so it's more or less

a the FED watch tool you can see that

for the next think there's a 100%

probability they're going to cut

interest rates the question is are they

going to cut by a quarter percentage

Point that's a 70% chance or they going

to cut by a 50 basis points which is .5%

that's a 29% probability and as a result

you can see that long-term interest

rates have also boom collapse so

ordinarily that will be bullish for the

market right we'll come to that in a

short while so the question is the Fed

has been you know raising rates and

keeping rates high for almost two years

and now they finally are cutting

interest rates so usually after the FED

Cuts interest rates what tends to happen

to the stock market so it all depends on

what happens to the economy so the

economy continues to be strong continues

to grow then once the fat Cuts rates the

stock market will continue to do well so

this chart you can see see what happened

in past Cycles once the FED start

cutting interest rates and there was no

recession economy continued to do well

so if there was no recession you can see

that there we are average with no

recession in red you can see that 12

months later the Market's up about an

average about what 16 177% and 24 months

later the Market's up like about close

to

40% fantastic right but if a recession

happens then it's a different story so

you can see that uh if there's a

recession then you get this um orange

line over here where the market you know

12 months later could be down about well

actually not that bad you know 12 months

later it's down like maybe 5% from from

the top went all the way down you know

uh 15% then 12 months later down 5% but

24 months later it's made it all back

that's why I say in in long run don't

worry because whether there's a

recession or no recession long run the

market always goes up right so but

understand that it is not the FED

cutting rates that could potentially

cause a recession the recession happens

because the FED kept rates high too long

so remember here's the analogy right the

economy is like a car when a car is

going too fast it overheats that's like

inflation so to slow the car down the

FED has to raise interest rates by

stepping on the brakes so for the last 2

years the FED has been stepping on the

brakes to slow the car down so if the

FED is able to slow the car down without

the car stalling that's great but now

there's a fear that hey the FED has

stepped on the brake too long and now

the car could stall right the economy

could go in recession and then we could

be in the house for the short term

now yesterday was a pretty interesting

day in the market because initially

after J Powell's speech and people felt

that oh okay the fed's going to cut

rates people all optimistic right so the

market actually opened High yesterday

showing that this uh pullback may have

bought them and we're going to bounce

back higher but then suddenly during the

trading day what happened everything

reversed down and the market closed

sharply lower yesterday although it did

close above the 50-day moving average

but current Futures are showing that the

market could go lower today it all

depends on 8:30 a.m. eastern time the

employment report so if we get uh strong

employment report then I think Futures

could reverse up we could bounce back

higher but if the employment report

comes negative then yeah we could go

down a bit more in the short term so

what is it that caused that intraday

reversal yesterday that from going up

everything started to come uh crashing

down well it was the sudden new

narrative that the FED could have waited

too long they cutting too late and we

could be going into a recession what was

interesting was that yesterday not all

stocks went down stocks that are

defensive in nature or Recession Proof

didn't go down in fact they went up for

example you can see consumer defensives

your um your McDonald's your young

Brands your protein gamble your

Hershey's you know they all went up in

fact Hershey's reported earnings that

was not very good I own Hershey's by the

way and despite lousy earnings Hershey's

went up yesterday why because Hershey is

a consumer defensive stock know to be

Recession Proof and what else went up

Healthcare went up I own a lot of

Healthcare in my portfolio and most of

the healthcare stocks went up these are

the Recession Proof stocks and stocks

that tend to be more sensitive to a

potential recession they fell pretty

hard uh like basic materials Industrials

financials energy consumer discretionary

and yeah technology but the interesting

thing is actually technology is

not really sensitive to recessions if

you look at past recessions pure tech

stocks can still do well during

recession so I think it's more like a

bit of a sector rotation where people

are rotating out of technology and going

into more defensive sectors right and

you know a lot of people expected small

caps to rarely as interest rates are

coming down but small caps dropped

yesterday why because small caps do very

badly in a

recession so a few questions ask number

one what changed the narrative so just a

couple of moments ago the the market was

concerned of oh inflation is bad now no

more inflation but oh my God it's a

recession so there's always something to

worry about in the market and the market

always finds a narrative to kind of like

create lots of volatility so what

changed narrative well was actually two

things that happened yesterday the first

thing was that the ISM Manufacturing

Index came in lower than expected it

came in the July index came in at 46.8

