Join us as Phil Streible of Blue Line Futures unpacks the surprising small-cap rally and its implications amid expectations of a rate cut.
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Transcript:
stocks. A little bit of a hit there in the last 10 minutes but we’re hanging in but yeah, it’s kind of coming off a bit Phil Streible joining us for Blue Line Futures chief Market Strategist, my go to man on Friday. Phil were fading a little bit what happened?
They were fading a little bit I
feel like it’s it’s a battle like that South Park episode with the World of Warcraft and a couple people. You know the little South Park characters fighting that one guy so
no, no, I’m doing it right now that Cartman playing World Warcraft.
There you go. I mean, it was an incredible breakout to the upside definitely caught me off guard yesterday, I thought that that number would have came in a little bit hotter than expected. So we were shorting you know, some of the rustle least I was but it was balanced with like long gold, long silver, things like that. So just a really surprising move there. And it’s the massive squeeze to the upside. So
we’ll see if it can hold on there.
I mean, it looks really good right now the rustle to the upside.
Okay. Yeah, the small cap move. I mean, just wild stuff, right? awakened. And now walking again. Is it a zombie? Or do you think Phil, should you ride with it?
That was that was the argument that
like all the like, when you start looking at like third party independent research, they’re big argument is yes, they’re designing high inflation environment, you know, high interest rate environment, small caps are not the play at all. That’s the you know, that’s what, you know, they recommended short and things like that. They want to be long momentum, they want to be long, you know, mega cap growth and things like that. So it was just a big rotation yesterday, people are trying to front run, you know, the next kind of narrative or the next like few quarters out. And they really believe that the Fed is going to cut rates. I mean, it’s a 90% chance, even after today’s PPI number that the Fed will make its first interest rate cut at September 18. Yeah.
Okay. And as that sort of firms up, then, you know, I guess Jackson Hole becomes important is kind of like pals opportunity to lay the groundwork.
Yeah, yeah.
I mean, you got Jerome Powell on Monday, Tuesday at retail sales. We’ve got industrial production on Wednesday along with Beige Book, and then our initial claims and Philly Fed. So more fed speakers next week, we don’t have any big like, you know, I’d say I’m going to be watching kind of that retail sales. And again, Jerome Powell, those I think are your two biggest things. So, you know, today was interesting in a lot of the metals like gold futures dipped below 2400. At one point, Silver was down about $1, they were able to really claw their way back. And I think what they’re looking at is we’re looking at like two year treasury yields breaking down, and also the dollar index had flush below the 50 day moving average. And it’s really staged a pretty good sell off, you got to break out in the euro, the British pound and some of the other foreign currencies. Yeah,
the dollar really got clobbered. But even so, no ramp in BTC. You know, everything seemed to come together here. So Phil, what’s going on? And yeah, Bitcoin
hasn’t really, it hasn’t moved in four or five days, since that big flush out down below 55,000. Since then, we’ve consolidated I think, from, you know, if you’re gonna risk manage it, you’re gonna have some tight stops, and it’s got to be just right around 56,500. Because we haven’t closed below that level, we probed the load a few times 60,000 has just been like hardline resistance on it, we get a break above there. I think we go back in a consolidation phase around 60 to five, but at least it’s holding this area, it’s not as volatile as some of these other asset classes.
Yeah. What do you think happens if it does? Break? Or I guess the kind of flip side not to insert my own? Maybe bias there? But how would you know if it’s going to flip back higher then?
Yeah, it’s it’s tough. It just doesn’t there’s just not a lot of flows into it at the moment. That’s the same thing. We asked the same questions with like a lot of different markets out there, like two questions that every gold you know, should be on every gold traders mind is how much of the interest rate cut is priced into the market. And then when will ETF investors flow back in and it’s, you know, gold makes new all time highs, the ETF investors come back in, they chase momentum, they start broadening out, they buy silver and things like that on Bitcoin, it’s gotta be a break back above some of these, you know, higher levels, we got to get back over like 65,000, which the 50 day, you know, 70,000 will change the dynamic of it. And they’re just not there that it’s just not the party to hang out at.
Yeah, it’s true as the AI party. Now well into that point, Phil, and mean, what happens if the tech slam that we took yesterday returns? Because then it’s like if bitcoin couldn’t rally when tech stuff and growth themes were ramping up, I mean, what happens if that trade on winds like I mean, well,
yeah, He’s kind of that was that was something I was watching yesterday, it was like what is the reaction function to some of these big, big sell offs and it looks like it is just primarily focused around, you know, some of the indices and it’s not really affected other things, like where people are going to, you know, start liquidating some of these other asset classes, I mean, gold was able to rally and really, if people are going into small caps you think they’d be taken much more risk on because frankly, I got more confidence in something like the video or Apple versus some of these, you know, tiny small caps, but it is, it is nice to look into your portfolio and see these couple dollar stocks that were kind of left for dead, you know, a little bit or revive been revived a bit.
Yeah, the Lulu trade. You know, the solar trade, like some of that stuff that was way way down there.
Not not an endorsement, but my favorite one is Soundhound because, right, yeah, dounce they had some holdings in it’s a few boxes. So I thought
that was a fun trade too, because they I’m a big like, voice to text guy and they’ve got the best technology for that. Yeah,
yeah. So I love that too. I mean, like, again, not an endorsement. I
just think it’s fun to fun to watch and play around with. Yeah,
went from four bucks to six. Good call. I’d missed that this week. Thanks, Phil. Have a great weekend. You too, but it was Phil Streible chief Market Strategist at Blue Line futures. We got a great big picture panel coming up.