MicroStrategy Nasdaq 100 Talk Gets Me in the Mood to Buy
Today's CPI news likely locks in the Fed rate cut next week. But things become much more unpredictable after that.
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November CPI numbers were exactly as expected, but that was good enough to likely lock in a quarter-point interest rate cut at the Fed meeting next week. Fed Fund futures now indicate a 99% chance of a cut.
While CPI wasn’t a surprise, it was higher for the third month in a row. The reason that it doesn’t matter is that post-election optimism for economic growth is still very high. The market can handle a little inflationary pressure if there is sufficient growth to offset it.
However, after the rate cut next week, then things become much more unpredictable. The market is still pricing in some cuts in 2025, but the odds have been falling, and the danger that Trump policies could cause inflationary pressures is very high.
For now, the market is happy with the economic situation, but we will have a potential "sell the news" situation when the Fed cuts next week.
The Magnificent Seven MAGS names are leading the charge, and the "shooting star" pattern on the chart seems to have been forgotten. That pattern needs confirmation with more downside the following day and it doesn’t look like we will see it as MAGS is now making new highs with big moves in Meta META and Tesla TSLA.
The Russell 2000 also rallied on the CPI news, but it is fading, and there is very little speculative strength. I’m seeing only about 25 stocks up more than 10%, and themes like quantum computing have cooled off.
Bitcoin IBIT is better, and that group is running well. It is helping that there is talk that MicroStrategy MSTR could be added to the Nasdaq 100 QQQ. That is sure to create some massive momentum if it occurs. Still, MicroStrategy is very high risk, and I’m trying it in a very short time frame in small size.
I’m on the hunt for some buys, but with speculative trading slowing, there aren’t many good setups. I’m still optimistic about a year-end rally, but I believe we will need more downside before it develops. I’m working on updating my shopping list.
At the time of publication, Rev Shark was long MSTR.
