AI & Tech Euphoria is Reversing

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News Buzz

• U.S. job growth cooled sharply in July while the unemployment rate unexpectedly rose to the highest level in nearly three years. The Labor Department reported Friday that employers added 114k jobs in July, missing the 175k gain forecast by LSEG economists. The unemployment rate also unexpectedly inched to 4.3% against expectations that it would hold steady at 4.1%. It marked the highest level for the jobless rate since October 2021. —Megan Henney, "US Job Growth Slows to 114K in July While Unemployment Unexpectedly Jumps," www.foxbusiness.com, August 2, 2024.

• "Investors are shifting from focusing on inflation risks to recession risks," said Michelle Gibley, director of international research at the Schwab Center for Financial Research.  

• The market has a sinking feeling that FED has fallen behind the curve.

• Bill Ackman’s Pershing lost 4.7% in July, erasing most of the yearly gains.

• Warren Buffet sold 50% of his AAPL stock position.

• 74% of S&P500’s components fell on Friday, and the AMZN drop was most dramatic.

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AMZN Sub-Prime

• I warned about AMZN and other Magnificent 7s two to three weeks ago based on my cycle and Elliott Waves analysis.

• It is like “stairs up, elevator down,” losing about 20% and erasing half of the 9-month gains since Oct’23 in wave 5 in just two weeks, on an intra-day basis.

• It broke below the price channel, multiple support levels, and 50D, 100D and 200D Mas. It is not a pretty picture. There is plenty of resistance above on any bounce.

Equal Weight S&P500

• Many pundits were excited about the market just a few days ago, like “the market is broadening,” “it is a fresh new bull market,” …

• Consider the cycles of RSP (Equal Weight S&P500 ETF). The chart below shows the cycle composite of dominant cycles detected on the daily RSP chart. According to my cycle analysis, " not “a fresh new bull market,” at least for the next several months.

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August-September Seasonality

• August-September is within the seasonally weak part of the year, From 1 June 1 to 1 November.

• The table below (courtesy of SentimenTrader) shows cumulative August-September returns over the last 77 years.

• Although slightly 54% of these periods were net positive, the cumulative return is dismal across virtually all sectors.

Follow BraVoCycles on X

• Consider following me on X (former Twitter) for your benefit. My posts in the newsletter and on X go like “hand in glove.” A few days ago, I warned premium subscribers about an imminent reversal in Bitcoin. On Friday afternoon, I posted a timely Bitcoin update.

Market Summary

Market Data

As of close on 2 August 2024.

What Has Been

• The major Asian, European, and US markets were unanimously down. I like red when I am bearish.

• Dow declined 610.71 points or -1.51% to 39,737.26.

• S&P 500 declined 100.12 points or 1.84% to 5,346.56.

• Nasdaq declined 417.98 points or -2.43% to 16,776.16.

• Russell 2000 declined 76.85 points or -3.52% to 2,109.31.

• But some things were in green: long bonds and VIX, which was up amazing 25.8%.

• I warned about this and suggested raising cash for a few months.

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