Market Timing Brief for July 29, 2025:
“Will Stocks Rally or Fall on the Fed Rate Cut Decision Tomorrow?”
UPDATE 8-03-2025: The above prediction was incorrect, but the bond market made a rate cut anyway! The correct answer was that Powell did nothing to even hint at a rate cut, which has sent the market down based on very negative US jobs data on Friday with extremely negative revisions going back another 2 months with no help offered from the Fed. To be fair the report came out on Friday, two days after the jobs data was released with the big revisions downward.
What has happened to the markets? In the Treasury market, longer term rates and short rates fell, driving up the prices of those bonds and bills. The bond market is LEADING THE FED by cutting rates itself! TNX (10 Year Treasury Yield) was down 14 basis points on Friday alone.
The 2 year Yield was down 24.9 basis points or 0.249%. Twenty-five basis points (0.25%) is considered one entire Fed rate cut! As I said, the bond market is telling the Fed what it must do.
Trump is right that his trade policies are hurting confidence among both consumers and businesses, and rate cuts may now be needed to stimulate the downturn his tariffs have created.
Lower growth, if it continues, will hurt stock prices. A number of equity markets/sectors have already lost both very short term momentum and to some extent, some intermediate term momentum. They will either promptly recover or dip down for another couple of days or longer. I’ll be following my indicators which turned Bearish starting last Weds. after the Fed meeting and got worse after that. The summary is HERE.
Follow my indicator changes on social media at the links below, and I’ll tell you when I see a turn and am buying exposure back… So far, I have not sold much U.S. exposure – just some individual stocks and a couple of failed country ETFs that broke down.
What follows below are the trend classifications of the ETF’s I’ve posted about and bought. My trend system is detailed HERE…
All of these markets are teetering, but are not fully broken yet…
Consolidating UpTrends™ = GLD (gold; was up on Friday, while the rest were down in fairly big moves on a volatility basis) IWO (Small growth, in danger of failing trend) IWP (mid growth) IWR (mid caps) KWEB (China Internet) QQQ (tech heavy NASDAQ 100) SPY (S&P500 Index) XLK (SPX Tech).
Trump’s mercurial trade tariff policy has been whipping the market around, so if you sell some exposure here or a bit lower, be prepared to add it back should the market/index/stock you just sold reverse back UPward, when Trump changes his mind. Tricky huh? 🙂
I have plenty of cash left to deploy should we see much lower prices, as I’m at roughly 87.5% of usual max. equity exposure for a Bull market and I can go to 100-120% using just cash, not leverage.
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The initial post follows…
The following will tell you how to position yourself on a market timing basis in both US stocks and bonds, before the Fed meeting, and what to expect from the bond market over the next several months, which impacts many stocks as you know…
Trump gave away the punch line following his Fed building tour with Chair #Powell. He said they were in agreement on rates in so many words. He said that to hint that Powell had agreed to cut rates “soon” IMO. Otherwise, what was the point of lowering his antagonism toward Powell. The beating would have continued. It didn’t with the exception of the cost overruns on the Fed building project.
That means there are two possible outcomes to consider for tomorrow…
1. The Fed cut rates tomorrow by 0.25% and surprises a market that expects NO rate cut at a 96.9% likelihood or…
Large, small, and mid cap stocks will all benefit from the prospect of lower interest rates. The market will likely continue to favor growth over value within SPX Large Caps meaning SPYG as well as QQQ vs. SPYV, Small Caps IWO vs. IWN and Midcaps, IWP vs. IWS).
That means that the 10 Year Treasury Yield, TNX can fall up to the time of, and then following the next CPI reading for days to weeks, but it will then rise into year end.
and because it’s good to have a backup…
or on the oligarch’s network… 😉
Real time messages are on StockTwits as always and appear a bit later on BlueSky, and then on X/Twitter (following me on two platforms ensures that you have a backup to get my posts btw, when one may be down. It happens…).
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