The most neglected part of investing

Eric Fry launches tonight at 8pm EST… is Bitcoin at $100,000 back? … Louis Navellier’s small-cap wins … is China a “buy” with Beijing offering incentives?

We’re kicking off today with a reminder that tonight at 8:00 PM EST our macro expert Eric Fry will be broadcasting Great sale from 2024 event.

There are three main focuses:

• What to make of our strong market that has hit a series of all-time highs this year
• Where is the market going next and why?
• A suite of investment tools that provide investors with powerful quantitative support, helping them better time their entries and exits and achieve higher returns

Having these tools can make a huge difference in your trade management and that has a huge impact on the value of your portfolio. Here is Eric:

Most people go into investing with a destination in mind… but no plan for how to get there with profits intact.

You see, the decision to enter into an investment or trade is only Step 1 of the process. I dare say that’s the easy part.

But the next steps are even more important. Trade management can make the difference between generating big wins…or big losses.

As I pointed out in Digest we have been in a challenging market with many crosswinds for the past few days. The stock could go up 20% over the next year, or it could just as easily go down 20%.

So while we want exposure to the potential continuation of this bull market, it’s just as important to be prepared to ride out a bear. The tools that Eric will highlight tonight are designed to help investors preserve their gains and reduce their downside risks.

Back to Eric:

We’re on the precipice of a series of huge, market-changing events: recession rumors, one of the most contentious presidential elections in US history, the staggering cost of living and more. It’s all a perfect storm for a tumultuous stock market.

However, this is not all doom and gloom. There is a way to emerge in a stronger financial position than you are today…

That’s why tonight at 8:00 PM ET I’ll be going live with some of the best tech minds in the business.

At a special event we call The big sale of 2024we’re going to reveal what I believe is one of the most important trade management tools. You can click here now to instantly reserve your spot for that event.

Shifting gears, Bitcoin is back above $63,000… is the bull market back?

Crypto investors should enjoy a monster market following the spring fourth half.

Not only did that not materialize, but instead a bear market arrived as bitcoin fell 24% between April 1st and September 7th.

However, since then bitcoin has risen 18% and is now trading above $63,000.

Source: StockCharts.com

Is the value after the halving back on the table? And if so, what kind of potential earnings are we looking at?

In his weekend update a Crypto Investor Networkwrote our expert Luke Lango “(the Fed’s rate cuts) might just have saved the crypto markets – and sparked a rally to $100,000 in Bitcoin (BTC/USD).”

Now, I’ll quickly add that before going back in, Luke remains cautious. He’s still waiting for a green light to indicate that this is a breakout that investors want to buy. From his update:

The technicals suggest we need a few more good days from Bitcoin before “buy signals” are flashing everywhere.

BTC has bounced back well from its 50-week moving average, but has yet to impressively retake its 25-week moving average around $63,000 – something we feel is necessary to confirm that this is not a “false recovery” , as we saw in May 2014. and April 2018.

BTC also retook its 20, 50 and 100 day moving averages (ME) in this return. But it has yet to retake the 200-day MA or the March 2024 downtrend resistance line.

Now, remember, Luke wrote this over the weekend. Since then, bitcoin has actually recovered $63,000. Meanwhile, he’s knocking on the door of his 200-day MA, which Luke just highlighted.

Source: StockCharts.com

While this is encouraging and indicative of growing power, Luke doesn’t buy until he sees one last box ticked:

We would like to see Bitcoin make a move above $64,000 – and stay above $64,000 – to confirm the technical legitimacy of this comeback rally.

If this happens, we will see this as a “buy signal” in the market. This would probably be a good time to start buying more cryptos.

As I write on Tuesday, bitcoin is 1% below $64,000. If you’ve been looking to buy into the crypto market, keep an eye on this trigger.

The move to rate cuts, now that we have started a new easing cycle, which corner of the market is Louis Navellier betting on?

If you are new to DigestLouis is a legendary quantitative investor. He bases his market decisions on cold, unbiased numbers instead of hunches or guesswork. And the numbers he’s evaluated tell him there’s one part of the market to make sure you’re in today — small caps.

Here is Louis:

Small-cap companies can be some of the most innovative and profitable in the market. But the truth is that smaller companies carry more debt than their large-cap peers and rely on external financing to finance their operations. With a rate cut, they can lower their borrowing costs and invest more capital into their operations.

So, while small-cap stocks have traded erratically and large-cap stocks have underperformed this year, an important rebound is likely to show.

Historical market data supports Louis’s food. Below, we look at the performance of small-, mid-, and large-cap stocks in the first 3, 6, and 12 months after the first rate cut (data starting in 1954).

Small caps are on the left. You will see that they perform better in all three time horizons. And note that the one-year return of nearly 27%.

Source: Calamos Investments

While we’re on the subject of small-cap wins, quick congrats to Louis Discovery Actions subscribers. Between September 6 and last Friday, 13 of the small-cap stocks on their stock list posted double-digit gains of between 10% and 37%.

And as of mid-August, one of Louis’ most recent recommendations, Idaho Strategic Resources (IDR), rose 55%, while the S&P added just 3%.

Source: StockCharts.com

This is what can happen when you combine a quant market approach, the cutting edge world of small caps and interest rate cuts from the Fed.

Bottom line: There’s a huge tailwind blowing behind small-cap stocks right now. History suggests that you want exposure to this corner of the market.

Finally, China just went big with stimulus

If you haven’t been following, the Chinese economy and investment markets have struggled over the past two years.

Economic growth has slowed due to weak consumer spending, a slump in the housing market and the lingering effects of pandemic disruptions. Major real estate developers such as Evergrande have gone into debt default, raising fears of a financial crisis. Then there are geopolitical tensions, particularly with the US, which have slowed foreign investment in China. It turned into a mess.

Meanwhile, the government’s tight regulatory restrictions on sectors such as technology, education and entertainment have dampened investor confidence. Between the spring of 2023 and a few days ago, the Shanghai index fell by 20%.

So what happened “a few days ago?”

Well, Beijing has come up big with a bailout.

from Bloomberg:

China’s central bank unveiled a broad package of monetary stimulus to revive the world’s second-largest economy, underscoring growing alarm within Xi Jinping’s government about slowing growth and declining investor confidence.

People’s Bank of China Governor Pan Gongsheng cut a key short-term interest rate and announced plans to reduce the amount of money banks must hold in reserve to the lowest level since at least 2018…

The central bank also pledged to provide about $113 billion worth of liquidity support to the Chinese stock market.

Now, on the one hand, this hose of support makes the Chinese market suddenly more interesting.

Below, we look at the MCHI ETF, which is the iShares China ETF. The rally over the past two days is the reaction to this news of government support.

Source: StockCharts.com

On the other hand, remember that this fire hose is necessary because, well, things are on fire.

If you want to bet here, make sure you’re ready to protect your capital if the bull case doesn’t materialize.

And that brings us back to Eric’s event tonight, which will highlight a number of tools that are designed to address exactly that need. Here is the sign up link again.

We’ll keep you posted on all these stories here in the Digest.

good evening

Jeff Remsburg