July 24, 2024, 1:07 pm EDT
Defense Action
The stock market rallied significantly from April to July 2024. Numerous new highs occurred for all major indexes: Dow Jones, S&P 500 and Nasdaq. Our earlier lookout last year that the breakdown and lowering rates in the first half of 2024 did not happen.
Rather, the inflation slowdown encouraged the market participants to squeeze out another uptrend. Because the lowering rates are likely to happen a couple of times in the second half of 2024.
This event is significant because the Fed would signal the end of the rate hike and the beginning of the easing process.
Although today’s drop was the reaction of disappointment in earnings from Tesla and Aplphat / Google tech companies, it shows more defense action for the unstable and shaky foundation of the market.
The election news from Donald Trump, Joe Biden, and Kamala Harris was shocking and confusing. The wars including Russia-Ukraine, Israel-Middle East, Asia (North Korea, China-Taiwan, and South China Sea are also disturbing.
Thus, investing opportunities come to the defense and defensive industries like telecom (T +5%, VZ +2%), defense (LMT +3%, TDY +4%), and consumer staples (KO +1%). Of course, there should be no surprise to see the retreat from the high-risk fast-growth area (TSLA, SMCI, ARM, NVDA, MSFT, AAPL).
Our view is still pessimistic for the stock markets. We think the worst is yet to come. So, stay defensive.
