September Blues…

Morning Traders! We are Munny Tree. Fall is coming and our leaves are getting ready to fall like the market seems to in September

Sorry that we’ve been M.I.A. the past few weeks. We’ve been continuing to do our analysis and send out trade alerts but our normal weekly newsletter was put on the back burner. We’ve been working on some new nuggets that we think you’ll love. More to come in the next month or so but we are really excited for a new launch coming this fall 🚀

Our newsletter this week follows the September blues and how to navigate this market that is going through some pretty substantial changes:

• Will we see a normal September slide or can we buck the trend

• The Fed is about to cut rates

• What’s going on with AI and Semi-conductors?

Performance so far this year

Overall we’ve had a good year so far. We’ve beat the S&P 500 6 our of 8 months and overall are up over 33% for the year. And if not for a couple of bonehead moves; not selling New York Community Bank when we were up over 50% and it falling back down to break even and letting MLCO fall and fall and fall without selling (unfortunately our hold indicators were still saying “hold” that it would recover….it didn’t).

But other than that we’ve been doing really well. A few stats about our year so far:

• 60% of our trades were positive each month

• 3.2% average monthly gain per trade

• Months where we have hedged positions with options strategies have seen 0.55% additional gains

We are currently at 33.82% return this year and our goal is to exceed 50%!

As of this moment we currently own no position in the portfolio. Look out for trade alerts this week as we buy into the dip.

The September Blues vs the Fed

September, on average, is the worst month of the year. So far, this September seems to be following the trend with the S&P already down almost 3% for the month. In order to not be caught up in the wave we must be especially careful on what stocks we add to our portfolio and sell for gains quickly.

But we have something coming this September that other years haven’t had…a long awaited Fed rate cut. September 18th the Fed will announce their first rate cut. The big question is how big will it be: 0.25% or 0.5%

CPI and PPI this week will be a big factor in which way the Fed goes. An 0.5% rate could be seen as getting the market back to neutral rate faster and lower the cost of capital which is typically good for businesses. But it could also signal that the Fed is more worried about the economy slowing than they have let on which could spook the markets. Where 0.25% cut could be seen as ‘slow and steady wins the race’ or the Fed not doing enough and keeping the economy tighter for longer than necessary. So it’s a delicate balance. The rate itself probably won’t move the market as much as whatever Powell says in his speech.

Is the Semi-Conductor euphoria over?

The first 6 months of this year the semi-conductor industry ETF that contains a basket of semi-conductor stocks, was up 85%!!! Just buy that, sell it on June 30th and take the rest of the year off, right? Because if you didn’t and are still holding, well, you are now down for the year.

So what’s going on here?

1. The sector was up so much that it was hard to imagine it continuing to go up

2. AI and NVDA largely were leading the sector. NVDA got up to $3T valuation and while they continue to beat earnings expectations it seems not by enough to keep the stock going up forever

3. Other Semi-conductor companies (Micron, Intel, etc) aren’t caught up in the wave and are being left behind

So where do we go from here?

This dramatic pull back in semi’s actually makes some of these company’s attractive buys and you might see them on our buy list at some point soon. AI is still in its infancy, there’s more and more data centers being built, which means more chips will be needed. And it’s possible the 1st mover isn’t the winner. That doesn’t mean jump in today with both feet. But it does mean we should start putting on our sunscreen and flippers ☀️🥽

What we are watching right now

We currently hold cash in our portfolio and have no stocks. This was a somewhat lucky situation given how poor the month has started. September is historically a bad month and how the market reacts to the Fed decision next week will determine how this month fairs. We will wade into the market carefully and act quickly so keep an eye on our alerts.

Here’s what we are watching right now:

Happy trading!