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Updated Market Thoughts
The best way to summarize my current market views: Shorter-term, expecting a consolidation. Longer-term, we’re still in a strong bull market powered by AI.
1) The Federal Reserve is not going to cut interest rates today and it’s going to be Groundhog Day. Six more weeks of President Trump harassing Fed Chair Powell. Trump won’t fire Powell, but the market’s not going to like the constant nonsense headlines.
2) We are heading into the seasonally weak months of August and September. Some form of consolidation would be expected. This can come through price (a possible normal pullback to the 50-day moving average), or through time (a possible sideways consolidation). Either way, I think it’s worth keeping expectations realistic over the near-term.
3) After this week, the majority of S&P 500 companies will have reported earnings, and the news cycle is going to shift away from fundamentals (earnings) to the bullshit headlines about tariffs, the Fed, interest rates, geopolitical, etc. This could lead to potential volatility over the summer.
4) I mentioned that I reduced my exposure last week to lock in some gains and to help minimize volatility for my clients in case we get a pullback. As always, your portfolio decisions should depend on your timeframe, your risk tolerance, and your overall plan. If you don’t have a plan, I suggest working on one to help you produce consistent gains over the long run.
5) If we do get a pullback, I’m going to put money to work in some of the growth names I like longer term. There are so many stocks with strong fundamentals, accelerating earnings and sales growth, insane bullish options activity, super strong technicals, and are likely going higher over the next 6-12 months. I have core positions in some of these stocks, and I will look to add on logical support. In case you missed it, I wrote about my longer-term bullish thesis in this blog post: https://joefahmy.com/2025/06/29/dont-lose-sight-of-the-bigger-picture
6) I tell my Educational Members this all the time: Actively managing a stock portfolio is not easy and not for everyone. It involves decision making and an incredible amount of mental toughness. Know yourself and what works for your personality and for your overall temperament.
7) Speaking of my Educational Product, the price is going up to $595 on September 1, 2025. From now through August 30th, first time members can use the discount code: take100off for $100 off the current $495 quarterly membership price AND one free month. After you sign up, my web team will add one complimentary month to your membership. Take advantage of this offer before the price increase in September. You can sign up here: https://joefahmy.com/investor-education
I can be reached at: jfahmy@zorcapital.com.
Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this blog. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.
Don’t Lose Sight of the Bigger Picture
In early June, I sent a research note to my Educational Members. Since then, it’s been highlighted on Fox Business: https://www.foxbusiness.com/video/6374823459112 and on Jim Cramer’s Mad Money show: https://www.youtube.com/watch?v=SfR3nbnIV98. I summarize my key themes in the following 9 points:
It’s easy to get caught up in the day-to-day market noise, especially during periods of heightened volatility. When investors focus on the near-term headlines such as the tariff news and the geopolitical tensions, they tend to lose perspective of the powerful underlying trends shaping this bull market. The purpose of this research note is to remind market participants of the “bigger picture” concepts I’ve been discussing for the past two years and will continue to mention over the next two to three years.
1) A new bull market began in May 2023 powered by Artificial Intelligence (AI). Some people argue that it began at the October 2022 lows, but it’s all semantics. The reason I say May 2023 is that’s when the true AI market leader, Nvidia, delivered one of the greatest earnings reports in stock market history. I wrote about it back in May 2023: https://joefahmy.com/2023/05/28/the-stock-market-game-changer
In this piece, I highlighted that ChatGPT was the fastest application to reach 100 million users.
Throughout history, bull markets are powered by inventions and innovations that revolutionize our lives. Some examples include railroads, television, airlines, drug discoveries, personal computers, cell phones, and the internet. What do all these have in common? They help to increase productivity. AI is the next major wave, and it’s already driving productivity across many sectors. This is the fundamental reason I believe we’re in a longer-term uptrend.
2) I’ve frequently compared this cycle to the internet boom of 1995-2000. If the current market is going to have a similar path (meaning both markets being powered by major inventions), then this bull market could last for approximately 2-3 more years. This chart from Bespoke Investments compares the Nasdaq Composite from the late 1990’s to the current market, and overlays Netscape web browser releases to ChatGPT releases. Some people might think this is a crazy comparison, but I find it very fascinating. As I mentioned earlier, ChatGPT is the fastest application to 100 million users. Even if one thinks this comparison is total coincidence, what matters most is staying focused and capitalizing on the current opportunities.
