“Technology tends to exhibit upside leadership in strong tapes and during bull market cycles that have that good steep slope to them.” – 02:40
Remy Blaire welcomes Katie Stockton, the Founder and Managing Partner at Fairlead Strategies, to discuss the latest developments in the financial markets. The episode opens with a significant announcement: the Federal Reserve has cut interest rates by a quarter percentage point during its October meeting, marking the second reduction of the year and bringing the benchmark rate to a range of 3.75% to 4%. This decision comes as the 10-year Treasury yield rises back above 4%, despite a notable decline over the past month.
Remy and Katie begin their conversation by analyzing the S&P 500 index, which is currently hovering around the 6876 level. Katie explains that this level is crucial, as it represents an objective from the June breakout of the index. While this point may serve as a natural pause for the market, she emphasizes that the long-term momentum for the S&P remains strong, even though short-term momentum has slightly waned. Katie notes that recent gaps higher in the index may indicate a potential for a pullback, but she does not foresee a major decline at this time.
The discussion then shifts to a sector breakdown within the S&P 500, particularly in light of recent earnings reports and geopolitical developments. Katie highlights the technology sector’s continued dominance, noting its strong relative performance and leadership during bull market cycles. However, she also points out an interesting rotation occurring, with sectors such as healthcare and energy gaining relative momentum, suggesting a shift in market dynamics.
As the conversation progresses, Remy and Katie delve into the recent earnings reports from mega-cap tech companies, including Amazon and Apple. Katie provides a technical analysis of these “MAG 7” names, noting the dispersion in performance among them. While Amazon has experienced a breakout following its earnings, other companies like Microsoft and Meta are facing pullbacks. Katie stresses the importance of scrutinizing the fundamentals of these companies as investors navigate the evolving landscape.