which was below the expectation of 48.9

and Below June's reading of 48.5 so

there we are that was July's reading you

can see was a contraction so anything

below 50 is a contraction of

manufacturing activity and economic

activity so that's freaking people oh my

God it's a recession so but does it mean

it's going to be a recession well again

no there a lot of false you know

positive right like for example take a

look at 2015 the index went below 50 as

well contraction but you know there was

no recession and it bounced back back up

over there here it bounced back up as

well but of course this was caused by

covid so if you discount covid you can

see that you know in the last two cycles

when it contracted it was actually no

big deal but again the market likes to

freak out over every little thing so

that's the first thing the second thing

that kind of created a recession fear

was that initial claims unemployment CA

claims came in higher than expected so

249,000 unemployment initial claims

versus 235k expected and Contin

continuing claims came in at 1877 again

above consensus and the unemployment

rate has been ticking up as well up to

now 4.1% so all this is Fanning that

narrative that we could be coming into a

recession the FED has been too late to

cut so are these economic slowdown fears

Justified well I don't think so well at

least at this stage not yet because

while there are some negatives you see

there are also a lot of positives so my

job is to show you both the negatives

and the posi positives and you make up

your own mind whether the economy is

still going to go strong or tip into

recession so let's look at some positive

well couple of days ago US Quarter to

real GDP growth came in much higher than

expected it came in at 2.8% annualized

there we are that just came in just 5

days ago which was a reacceleration from

quarter one of 2024 so initially again

there was a concern that quarter three

last year quarter 4 last year quarter 1

this year G GDP was growing but at a

slower pace and people afraid that that

was going to lead to recession in fact

that led to a bit of a market selloff a

couple of uh months ago as well but then

just in Quarter Two this year GDP re

accelerated so that was not reported in

the news yesterday so the market tends

to be have this recency buyers whatever

it sees latest it gets freaked out about

all right but it forgets what it saw a

couple of days ago okay and this is much

higher than the 1.4% growth in quarter 1

and most of this was driven by consumer

spending remember 70% of US GDP comes

from consumer spending and that increase

at

2.33% um in quarter 2 versus 1.5% in

quarter 1 so that's looking pretty

healthy uh what else is looking pretty

healthy well if you take a look at the

Atlanta fed G GDP now real GDP growth

estimates this is a realtime tracker

that tracks realtime GDP by looking at

all the different economic data points

you can see that quarter three y quarter

tree of this year GDP is now forecasted

at

2.5% which is still pretty strong all

right now let's take a look at the yield

curve of course we got some people

saying that the yield curve inversion

will lead to a recession and of course

that has happened before but it hasn't

happen all the time but as I said

previously it is not the

inversion that precedes a recession it's

a reinversion right so over here you can

see the 10-year treasury yield minus the

3month treasury yield so whenever it

goes negative it means

that the yield curve has inverted all

right the three Monon is above the 10e

which is what's happening right now you

can see the three-month yield is

5.22% and the 10e yield is

3.95% so if you take the 10 year minus

the 3 month 3.95 minus 5.22 it's

negative that means the yield curve is

inverted so we have been in an inverted

yield curve for quite a while so

historically can see that when the uur

is inverted and it uninverted that means

it goes back above zero where the uh

where now the 10 years above the three

month then it's followed by a recession

in the Shaded area same thing here

inversion

uninversity so that's another soal

positive data

point what else now ultimately it all

boils down to the earnings of the

companies if companies continue to grow

their earnings then the stock market

will continue to go up it's as simple as

that ultimately what drives stock prices

are earnings okay so right now we are in

the middle of the earnings season as you

guys know and so far half the companies

have reported

earnings uh and among some of the big

tech stocks Apple announced earnings not

bad stock price we up yeah I think it's

it's going up today slightly right meta

announced great earnings stock price

popped Microsoft announced great

earnings stock price went down okay even

though earnings were great uh Google

report reported pretty good earnings

stock price went down but rebounded a

bit and Amazon just reported earnings

yesterday was pretty good I was pretty

happy with it but looks like going to

gap down about 8% today so ultimately

when you hold these companies don't

worry too much about the shortterm ups

and downs of the stock price look at how

the business is doing if the business is

growing that's all you need to know

because ultimately any short-term dips

is an opportunity to add more shares to

Great companies okay so out of half the

companies that reported so far we have

got

78% of the companies that have beaten

their earnings per share estimates to

date for Quarter Two earning season this

is above the 5year average of 77% and

above the 10e average of 74% so in other

words companies are reporting earnings

