The Week Ahead 9/1/25
Hello All,
I hope you’re all enjoying the long holiday weekend and getting some time away from the screens & I also hope the year has treated you well so far, and I wish you all a successful remainder 2H of ‘25 as we nearly round off into Q4.
Looking back at this past week, it was a relatively quieter one all around in regard to economic data / general event risks & with Nvidia earnings finally being out of the way along with PCE #’s, the next bigger risk / datapoint is the upcoming NFP print into this upcoming Friday & if the report is well received / better than feared (slowing growth is fine but recessionary data is not), we’ll likely continue to see the recent outperformance of both small-caps & cyclicals extend further & in regard to last week, that was made clear as IWM ended up being the best performing of the indices on the relatively quieter week, closing higher by 27bps, whereas the Q’s ended up being the worst performing of the indices & ended up closing lower by 19bps on the week… and since mid-August, IWM has outperformed the Q’s by just under 8% so it’s been quite an impressive stretch of outperformance these last few weeks.
- Economic Data for the Coming Week:
In regard to economic data into the upcoming week, again, it’s a shortened week given the holiday but we do still have a plethora of economic / labor market data but in general, all eyes will likely remain on Friday’s jobs report to see if the recent weakness given the months of both May & June’s job report were revised down by 90% & or if that was just the expected post-Liberation day blip…
- STD Channels on Indices for Perspective: Weekly TF
- SPY
- QQQ
- IWM
- DJIA
Since starting this Substack back in June of ‘23, between individual names / tactical trades / baskets, we have netted a 148.08% return whilst in the same period, the Q's have returned 61.48% / Spooz has returned 53.49% / Dow has returned 40.16% & Small-caps have returned 33.41%, so nice outperformance against all the indices whilst having a 82.1% win rate, averaging a 24.83% return on realized gains / winners & a 14.44% loss on realized losses / losers.
Looking forward to the future as we continue to progress through ‘25.
Earlier on in ‘24, a series we had started was ‘Educational Pieces’ with each including a wide variety of topics, some even suggested by you all & we’ve finally decided to release Part Trois.
Nevertheless, for those whom may have missed the first educational piece along with the subset of topics included:
General background / knowledge on all option strategies
In-depth talk on risk / reversals & how to go about expressing / utilizing them
Options Structuring
When to used naked calls / puts vs. spreads
Choosing expiration dates
Identifying key pivots / supports / resistance zones
General briefing on stock gaps
What to look for in regards to fundamentals
Implementing fundamental / macro / technicals into a trade
Hedging
Creating risk/reward setups
Taking profits / managing losses
Overall Process
Book recommendations
I include a link here to the original.
And given the amount of positive feedback we had received on the first educational piece & how helpful it was for many, we decided to release Part Deux earlier on in ‘25 & for those who may have missed, a link to Educational Piece Part: Deux can be found here.
And then FINALLY, a link to the latest part of the series, Part Trois (for now), can be found here.
Psychology is the silent driver of performance & your edge often comes not from knowing more but from managing yourself better.
To jump right into it, this past week was a relatively lighter week in respects to economic data / headline driven news & arguably the biggest piece of news was Trump having announced plans to dismiss Cook:
As we’ve been discussing for the past two weeks or so but the motives are clear… Yes, Cook has committed mortgage fraud but the clear & main goal here is to gain control over the Fed board (In order to influence policy) & the firing of Cook would essentially help secure that.
Take it from Trump himself:
- TRUMP: WILL HAVE MAJORITY SHORTLY ON FED
If Trump were to be successful in terms of the removal of Cook, the risk of the Fed losing independence essentially becomes nearly inevitable as Trump then gets to pick the new Fed Chair in whom will replace Powell & Trump has made it pretty clear he plans to pick an individual whom wants to cut rates / ease (Admin indirectly influences policy).
And again, why even try & gain control over the Fed & risk Fed independence? Well, it’s almost as if the administration can’t get any more clearer that they’re trying to do everything they can to ‘run it hot’ in ‘hopes’ growth can outpace spending to reduce the deficit-to-GDP as the earlier on in the year attempts of austerity proved to be short-lived as we all know.
As we get ready to head into next week, it’s a fairly important one given we’ll receive the jobs report for the month of August & for those whom don’t recall but the prior jobs report was perceived as more ‘softer’ than expected along with the prior months for both May & June having been revised lower by 90% which is more so what has sparked the recent ‘rate-cut fever’ with two cuts remaining as expected into year-end & as of now, odds for a September rate-cut remain firm at just above 87% after having essentially being solidified following Powell’s Jackson Hole speech where he essentially reiterated as he has since the initial late ‘23 pivot… the Fed will continue to choose to remain supportive of growth rather than trying to finish the job on the inflation front even though it still remains firmly above their stated target.
And with that being said, one of the more interesting dynamics within the market is how stubborn general positioning / sentiment has remained even with the indices continuing to rally higher & make highs & as shown below but the recent Goldman Sachs Equity Sentiment Indicator underscores this dynamic as despite the continued strength within equities, it’s still sitting within negative territory (-0.5) which essentially suggests investors aren’t fully ‘risked up.’
Why does this continue to matter? Well, despite markets continuing to climb higher, institutional, retail, and foreign investors have yet to reach stretched positioning levels & essentially the current leg higher isn’t necessarily being fueled by euphoric positioning but rather by incremental flows against a backdrop of continued skepticism which ultimately makes the setup more durable than if the indicator were flashing “stretched” and sentiment was already euphoric.
