The stock market is buzzing with excitement around artificial intelligence (AI), driving a surge in demand for companies that power AI data centers. Quanta Services (PWR), a major utility contractor, is a prime example of this trend. While PWR has seen a breakout, its high volume and overbought RSI indicate a potential overreaction. However, it’s important to consider the broader picture.
China is making significant moves to stimulate its economy, with the People’s Bank of China (PBC) lowering its reserve requirement ratio and repurchase rate, as well as reducing down payment requirements for second homes. This has sparked a surge in Chinese stocks and commodities like copper, steel, and oil. These developments will likely impact global markets, so investors should pay close attention.
Looking at the US market, money flows are positive for Apple (AAPL) and Tesla (TSLA), while Amazon (AMZN) shows negative flows. It’s crucial for investors to understand these money flows and recognize when smart money is buying, especially in gold and oil, using ETFs like SPDR Gold Trust (GLD) and United States Oil ETF (USO).
Bitcoin continues to trade within a range. However, investors need to look ahead and consider long-term positions with protection bands, incorporating cash, Treasury bills, or short-term tactical trades. The level of protection should be adjusted based on individual risk tolerance, with higher bands for conservative investors and lower bands for those with a more aggressive approach. Remember, it’s essential to have enough cash on hand to seize new opportunities.
Traditional 60/40 portfolios are less appealing for long-duration bond allocations. Consider focusing on high-quality bonds with shorter durations or using bond ETFs tactically.
The author highlights their track record of accurate market calls, emphasizing the importance of staying informed and adapting to changing market conditions.
