Good Afternoon, We talked last week about Jerome Powell’s speech at Jackson Hole Wyoming being a possible inflection point for the market and that’s exactly what it ended up being. The Fed chairman gave a somewhat dovish address in which he noted that  “the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.” He further stated that “the balance of risks appear to be shifting” between the central bank’s dual mandate of full employment and stable prices. He cited “sweeping changes” in tax, trade and immigration policies. As a result, expectations for a quarter-point rate cut in September surged to roughly 83% following the speech from about 75% earlier in the week, according to the CME Group’s FedWatch tool. This change in sentiment caused the market to rally on Friday and I expect that the uptrend will continue through the first week in September when the next Fed meeting will occur. At that time if the Fed follows through with an interest rate decrease the uptrend should continue into the new year. Understand one thing about the uptrend that started Friday. At least up until the Fed meeting it will be extremely data sensitive. If there is the least bit of negative news that is construed by the market as possibly influencing the Fed to hold off on a rate increase in September the market will sell off. Depending on how drastic that news is will determine the intensity of the selloff. So be prepared in case the waters become rough sometime in the next week or so. Everything else will take a second seat to a rate decrease to be sure, but the market will still keep a close eye on earnings  and a really bad miss from a large cap company could  definitely move the needle as well. The bump Friday certainly gave a boost to our S Fund which demonstrates why we remain invested there.  I said it before and I’ll say it again. Small and Midcaps are where you want to be invested in a falling rate environment as they are more interest rate sensitive. I had a a few folks posting about the I fund. Let me note that it has definitely out-performed the S and the C since February and we could of probably should have been in it. However, this late in the game it would be chasing if we bought it. Being invested in the I fund after June was risky! Why???? Because data indicated that the Fed would be influenced to reduce rates and once that took place small cap stocks would rally and the dollar would rise. If that took place the rising dollar would become head wind for the I fund which at that point would way underperform the C and S funds. That is the reason we remained invested in the S Fund most of this time and Friday was a good example of what I am talking about. The S Fund posted a whopping gain of +3.14% while the I fund gained less than half of that at +1.50%. Expect that to continue if there is indeed a rate decrease. You see, that’s the thing about fundamentals. They could be described as inexact at best. We know what the market could do and should do but how do we predict what Jerome Powell will do? Especially when emotions become involved as the did between he and President Trump. We knew a rate decrease would be coming at some point. So we stuck to our guns and stayed invested in the S Fund. I think one message I got said we were gambling. Really? Was it not gambling to be invested in the I Fund which could turn on a dime and become the underperformer. Then there were a few folks that said it was best to stay diversified. I’m Okay with that. I really am. However, know this if you have your money spread out in the shotgun approach where you are always invested in the right place then you are always in the wrong place as well. My goal is to be in the wrong place as little as possible. We may not make as much as they do when we’re wrong, but we make a lot more than they do when we’re right. As in most things, you must do what fits your talent and temperament the best!

Fridays trading left us with the following results: Our TSP allotment posted a wonderful gain of +3.14%. For  comparison, the Dow was up +1.94%, the Nasdaq +1.88%, and the S&P 500 +1.54%. Praise God, we had them covered!

Dow surges more than 800 points to post record close as Powell speech fuels rally: Live updates

Last week action left us with the following signals : C-Buy, S-Buy, I Buy, F-Buy. We are currently invested at 100/S. Our allocation is now +14.84% on the year. Here are the latest posted results:

I Fund:

F Fund:

So far our system is working great in 2024. It took us a little longer to learn to use if efficiently and effectively but we did. I guess nothing ventured, nothing gained. That’s all for this week.  Have a great rest of your weekend and may God continue to bless your trades!

God bless, Scott 

***Just a reminder that you can review the performance of our allocation at the Web Site TSPTALK.com in the autotracker section under the screen name KyFan1.

I produce and publish this blog as both a ministry and for the benefit of any Federal Government Employee. This is done to offer you some guidance as to how to approach your retirement more financially successful. When it is time for you to retire, I recommend you utilize the services of a Professional Money Manager, who works with a reputable investment firm. He understands the guidance you have already received and he can manage your savings assets utilizing a more advanced investment program into the future.

If you would like to receive more information about this introduction, please feel free to contact me at  KyFan1@aol.com.