the audience laughing. As he left the podium he received a standing ovation! Is Jay going to be Superman?

What a shift from the past few years! The question on everyone’s mind: Can Powell actually pull off a soft landing and keep the U.S. out of a recession? This is the narrative we need to consider as we manage our portfolios. For those in the M$M Inner Circle, you already know my game plan for both scenarios—If you haven’t joined yet you need to hurry, prices go up next month. Time to sign up!

But here’s the thing—there was almost too much focus on Jackson Hole. The headlines are doing their job, keeping our attention locked on whatever’s trending. And while everyone was buzzing about Powell’s speech, the real market mover next week could be NVIDIA’s earnings.

With all eyes on Jensen Huang, the big question is: Can NVIDIA meet the sky-high guidance expectations? We know the demand for their chips is there, but I see more downside risk than upside. If you’re holding 100 shares, it might be time to think about setting up some collars. Don’t have a strategy in place? Check out my blog on how to collar your positions and protect your gains.

Now, let's dive deeper into why blocking out the noise is more important than ever:

Trust Your Plan, Don’t Let Market Chatter Derail You

Blocking out the noise is crucial in today’s market. Every week, I emphasize this because I understand how challenging it can be.

Lately, we’ve seen big investors selling positions and even Warren Buffett sitting on a mountain of cash. This isn’t new information, but let’s be real: we’re not Warren Buffett (I know captain obvious). We don’t get the same deals as Berkshire Hathaway.

Remember back in ‘08 when Warren snagged preferential shares and rates that the rest of us could only dream of? I sure do. I’m not here to complain, but to highlight why sticking to our own plan is essential. Warren raising cash doesn’t mean you should sell it all.

People will always say the stock market is about to crash. It’s a constant drumbeat. But look at us:

Warren may have been offloading BAC, but that didn’t stop us from trading it. This trade was posted in discord.

Our put sales closed for a nice win. Price to book for BAC is good! It’s still a bank even if Warren is selling.

The good kids are all about staying informed without following the herd off a cliff. We all need to make our own trades no matter what billionaires are doing!

So, keep your ears open, but don’t let the noise drive your decisions. Stick to your plan and keep trading smart.

I also own shares of BAC, did you read my blog about using premium to buy shares?

SPY and RSP: A Tale of Two Indexes

Remember when I mentioned how heavily weighted SPY is towards tech? It’s worth revisiting about 31% of SPY’s total weighting is tech.

SPY doesn’t quite capture the broader market’s strength.

But when we look at the equal-weighted S&P 500 (RSP), the picture changes a bit.

Did you see how RSP hit a new all-time high on Friday? Meanwhile, SPY showed a bullish inside day, mainly because of some softness in the Magnificent 7 tech stocks. Do you see how tech is pulling down SPY, but the market’s strength is broadening.

I’ve highlighted a retest gap on SPY’s chart, signaling where the market might retest before bouncing back. This isn’t just a random guess—remember, gaps on charts usually fill, and a healthy retest could be just what we need. I do like the red squiggly line I drew below.

Take a look at RSP’s weekly chart, and you’ll see three bullish weeks in a row, with RSI running high

Keep an eye on RSP if tech continues to be weak. Also remember retests are healthy. Understanding these dynamics helps us stay ahead and we can block out some of that noise I mentioned earlier.

Make Your Charts Look Like Mr. Money Maxwell’s

Ever wondered why my charts look different than yours? It’s all in the setup! I’ve heard from many of you who want your charts to look just like mine, so I’ve put together a free TradingView guide that walks you through the exact steps to set up your moving averages just the way I do. It’s time to take yo

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Weekly Recap:

SPY: What a V-bottom recovery! Over 10% in just three weeks—uncommon, but anything is possible in this market.

QQQ: Tech is showing weakness compared to the broader market. Notice the lower highs? This is why I love using moving averages as buying targets. NVDA’s earnings this week could steer the tech sector, so keep watching.

TLT: Still strong overall. Remember, it’s normal to see some bearish weeks—stocks don’t just shoot straight up!

GLD: Gold’s rise alongside the stock market is intriguing. Could this be a flight to safety? It’s rare to see both moving up simultaneously. Gold looks bullish to me.

VIX: Back in the familiar range for 2024. Despite what many ‘experts’ predicted; volatility didn’t stay high for long.

The Power of Time in the Market

Thinking about going all cash? Before you do, consider this: some of the biggest market moves happen in just a few days each year. If you’re out of the market, you could miss those critical gains that drive long-term growth. In this week’s blog, I dive deep into why time in the market is your greatest ally, especially when it comes to retirement. Interrupting compounding can have serious consequences for your financial future, so let’s talk strategy.