Market Outlook – Early Week
- Short-Term Sentiment: Leaning bullish early in the week, supported by expectations of potential monetary easing and active capital rotation into leading sectors.
- August Risk Profile: Elevated risk of a sharp correction this month. Current valuations are relatively high; if the Fed were to cut rates immediately, any initial “pump” would likely be unsustainable and could trigger profit-taking.
- September Macro Scenario: Probability is rising that political pressure from the Trump administration could push the Fed to cut rates. However, given current price levels, such a move may not create lasting upside momentum — more likely outcome: market dips first, then rebounds (drop → bounce).
Base Case
- Bullish bias in the early week.
- August: Expect choppy price action with a higher chance of downside.
- September: Rate cut, if it occurs, likely leads to a short-term drop before a recovery.
Invalidation
- A combination of falling yields and upward earnings revisions could reduce the magnitude of any correction.
Risk Management
- Avoid chasing prices at extended levels.
- Favor entries on pullbacks toward key support zones.
- Use clear stop-losses and maintain flexible position sizing.
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