3) There is a VERY IMPORTANT point I would like to emphasize. Does this mean that everyone should be reckless, load up on the market, and ignore risk? ABSOLUTELY NOT!!! Please keep in mind that even though 1995-2000 was a strong market, there was insane volatility and aggressive pullbacks along the way. For example, late 1997 witnessed a significant correction (including a “mini crash” on 10/27/97) due to the Asian financial crisis. Also, the summer of 1998 saw an incredible scare due to the Russian debt default. Back then, a highly leveraged hedge fund called Long-Term Capital Management blew up, and the market only recovered when the Federal Reserve orchestrated a bailout to prevent a potential systemic crisis. My point is that if this current bull market is going to last until 2027, we are going to see some major corrections, shakeouts, pullbacks, and growth scares along the way. One could argue that we just witnessed one with the recent tariff correction.
4) Coming out of the recent tariff correction, we saw several breadth thrusts, including a Zweig Breadth Thrust (ZBT). The main point of the ZBT is to indicate the insatiable buying demand coming from the big institutions over a 10-day period. Again, this is for people who have a timeframe of longer than 7 seconds. There have only been 19 ZBTs since World War II and all 19 have led to above-average 12-month forward returns (see chart from Ryan Detrick). This is something to keep in mind into the upcoming October 2025 through April 2026 period, especially if we see a normal correction during the seasonally weak summer months of August and September.
5) Over the past two months, there’s been insane call buying in many June 2027 and December 2027 calls. Some examples include bullish flows into AMZN, GOOGL, ARM, NVDA, TSLA, AVGO, NOW, and PLTR. If these stocks are going to move higher over the next 2-3 years, that means we are likely to see the entire market move higher due to their significant weighting on the major indexes. Again, this doesn’t mean that everything will just shoot straight up or that any of these will work. It’s just one more piece of data supporting a constructive backdrop. As always, risk management remains paramount.
6) Another supportive factor is the longer-term charts in the Semiconductor sector. The main Semiconductor ETF (SMH) has been consolidating for the past year. NVDA, which makes up 21% of SMH, has also been consolidating for a year. In fact, last June, the price reached $140, and a year later, it’s currently around the same price (as of early June when this was originally written). The next two largest components of SMH, TSM and AVGO, have also been consolidating nicely, while other large components such as MU and KLAC are also starting to emerge out of their recent ranges.
7) Markets ultimately move on earnings and interest rates. Over the next 12-24 months, expectations are for lower rates, which should enhance liquidity and create a more equity-friendly environment. You don’t have to agree with the Fed but always remember the Marty Zweig quote: “Don’t Fight the Fed!” In fact, I suggest getting a tattoo of it, so it will be a frequent reminder.
8) Another chart that adds to my bullish thesis occurred recently for only the seventh time since 1985. It’s when the Nasdaq 100 rallies from down -20% to a 1-year high within 3 months. The dates on the left are occurrences after sharp corrections and bear markets. On average, the Nasdaq 100 was up over +40% a year later.
9) The incredible bull market we saw from 1995-2000 was mostly fueled by internet-related stocks, but there were other growth areas such as smart phones, fiber optics, and retail-related (both apparel and restaurants). The sign of a healthy market is when it is broad-based, and this current bull market is more than just AI. For example, I’ve discussed many Space-related names (https://joefahmy.com/2024/10/13/stock-idea-rocket-lab-usa), energy-related stocks, and select retail stocks continue to show up on the 52-week high list. The takeaway: Stay open-minded and be flexible. There are multiple growth stories at play.
This research note isn’t a green light to blindly chase stocks or to ignore risk. It also doesn’t mean that we won’t have major corrections along the way. It’s simply a reminder to shut out the noise, stay disciplined, and stay focused on the bigger picture. If this bull market is going to continue for the next few years, it’s essential that we take advantage of the opportunities. As always, I will continue to share my best interpretation and keep people on the right side of the market, while also highlighting strong setups as they emerge. Thank you and good luck!
I can be reached at: jfahmy@zorcapital.com.
Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this blog. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.
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