better than expected okay at the same

time consensus analyst expectations for

S&P 500 earnings per share actually Rose

during the latest week for 20124 2025

and 2026 so as a result forward earnings

Rose to yet another record high during

the week of 25th of July so over here

you can see these are the uh consensus

estimates for 2026 the year 2026 they

are rising 2025

Rising uh

2024 is a bit Yeah came down a bit right

came down a bit um and overall the S&P

500 bottom up forward earnings per share

has been rising so what does all this

mean basically the economy is growing

corporate earnings are growing right so

the probability of a recession session

happening uh anytime soon is still

pretty low in my opinion now again of

course anything can happen you know no

one can predict for sure when a

recession will happen not even a top

Economist in fact the majority of

economists all predicted that 2023 was

100% chance of a recession it didn't

happen so if the top Economist can't

predict recession neither can I neither

can you but we can just look at the

current data to see hey are we still

growing in terms of earnings and uh GD P

which we are for now all right so what

can we expect for the rest of the year

now if you take a look I've shown this

chart before by the way if you take a

look at all the past presidential

election years which we are in one uh

right now you can see that August for

presidential election years tends to be

pretty bullish actually okay so if

seasonality and history is anything to

go by we should end August up bullish

again there's no guarantees there's no

100% but this is just based on

probability okay and if you actually

take out 208 which was the great

financial crisis take that out because

that was an election year but that was

um a GFC you can see

that all the other election

years um from August which made a high

all the way to October mid October the

market actually was not that bearish but

it wasn't bullish as well it was

actually in a Range going up and down

and up and down and up and down and up

and down so we should expect a lot more

volatility in this case so is there

money to be made in this kind of

volatility yes a lot of money especially

if you learn how to trade options right

so whenever you see great companies on

the index selling off selling off you

can sell put options cash secure put

options in fact that's what I do most of

the time and by doing that I made over

$1.8 million in The Last 5 Years selling

put options on very good companies

Whenever there short-term volatility do

check out my beat the market webinar

where I talk more in detail about how I

did that but if you have got a smaller

account and you can't sell cash secure

put options you can always sell buo put

spreads also known as put credit spreads

so with small account you can do that

and get pretty good premium right at the

same time after the market goes up what

can you do you could actually sell

covered call options on the stocks that

that you own or if you don't own 100

shares of a stock you can sell what we

call bare call spreads you can also do

iron cond do you can also do uh calendar

spreads in options so there are many

strategies you can use in options to

create extra income for your Investment

Portfolio while it's going sideways and

of course whenever you got a great

company that's dropping to a support

level that's undervalued use that as an

opportunity to accumulate more shares

because ultimately Theon e continues to

be okay and doesn't go into recession

then by the end of the year we should

have a pretty strong uh rally okay again

of course there's no guarantees we can't

predict the future it's just a

probability yeah now of course you may

say Adam but what if what if the FED

actually hit the breaks too long and we

do tip into a recession then how what

should we do are we going to die no okay

you're not going to die don't worry

right now remember invest is a marathon

it's not a Sprint we are in this

investing game not for one year or three

years we're in it for 10 20 30 years

until we die okay and during this time

in the markets we will go through a lot

of recessions we will go through a lot

of bare markets it will happen we just

don't know when it's going to happen the

thing is not to freak out about it the

thing is to take advantage of it and to

make the most intelligent

decisions so one of the things that I

learned is that there's really no point

trying to predict a recession why

because like I said history has proven

time and again that the best Economist

in the world can't predict recession so

if they can't why do we even waste our

time okay that's number one number two

is

that even if

we read the economic data and we

discover that okay there a recession

what should we do it's often too late

because remember this that the stock

market is not the economy write this

down the stock market is not the economy

the stock market is a leading indicator

of the economy so the stock market

always moves first the economy always

moves 6 to 9 months later all right and

I'll show you how useless it is to read

economic data to know whether you are in

or not in the recession right let's go

back to

2020 now in 2020 we had a pandemic we

had a global lockdown and as a result we

had in we had a severe recession and and

what happened was the stock market went

into a bare Market it collapsed all the

way down and it bottomed on the 22nd of

March and if you recall if you were

following me at the time in early April

over here I said that we have started a

boom market and most people were very

