Hey everybody. Thanks for reading.
The Tobin Report 📰 is all things money💰, markets 💹, and charts 📊.
Okay, no time for pleasantries.
Let’s get to work.
Recession and Rate Cuts
Well, it looks like the Fed is done raising rates. FINALLY, this rate hiking cycle is coming to an end! Finished. Over. No mas.
Sounds like a good thing, right?
🚫 🏃🏽♀️💨Not so fast.
We know what comes next. Rate cuts. ✂ The Federal Reserve cutting interest rates has long been viewed as a signal of imminent economic doom.
Cuts in 2001, 2007, and 2019 were soon followed by recessions. Will 2024 be different? We shall see.
❓ Let’s address two questions.
How long until they CUT rates, and…
What happens when they DO…
1️⃣ How Long Until They CUT Rates?
🔷 Average time from last hike to first cut = 8 months. We are already at the 5 month mark. This doesn’t guarantee a rate cut in March ‘24…but it does become statistically probable.
2️⃣ What Happens When They DO Cut Rates?
🔷 It generally means recession is just around the corner.
My expectation:
Recession is on the horizon. 🌄
Business Cycle Never Lies
🔷 The next question we have to ask is….WHY they would be cutting interest rates. They don’t cut rates because the economy is doing great. They cut rates because the shit is hitting the fan.
“Collectively, these have never been wrong.” - referencing the flashing recession indicators below. 👇🏽
Just something to think about. That’s all. Rate cuts are generally not a good sign. But maybe this time IS different. Maybe they do pull off the soft landing.
Let’s move on to my favorite part of The Tobin Report….
Charts 📈
Let’s review a couple charts from a few months ago and see how they’ve performed after my technical analysis reviews.
1️⃣ Amazon - AMZN
🟢 These were my notes from a few months ago when Amazon was trading at about $100 / share. 👇🏽
🟢 And here we are today. Same chart a few months later and price is at $150! A 50% gain in a few months. You can see how price broke out of downtrend and continued off key trendlines.
Technical analysis works!
2️⃣ Southwestern Energy SWN
🟢 These were my notes from a few months ago when SWN was trading off its lows after a clear basing pattern. 👇🏽
🟢 And here we are today. You can see how price again broke out of the downtrend and started marching higher.
Again…all technical analysis. Bearish to bullish reversals. Breakout of downtrend. Riding trendlines.
More Charts 📈📈
Now let’s look at a couple charts I like moving forward. I’ve highlighted what I believe are good entry points. None of this is meant to be investment advice. I’m just a guy on the internet with amazing technical analysis skills! Too much? Okay….I’m just a guy on the internet putting out some charts about some stuff for fun.
🎯 Technip - FTI (Oilfield Services)
Clear pattern of riding the 150 day moving average
I purchased on the pullback at the buy zone, green arrow
🎯 Franco-Nevada - FNV (Precious Metals)
Sold off, formed a double bottom into the buy zone
Stretched too far from 150 day moving average
I purchased at the buy zone in green
Looking for a reversion to the mean
🎯 Uniti Group - UNIT (Real Estate Investment Trust)
Bearish to Bullish reversal - trend change
150 day moving average (orange line)
🎯 Roku - ROKU
Another bearish to bullish reversal - trend change
Buy zone on pullbacks to the 150 day moving average
Well there you have it….a few charts to watch for the week. I could go on and on and on but that seems good for now. Besides, I’m sure I’ll have plenty to correct once I hear from Bill Tobin telling me about all my grammar and punctuation errors!
Have a good week,
Eric
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Eric