Many people trade off of relative strength or relative weakness. This means buying the strongest stocks and/or shorting the weakest. This post will focus on stocks that held their gains through last week's dip.
Earlier today, the Federal Reserve cut interest rates by 50 basis points. The Fed rate meeting was scheduled for March 18th, but they couldn't wait until then to cut rates, one of the reasons why this is an "emergency cut". The other reason being that 50 basis points is a lot for a rate cut. This is the first emergency cut since the financial crisis of 2007-2008.
The market has had its worst week in a while. The Dow Jones fell 12.36% in 5 days. It all started the week earlier on Friday when there was a random sell off intra-day on no news.
Since September, the Federal Reserve has been involved in Repurchase Agreements, also known as repo's. To understand why they are important, first it is important to understand exactly what they are and how they affect the market.
Recently, the market has sold off. Many people were in panic mode about tariffs and the yield curve inversion. We even wrote an article about why the yield inversion is important. Since then, a few things have happened that are positive for the stock market.
As expected, the Federal Reserve cut their interest rates by a quarter of a percent. We outlined this scenario in one our recent blog posts where we said the market could temporarily sell off is everything goes as expected. Needless to say, the market peeled off a few points.
It has been a decade since the federal reserve last cut interest rates. The last time rates were cut was during the great recession of 2008-2009. Now 10 years into the longest bull market, it is almost certain that they will cut rates once again considering the market has priced in a 100% chance of it happening this Wednesday, July 31st.