Meta Strategy Trading Portfolio – Probability Map Update.

Decisive Breakout meets Red Week

The S&P 500 finally staged a decisive breakout to new all-time highs last week, which is a strongly bullish development.

In-line with this view is the start of a fresh interest rate cutting cycle, which is supportive of higher stock prices over the medium- to long-term, if the US economy can avoid falling into a recession.

For now, recession probabilities remain low despite some warning signs in leading fundamental indicators.

Unfortunately, the picture is not quite as clear cut when we consider a few short-term headwinds that may play a role over the coming 2-4 weeks.

The week after September OpEx has traditionally been the very worst week of the year.

Strong momentum may be challenged over the short-term, but from mid-October on the picture becomes clearer, as strong seasonality and supportive year-end flows align with a positive technical and fundamental picture.