The last data before the rate cut will be released on Wednesday this week. The seasonally adjusted CPI annual rate for the end of August was 2.9% before and 2.6% as expected. This expected value is very close to the Fed's target. Therefore, based on the current stable improvement of macro data and the Fed's conclusion that the current economy is not in recession, we can be sure that the first 25 basis point rate cut will have the necessary benefits for the market. If the first 50 basis point rate cut is implemented, the panic of economic recession will come again and the economy will fall sharply.
Market Analysis
The market rose violently last night following the U.S. stock market, resulting in a liquidation of 120 million U.S. dollars in short positions in the past 24 hours. Yesterday we talked about a second test, and today it seems that the second test near 52,500 is effective, but judging from the volume and other indicators, it is still not that strong. We will continue to pay attention to it in the future.
From the 4-hour level, 59,000 has now become a resistance level. If it can get above it, the next strong resistance will be 63,000. This position is also a key point to measure or judge whether the price will continue to rise in the future.
The market has been volatile. Will the best opportunity to buy at the bottom appear in September?
Whether September is the best time to buy the bottom depends on your overall judgment of the market and your risk tolerance. Historical data shows that September is usually a weak month for the stock market and the crypto market, while October is often a key time for recovery. Therefore, September may indeed provide a good opportunity to buy the bottom, but this needs to be judged based on multiple factors.
Here is a strategy on how to buy at the bottom and an analysis of the current market:
1. Market environment analysis
Background of the recent market correction: The market correction that began on March 14 has lasted for nearly six months, and there is a widespread sense of weakness in the market. But as you mentioned, the market's ups and downs are common, especially in September, when the decline may intensify. Although the decline in September may be anxious, it is often a time to accumulate energy and prepare for a rebound.
Seasonal effect: September is usually the month when the market falls, which may be due to macroeconomic factors, policy expectations or adjustments in the capital market. However, the market tends to rebound in October. Therefore, if historical data is a guide, there may be a low buying opportunity at the end of September to prepare for the rebound in October.
2. Bottom-picking strategy
Buy in batches: For uncertain market trends, the best way is to build positions in batches rather than buying all at once. This method can smooth your purchase costs and reduce the risk of further market declines. For example, you can gradually increase your positions at different support levels in three or four times to prevent greater market fluctuations.
Technical analysis assistance: Use technical indicators (such as relative strength index RSI, MACD, support level, etc.) to determine the potential bottom area. MACD golden cross and RSI oversold signal can often help identify oversold rebound opportunities.
Position management: As you mentioned, position management is key. When the market is at a low point, you can use a heavier position, but you should still control the overall risk. For long-term investors, it is a good strategy to appropriately increase holdings of high-quality assets, while short-term investors can maintain a flexible position and be ready to stop losses at any time.
3. Select the target
Prefer core assets: When buying at the bottom, give priority to core assets or leading stocks with strong fundamentals. These stocks are often the first to benefit when the market recovers. Avoid stocks with higher risks or stocks that have not yet established clear trends, and focus on assets that already have strong rebound potential.
Diversification: Don’t put all your money into one asset or sector. Appropriately diversify your investments into multiple asset classes with low correlations. This can reduce the risk of fluctuations in a single asset.
4. Risk Control
Set stop loss and take profit: Even if the market seems to have reached the bottom, set a stop loss point for each transaction to deal with possible unexpected fluctuations. The take profit point is also important to ensure that you can lock in profits when the market rebounds.
Stay flexible: Market trends may change, so staying flexible is key. If you find that the market environment is deteriorating, don’t stubbornly hold on to your position, but adjust your strategy in a timely manner according to market trends.
5. Mental preparation
It takes enough psychological endurance to buy at the bottom when the market is down. Often, there will be "panic selling" in the market downturn. This is often a good opportunity to buy at the bottom. Stay calm and don't be affected by short-term emotional fluctuations, so that you can make rational decisions.
In summary, although the decline in September is worrying, if we combine historical experience and the current market adjustment, this may also be a rare opportunity to buy at the bottom. The key is to build positions in batches, manage positions reasonably, and select core assets, and enter the market at a low cost and wait for the rebound in October-December.
