Market Update 9.21.24

This week’s market action was marked by a notable event: the FOMC rate cut of 50 basis points. We published a mid-week update shortly before the announcement, explaining that we saw a 50/50 chance of gains versus losses. In response, we reduced our leveraged positions prior to the meeting while keeping our unleveraged index ETFs in place. This strategy minimized our risk exposure while still allowing us to benefit from potential market upside.

Despite the significant news, the model was spot-on with its weekly prediction, which was published last week. DIA was projected to end the week at 420.33, and the actual close on Friday was 420.57. SPY was projected to close at 568.75, with an actual close of 568.25. QQQ was projected to finish at 482.48, and the actual close was 482.44. These results are impressive.

Looking ahead to next week, the AI-derived model predicts a relatively flat week-over-week change, with DIA expected to change by 0.2%, SPY by 0%, and QQQ by -0.2%. Notably, the probability of positive returns remains significantly high across all periods. Based on our interpretation, we believe the market may experience a slight "float up" in the coming weeks. While this doesn’t meet the criteria for one of our entry windows, we plan to participate using non-leveraged instruments.