Here’s my take on the Fed, The Cuts, and RNA – September 18, 2024
Dan Fitzpatrick here at StockMarketMentor.com. I want to end up with RNA ( NASDAQ: RNA ) but I’m going to start out with SPY ( NYSEARCA: SPY ) here.
The Fed cut rates by 50 basis points, the Market was expecting 50 basis points, so it was really not a surprise. Some were pissed off, some were, Oh, it’s politics. Some say, Oh, it’s too much, others say, Oh, it’s not enough. But the bottom line is, the Fed did what it did and the Market did what it did, and we got an initial bout of buying right here.
And then after that, there was selling into strength. If you really think about it, and I mentioned this before, we’re in this box here. I’ve been drawing all kinds of stuff, but we’ve been in this box for a while. And so to think that no matter what the Fed did we just get a continued move higher.
That really wasn’t going to happen, and I’ll explain that. Let’s say the Fed cut by 75 basis points or even higher, 100 basis points. Then the Market would say, Holy crap, they know something that we don’t because we didn’t think things were that bad. And so, the fact that they’re really, really being aggressive in cuts, Oh my gosh, we’ve got to get out of here.
And so there would be some broad-based selling. And there was a little bit anyway. But the point is, if you say, Oh, a 50 basis point cut is good news because now rates are lower. You’ve got to understand that it’s not necessarily good news. And if it was good news, then wouldn’t more be better, and it’s really not.
I really feel like the Fed split the difference. I think, and have for a long time, that the Fed should be abolished. I think this whole dual mandate thing is bullshit because what’s happened is, if you really stop and think about it, I’m going to rant for just a second.
When Congress decided that It wanted to give the Fed a dual mandate, then what Congress really did was abdicate its responsibility for spending, and Congress has the power of the purse. And so suddenly, now we can blame everything on the Fed. We can blame what the Market’s doing on the Fed. We can blame the price of just about everything on the Fed.
We can blame everything on the Fed, and Congress can just keep spending and spending. They can do whatever they want. Most of those people are performance artists anyway, they’re mediocre and mean. And then you think about it this way, If we can blame everything on the Fed, well do people really blame stuff on the Fed? No, because they just shrug their shoulders and say, Well, we’re just going off the data.
And so what’s happened with the system that we’re in now is, nobody has any true accountability for anything, the Fed doesn’t. If you think back when Ben Bernanke, who started this whole nightmare, he’s revered now, everybody thinks he’s awesome. Janet Yellen, a walking case of dementia, she’s revered too, she’s a Treasury Secretary.
So this can just be blamed on nobody. And so here we are, the Fed cuts interest rates, the market doesn’t really react. The Market comes down here, which it very well could be. It hit the 50-day moving average. Is anybody going to talk about the Fed? Nope, we’ve already moved on, already moved on and nobody cares. And then, oh, they’re done until the end of the year. Probably so, I don’t know, maybe, maybe not.
The bottom line is, we’re in a very, very fast news cycle. By Friday, nobody’s going to care about these lower interest rates. I do think, ultimately, this is what happens, I think, hopefully, we get a higher low here. And finally, we get a bounce, a blast-off.
We could see the same type of thing playing out in the Dow ( NYSEARCA: DIA ). If you just track the 50-day moving average here. If you look at the channel on the Dow ( NYSEARCA: DIA ), I can draw the same lines on the S&P. We’ve got an up-and-down choppy chop here, and expect more of a pullback. And that pullback can be this way, or it can be this way.
But ultimately what I’m saying is, I think that we should ultimately get a tag of this line. I’m just setting my alert for that matter right now, I might as well do this too. And then the QQQs ( NASDAQ: QQQ ) didn’t do much of anything today. So as I look at it, this 50 basis point cut, it’s Wednesday, by Friday everybody’s just working for the weekend.
Now, let’s get to RNA ( NASDAQ: RNA ). I was going to take this off of my Watch List. I had said the reason that box was there was because I was explaining on this day that we really needed to see a move higher, and we didn’t get it. Instead, this has been farting around here for a while, but now we’re finally getting this move higher, and it’s been on really, really strong volume.
Even though the stock is still, technically, it’s kind of technically in this base, I like the way this thing is setting up at 44.63 and you keep your stop down about 8 percent, maybe 7 percent below where it is now. You’re taking an early entry on a stock that could ultimately run higher like this. It’s just a thought on a weird day in the Market.
This is giving me some type of clarity, I’m not saying buy the stock right here. You could, it’s your money. If you don’t like that, then give me some of your profits. But you could buy this stock right here or you could just say, Okay, I’m going to keep it on my Watch List and see if it ultimately breaks out. Because if it breaks out above $49.00 or so. We could start seeing a nice big run. It’s a biotech stock, therefore they can theoretically go to infinity because that’s the way biotechs are.
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