skeptical Adam what do you mean a boom

Market are you crazy the econom is in

recession we are in house I said

the stock market is not the economy look

at the stock market forget about the

economy right and you can see all these

negative headlines in the news and the

more negative the headlines the more the

market began to rebound now here's the

interesting thing when was the 2020

recession officially declared by the NBR

the National Bureau of economic research

the official recession was officially

declared on 19th of July 2020 which was

here here okay so in other words by the

time they said we're in the re session

is official the market already bottomed

1 2 3 4 4 months before that and by the

time they declared is a recession the

stock market had already gone

up 48% from the lows that's why it's

completely

useless to know that it's a recession

Because by the time you know it the

markets really up 48% okay so instead of

focusing on the economic data and

whether in a recession you can focus on

a price action if you want so what do I

mean by Price action what I mean is that

look at the trend of the market is it

still on an uptrend or has it reversed

into a downtrend that's all you got to

concern yourself with really so for

example you can see over here the market

was on an uptrend right because the

market made higher

highs and higher lows and you can see

that initially the 50 moving average the

blue line was a level of support

and this green line over here the 150

was also a level of support So once the

market reversed from an uptrend breaking

down it broke the 50-day moving average

went down down down down down broke the

150-day moving average the one in green

it broke this moving average and went

all the way down so obviously over here

we know that the uptrend this uptrend

here has been broken now what people ask

me Adam should I sell everything when

that happens in the past I used to do

that in the past whenever I say okay

it's a downtrend I would sell everything

and wait for a new uptrend to buy it

back I used to do that in the past but I

don't really do that anymore because I

find that many times when you do that by

the time you sell and the new uptrend is

confirmed and you get back in often

times you may even get back in at a much

higher price so for example those of you

who understand the moving average

crossover you can see that when the

price drops rapidly by the time the

fifth moving average crosses below the

150 which is which is a downtrend signal

and by the time you sell you're selling

to late because moving averages are

lagging indicators if you will right and

by the time the the 50 moving average

crosses back above the 150 moving

average giving you an uptrend signal and

by the time you buy it back you would

have bought it back after it had gone up

48% okay so that's the thing so the

whole point is that if you hold on to

great companies you don't have to worry

about jumping out get getting back in

stay invested that's the most important

thing if you just stay invested uh

you'll do really really well okay but of

course don't be leveraged because if

you're leveraged then these kind of

drops could wipe you up if you get a

margin call Okay and like I said earlier

on when was the recession declared the

recession was officially declared on the

19th of July which was here so how

useful is that that by the time they

tell you it's a recession the

recession or rather the bare Market

already

came and went all right totally useless

now if you look at the more recent bare

Market over here now there was no

recession during the 20122 bare Market

uh but you can see again the price

action right so this this was a clear

uptrend where the price made higher

highs and you know it made higher lows

and the 50 moving average above the 150

moving average and it's above the 200 is

sloping up there's an uptrend and here

you can see it's a downtrend signal over

there with the 50 moving average

Crossing below the 150 so this is a a

downtrend signal there and then we have

a new uptrend signal so that's what I

call the price action so ignore the

economic indicators look at the price

action but again more for a trading

perspective if you're investing you can

hold it through the ups and down no

problem so where are we right now so

some people are freaking out because

yesterday we open and we

closed big so people think oh my God

we're going to die right we're going to

die right but again if you take a look

at the bigger picture you can see that

the trend has not yet been broken we are

still in this uptrend pattern Okay so

until it breaks down uh into a bigger

correction of bare Market which I doubt

is going to happen we are right now

still on an uptrend okay so let's see

what happens don't freak out you know

relax and stay focused on the individual

companies and use it use the chance to

add shares to good companies again uh as

I'm making this video it's about 7:50

a.m. eastern time at 8:30 uh eastern

time the employment report will come out

and like I said if the employment report

is a strong one

then we may reverse back up again uh but

if it's a weak one then yeah we could

see a bit more

downside at least for the short term but

as long as the economy doesn't tip into

recession which for now I don't see that

then we should be able to chop around

for the next two or three months and

then R towards the end of the Year by

the way if you want to learn the skills

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with that I'll see you guys in the next

video take care and may the markets be

with you