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The News Buzz

• obs Report Hits & Misses—According to Econoday, The 272,000 overall employment gain exceeded Wall Street's 182,000 forecast. Private-sector employers added 229,000 jobs, beating 168,000 forecasts. Government jobs rose by 43,000.

• Fed Rate Cut Odds - After the May jobs report, markets are pricing in 55% odds of a rate cut by the Sept. 18 Fed meeting, down from 67% ahead of the jobs data, according to CME Group's FedWatch page. Markets now see 51% odds of at least two quarter-point Fed rate cuts this year, down from 66%.

• The name of Apple's major AI overhaul, expected to drop at WWDC 2024 on Monday, has just been revealed. According to a top insider, the new system will be called Apple Intelligence.

• Three stocks now account for 20% of the S&P 500’s value - For the first time dating back to at least 2000, three U.S. stocks, MSFT, NVDA, and AAPL, account for more than 20% of the value of the S&P 500, Dow Jones Market Data show.

Grow Investing

Growth investing is an active investment approach focusing on companies with the potential for above-average earnings growth. These companies are typically young, innovative, and expanding rapidly in their respective markets. Growth investors aim to capitalize on this potential by buying shares in these companies early on, hoping to benefit from significant stock price appreciation as the company matures and its earnings increase.

• Focus on Future Potential: Growth investors prioritize a company's future growth prospects over its current financial performance. They analyze factors like market size, product innovation, competitive advantages, and management expertise to identify companies poised for significant growth.

• Higher Risk, Higher Reward: Since growth companies are often in earlier stages of development, they may have less established track records and carry a higher risk than mature companies. However, the potential reward can be substantial if the company's growth trajectory is realized.

• Investment Horizon: Growth stocks are typically held for a longer-term investment horizon, a testament to the strategy's focus on long-term potential. This approach requires patience but promises substantial returns as the companies mature and achieve their full growth potential.

• Metrics Used: Growth investors often analyze metrics that go beyond traditional valuation ratios, like the price-to-earnings (P/E) ratio. They might consider factors like sales growth rate, profit margin expansion, and research and development (R&D) expenditure as indicators of future potential. 

• Growth Investing vs. Value Investing: Growth investing often contrasts with value investing, which focuses on buying stocks of undervalued companies with strong fundamentals. However, these two approaches may also overlap. For example, already established growth companies with temporary problems or during bear markets may fit into the value investing approach. 

• Growth Stock Examples: Examples of companies that might be attractive to growth investors include technology startups, disruptive innovators in established industries, or companies in rapidly growing markets.

• Active Management: Growth investing is not a passive strategy. It often involves active portfolio management, as you must stay updated on the company's progress and market conditions. This active involvement can make the investment process more engaging and rewarding for investors.

How BraVoCycles methodology can elevate Growth Investing? Our cycle methods, complemented by Elliott Waves Theory and Technical Analysis, can facilitate optimal entry and adding points in time and price. 

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Very Narrow Market – Red Flag

• For investment history books:

  • MSFT, NVDA, and AAPL account for more than 20% of the value of the S&P 500.

  • Top 10% of stocks by capitalization represent 75% of the US stock market.

Black Swan Predictions

• I noticed an increasing number of “Black Swan” predictions. Although I see numerous MT and LT bearish indications, “Black Swan” predictions are nonsensical. 

  • A black swan, in the context of financial markets, refers to an extremely rare and unpredictable event that has a severe and widespread impact. These events are often difficult to anticipate beforehand and can cause significant disruptions to the financial system.

  • The keyword is “unpredictable.” By the same token, I cannot guarantee that such an event will not happen. These kinds of predictions are “attention grabbers,” and if something like that happens, they are popularity boosters. If nothing happens, people forget anyway.

  

Some People Are Predicting a Black Swan.

Market Summary

As of close on 7 June 2024.

What Has Been

• So far, the market has followed the script I highlighted in the premium newsletter on Thursday, speaking in “micro” terms.

• SPX and NDX are kicking off June on a positive note, as expected by cycles and positive beginning-of-the-month seasonality. However, the seasonality effect of June being a traditionally weaker month for the markets.

• For the week, the Dow gained 0.30%, while the S&P 500 was higher by 1.32%, and the Nasdaq advanced 2.40%. The Russell continues to show weakness, down over 2.10% for the week. There were no surprises here; this was entirely according to my expectations based on the EW charts.

• Non-Farm Payroll report caused bond yields to spike again, and the probability of a September rate cut shifted from 68% to around 52% within a matter of a few hours.

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• In my opinion, RUT and DJI have the tops. . .

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