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The torrid 17% rally from the June low is sputtering. That makes this market dangerous.
After bleeding all year because of persistent high inflation and a hawkish Fed, the market rallied on newfound optimism. The market anticipates six to nine months down the road and investors envisioned a Fed that is all done hiking rates by then amid falling inflation. But that’s optimistic. And the optimism has been waning.

Is this a bear market rally or a new bull market?

That’s the question investors are grappling with. Is this the end of the crummy market or is this 17% rally off the lows just a head fake? Let’s examine each possibility.

After a better than 30% plunge at record speed, the market has staged an epic rally from the bottom. The S&P 500 has moved more than 20% higher from the lows in late March. It is likely sensing an end to the economic shutdown sooner rather than later.
That’s good news, and the market usually gets it right. But even if the economy opens back up in May and June, there is a good chance of more trouble ahead. Terrible earnings and economic reports will come and consumers will be wounded for a while.


While I believe the economy and the markets will recover, there is a good chance of another down leg in the market. In this issue, I seek to take advantage of that possibility by targeting great companies to buy and below current prices. These are fantastic companies to own that are only ever cheap in bear markets like this.


The market will come back, but probably not yet. Taking advantage of another down move is a fantastic way to profit from the market’s eventual recovery.

Sure, the rally in the overall market may not last, but this unusual environment is still creating great opportunities in certain pockets if you know where to look. One such opportunity exists in the new and rapidly growing marijuana industry.
The growth in marijuana is undeniable.


While most companies have struggled to make a profit in the young industry, one company has been making money like crazy. It’s a marijuana farm REIT with a superior business plan that has managed to grow profits 600% over the last four years. The stock has been a phenomenal performer. But it sold off recently and appears to have just begun moving higher.


This month I also highlight a call on Global Ship Leasing (GSL), a stock that has bucked the trend and returned 28% YTD.


There are three portfolio stocks that have been upgraded to a BUY this week: U.S. Bancorp (USB), Visa Inc. (V) and One Liberty Properties (OLP). All the stocks have some momentum and strong reasons why the rally may continue.

The market is having a big day today. July CPI came out and showed moderation in inflation at 8.5% versus 9.1% in the prior month. Core inflation, which excludes volatile food and energy prices, was 5.9%, the same as last month.

The lower CPI number was widely expected as gasoline and other commodity prices have come down significantly amid the recession fears. But it was still lower than the expected 8.7%. Core inflation didn’t go down, but it didn’t rise either, suggesting a possible leveling off.

Isn’t this fun? The market is up big today. But things have been very ugly. And we might not be out of the woods yet.

As of yesterday’s close, the S&P 500 was down 12.49% YTD. The technology stock-heavy Nasdaq was about 19% lower for the year and more than 20% below the November high, officially in bear market territory. The latest down leg is because the Russia/Ukraine situation is getting worse.

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“Smooth seas do not make skillful sailors.” - African Proverb

For the first time this year, this week all three major benchmarks closed at all-time highs during the same session on the hunch that a lousy job market will spur a series of interest rate cuts by the Federal Reserve.

This has been a week for the history books with record-breaking volatility and uncertainty.

My advice? Stay on the conservative side, leaning to blue-chip dominating stocks not tied to U.S.-China trade. Buy more gold. Since early 2022, gold has strongly outperformed inflation-protected Treasurys, so gold is now the world’s preferred safe-haven asset by many investors.

The President Trump reversal yesterday as Treasury bond market yields jumped and the U.S. dollar fell sent markets soaring. The U.S. raised China tariffs and China responded in kind. Unfortunately, both sides remain on a collision course.

Markets recovered some gains yesterday following a climb down on both stiff reciprocal China tariffs and speculation that Fed Chairman Jerome Powell might be fired. Explorer stocks had a good week with Luckin Coffee (LKNCY) up 9%, while DBS Bank (DBSDY) shares were up 7.7% this week following last week’s 6.9% gain.

Today, we add a new ETF with exposure to a very particular European sector that should be immune to the ongoing tariff wars.

I’m an optimist. That quality has served investors well for decades. There are many stocks at cheap prices that will likely be a lot higher in a year or two as a new bull market will emerge. But I don’t believe that the market is on its way to the Promise Land just yet.

The market has rallied strongly off last week’s lows. Buy I’m not buying into it. Stocks are already floundering badly again today.
The S&P 500 came to within close to 1% of a bear market last week, down 20% from the high on a closing basis before several up days and a better than 4% rally off the low. The index has posted six consecutive weeks of decline, the longest such streak in more than a decade.

This is a big earnings week that could determine the near-term direction of the market.


This earnings quarter started at the beginning of this month. But the rubber hits the road this week. Big technology companies including Alphabet (GOOG), Microsoft (MSFT), Amazon (AMZN), and Meta (META) as well as energy companies Exxon Mobile (XOM), Chevron (CVX), and Valero Energy (VLO) all report this week.

SThe story of the broad market is much the same as it has been in recent weeks. To wit, rotation continues across several industry groups while the major averages remain stuck in a lateral range. Things should start to heat up as we head further into the earnings season, though we’re not advising any major change in stance just yet.

This week’s list includes a nice mix of key industries that are benefiting from major fundamental and economic trends. Our Top Pick is a stock that should get a boost from accelerating interest in online foreign language learning.

The market has turned south again. And things could be worse in September.

Blame the Fed. Blame inflation. Blame recession. Investors can’t look past them anymore. The market had rallied on hopes that inflation peaked, and the Fed will be all done hiking rates by the beginning of next year. But the Fed poured cold water on those hopes.



The end of this Fed hiking cycle is no longer in view after the recent hawkish statements by the Central Bank. The Fed indicated again last week that it is willing to induce a deeper recession to conquer this inflation. Rates may continue to rise well into next year and investors can’t see the light at the end of this tunnel anymore.

It’s starting to feel like a bull market. But let’s not bank on it just yet.

Inflation is moderating, and many see an end to the Fed tightening cycle by early next year. The Fed part is probably true. The Central Bank will likely raise the Fed Funds rate to around 3.5% and then stop. Higher than that would probably plunge the country and the world into a deeper recession. I doubt this Fed will have the belly to do that.

The sharp recovery from the recent bottom has leveled off, at least for now. From here, the prognosis looks murky at best.
New concerns have arisen. There is worry that Europe will impose additional sanctions on Russia, which may include natural gas. That would certainly increase the negative economic fallout from the war. Also, there is increasing concern about slowing economic growth later this year and next.