Weekly Update: Powell Sends Stocks Higher
Good evening, and welcome to this week’s edition of Stealth Trades!
Fed Chairman Jerome Powell has been hesitant to cut interest rates.
After massive money printing following COVID led to record-level inflation and the Federal Reserve was humiliated when their “transitory” prediction proved to be completely false.
Despite calls for lower rates from the President, Secretary of the Treasury, several Fed governors, and pretty much every Fortune 500 CEO, Powell has stubbornly refused to cut.
On Friday, Powell spoke at the Jackson Hole Symposium. Investors hung anxiously on his every word to hear whether we might finally get cuts in September.
And, lucky for us, that’s exactly what we got…
Powell came out dovish for the first time all year and all but confirmed rate cuts at the September meeting.
Investors cheered. Stocks soared. And bond yields came down today.
But, as expected, some areas did better than others. If you have been to any of my live events in the last few weeks, you have heard me talk about the strength I am seeing in the homebuilding sector and why I am extra bullish on those stocks.
Lower rates mean lower mortgages, and homeowners with 3% mortgage “golden handcuffs” might finally come into the market. I expect a housing boom in 2026 and 2027. And it appears that investors agree…
Homebuilders and building materials stocks soared, and many made new multi-month highs.
Mortgage and lending stocks also saw big gains with companies like Rocket Companies (+9.27%) and Upstart (+8.27%) leading the way.
A quick look at our sector performance charts shows a clear favoritism for this sector among institutional investors.
Tyler – a Traders Agency member and regular attendee of my Monday morning live sessions – sent me a link to an even bigger scanner from Finviz. It scans 144 industry sectors to identify which ones are leading the pack.
Look at the leaders this month: mortgage firms, residential construction, home improvement stores…
There is a similar pattern over the last quarter:
Nuclear and mining stocks have been hot all year, but construction is quickly climbing up the ranks.
Many investors – even some legends that I have great respect for – have begun sounding the alarm that the top is in.
But I see no evidence to support that…
The market continues to print net new highs. It has every day but one since mid-May.
The advance/decline line – which typically breaks down in advance of stocks before a market decline – is ripping to new highs.
This not only shows no signs of a pullback but points to higher stock prices in the near future.
Don’t get too caught up in the noise. Don’t listen to the whiners, naysayers and perma-bears. Just trade what you see. And right now, I see a healthy market with a lot further to run.
Best wishes for your trading,
