It’s a kind of corny joke I’ve used many times to describe this market. But here goes…
Since the 2024 election, it’s been a “bad hair don’t care market.” Look at the overall trend. Sure, we were sideways for a lot of the summer, but last week we got the big breakout. To me, the trend is intact.
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Table of Contents
The Big Picture
Here’s something to write down because it will come up again and again…
Sideways Doesn’t Change the Trend
Look at all of the things to be bullish about. Here are a few examples:
All-Time Highs
Last week the Nasdaq gained more than 5% and the S&P 500 hit new all-time highs.
SPY, SPDR S&P 500 ETF Trust, 6-month, daily candles, breakout
The Q2 earnings season has been a banger. More than 85% of the 436 S&P 500 companies that reported Q2 earnings by the end of last week beat analyst estimates.
Now, a lot of people will say “Tim, it’s just tech propping up the market, right?”
Hold on a minute…
We’ve seen strong earnings across tech, energy, communications, and health care. 10 of 11 sectors report year-over-year growth.
That matters because it gives traders a reason to keep buying, even when the economic data is more complicated.
The Market Shrugged Off the Jobs Number
The jobs number (August 7) wasn’t great, but the market was up big anyway.
Why? Because Wall Street wants the Fed to either drop rates, or keep them the same at the next FOMC meeting. Before last week’s jobs number, the Fed was signaling a rate hike. Now? It’s much less likely.
Tech Is Off the Charts
Now, you know I’m a tech geek and bullish on AI. It’s the greatest technology in the history of mankind.
The Future We Dreamed About in the 80s
I linked it in yesterday’s newsletter, but did you see what Elon has cooked up with Terafab? The future is upon us.
Ignore the Permabears, AI Is Going Strong
In June, Nvidia (NASDAQ: NVDA) endorsed Alibaba’s (NYSE: BABA) Qwen 3.6 to run local agents on its DGX Spark.
My friend, the AI explosion is an example of the Jevons paradox in full effect. In a nutshell:
When tech makes using a resource more efficient, it drives costs down. As that happens, total consumption increases. The cost of running AI, both local and on the cloud, is falling as the models become more efficient.
Now, the build-out has driven hardware costs up, but only temporarily. See the above point about Terafab.
Whatever you do, do NOT believe anyone who says this is an AI bubble.
Finally…
Even Sidelined Money Is Dipping Its Toes
Guess who’s dipping their toes in at all-time highs?
Berkshire Hathaway has basically been buying nothing for the last three years. What are they doing now?
Berkshire Hathaway is buying stocks. These are the most conservative guys on the planet.
Now, they don’t do what we do, we’re much more short-term. But they were sitting on a pile of cash for the last three years and now they’re buying. Meanwhile, you got people screaming “bubble” and “sell everything.”
My Take
There is just so much opportunity out there. At this point, until the trend breaks, I continue to be very bullish. Just respect the trend and respect the charts.
Watchlist
Steakholder Foods Ltd. (NASDAQ: STKH) was a big mover in late July after it announced a $10.5M private placement. Yesterday, it ran again.
STKH, 1-day, 5-min candles, recent runner
STKH has squeezed short sellers more than once since in the past two weeks. Add it to your rolling watchlist and trade the Oracle signals.
On My Radar
- SpaceX (NASDAQ: SPCX) briefly reclaimed the IPO price yesterday (Aug 10)
- Meanwhile, SpaceX rival Rocket Lab (NASDAQ: RKLB) reported earnings after the closing bell
- More after-hours: my mentor Tim Sykes has a new FREE after-hours watchlist and trading guide
- July Consumer Price Index (CPI) numbers drop tomorrow